UK sees new shale gas reserve estimate by end-2012

LONDON Mon Oct 15, 2012 7:05pm BST

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LONDON (Reuters) - Britain expects to issue a new estimate of its shale gas reserves in the Bowland formation in the north before end-2012, followed by a more comprehensive figure for the whole of the country in 2013, the energy ministry said on Monday.

The Bowland formation covers a huge area with potentially significant reserves, extending beyond current shale gas drilling locations in Lancashire by companies such as Cuadrilla Resources to the Isle of Man, north Wales, south Cumbria and the East Midlands.

"The Bowland Shale estimate will be released by year end," a spokesman for Department of Energy and Climate Change (DECC) said. "There will be a more comprehensive estimate of UK shale reserves in 2013," he added.

The estimate is eagerly awaited as substantial recoverable reserves could enhance Britain's energy security, offset declining North Sea output and reduce import dependence.

Last week Energy Secretary Edward Davey, who heads the department, said he hoped to encourage new shale gas exploration as Chancellor George Osborne considered "a generous new tax regime" to encourage investment in the energy source.

The government suspended shale gas extraction last year after the work triggered two small earthquakes near the coastal resort of Blackpool, adding to fears about hydraulic fracturing - a method of drilling through shale deposits to retrieve gas by injecting liquids and chemicals.

The department has commissioned the British Geological Survey (BGS) to quantify domestic shale reserves.

The last estimate by BGS put UK onshore shale reserves at 5.3 trillion cubic feet (150 billion cubic metres), which would be enough to meet its gas consumption for one and a half years.

UK shale gas exploration firm Cuadrilla Resources has put its figure as high as 200 trillion cubic feet of shale gas within the Bowland formation spanning Lancashire where it owns licences.

In the United States, a shale gas boom has resulted in a sharp rise in natural gas production, leading to a collapse in domestic prices and the possibility of the U.S. exporting liquefied natural gas (LNG) by 2015.

(Reporting by Oleg Vukmanovic; editing by James Jukwey)

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