What the UK Needs: A Production Environment By 2019-20
In a panel discussion dedicated to the Future of Shale Gas at the 25th Economic Forum in Krynica, Poland, Paul Landers, Expert, United Kingdom Onshore Operators Group (UKOOG), said that amongst the problems for shale in the UK in the last 4 years, one was the government. He described: “A coalition government where you have two different parties in your coalition that are at loggerheads with each other, then you can get nothing passed.”
Protesters, he said, had been the second obstacle.
He explained “One of the first planning applications for two well sites to drill four horizontal wells and apply 25-stage fracs on them was, after 2 and a half years, actually rejected, because protesters managed to persuade the authority to reject it.
“If you had looked at an analysis of the figures, that was 5% of the actual population, so the 95% were the silent majority. The council rejected it.”
Fast forward to June-July 2015, recalled Mr. Landers, the UK now had a new, conservative government. “They understand that without shale we have a real energy problem in the UK in the next 10 years.”
As a result, he explained, the UK government had made shale gas into a national interest, similar to nuclear power. “Therefore, local authorities cannot stop the process happening.”
Now, he said, when a planning application goes to an authority then a decision must be made within 16 weeks; if it doesn't after 16 weeks, that body receives a “black mark.” Depending on the number of black marks received, the authority may receive financial penalties.
“That's stopped authorities from making delays,” he said.
Meanwhile, the UK 14th onshore licensing round had been announced. Mr. Landers said, “We're bringing out 152 licenses: 27 have just been announced; 132 are going through a final consultation regarding areas of natural beauty whose results should be available at the end of this year.”
According to him, the licenses are now deemed “drill or drop,” which means that projects must have a plan to drill within 3 years.
He commented: “Even though we've only drilled a few wells compared to Poland, we will see many wells being drilled in 2016-17, and in 2017-19 most of these wells going through a frac and float testing, so that we end up with a production environment by 2019-20.”
That, opined Mr. Landers, is what the UK needs.
“We've had the energy security problem for the last 20 years – this winter coming forward we have a real problem in the UK, that we generate less electricity than we will consume, so we have a real problem.”
The government, he said, is preparing for brown outs, which may mean that some industries might have to curtail their production shifts to cut power consumption. Getting power from other parts of Europe, he noted, costs money.
Regarding energy security, he said: “We need it, because we're running out of gas in the North Sea.”
The UK, he said, has two major pipelines, in the north from Norway and in the south from Belgium, which had a 2-3 day failure almost 2 years ago.
He recalled, “Our friends in Norway gave us some more gas. However, for those 2-3 days the spot price of gas had doubled. If that happens more than a few days, then our price rise of gas to electricity will be huge, so we cannot rely on our friends for energy security – we have to find our own resources.”
This had resulted, said Mr. Landers, in the UK initiating a new nuclear power station, which has been delayed by a few years.
“So we have a problem, and it's only now that we have a government that's focused on energy security that we're enabling our shale gas revolution.”
Mr. Landers predicted that today's protesters will go away and take on another cause in the future.
“We are full steam ahead at last,” he commented, “and so we're now on the starting blocks of a race: we're getting there. We're hoping that the rest of Europe will see what we're doing and do the same.”
Apart from Poland, he said that Germany, France and Spain are “twiddling their thumbs, waiting for the rest of us.”
“'Let's just get on with it' is our view,” concluded UKOOG's Paul Landers.
-Drew Leifheit