UK could produce shale gas in 4 years in emergency -Cuadrilla

Wed Apr 2, 2014 10:02am BST

* Construction could start tomorrow if emergency -CEO

* All constraints to shale would have to be removed

* Would take 4 years to get to 'appreciable' output

By Nina Chestney

LONDON, April 2 (Reuters) - Shale gas production in Britain could begin within four years if the current crisis in Ukraine escalates to such an extent that a national state of emergency is declared, the chief executive of Cuadrilla Resources said.

Britain is in the early stages of exploring for shale gas to counter its growing dependence on imports, and geologists have estimated it could have shale resources equivalent to several hundred years of demand.

Cuadrilla is the only company in Britain so far to have used hydraulic fracturing, or fracking, in test wells in Lancashire.

It is two to three years away from establishing whether its British shale gas operations are commercially viable, Chief Executive Francis Egan said at an event at think-tank Chatham House on Tuesday evening.

If the Ukraine crisis worsens dramatically and Britain declares a state of national emergency and removes all constraints, "it would take two, three or four years to get up to appreciable production rates," he added.

In an emergency situation, Cuadrilla could start constructing a drilling site immediately and start drilling after two months. Drilling a well would take around four months, and three to four wells would be needed to demonstrate the commercial value of shale gas.

In normal circumstances, it will take two to three years just to find out whether shale is commercially viable, because it has not yet been established at what rate the wells would flow.

Energy consultancy Poyry has estimated it would take up to eight years for a developer to start commercial production in Britain after receiving a licence.

BARRIERS

As Russia's occupation of the Crimea region has led to the worst East-West crisis since the Cold War, there is increasing urgency for European countries to find alternatives to Russian gas supplies, which arrive via Ukraine.

Last week British Prime Minister David Cameron called the current crisis in Crimea a "wake-up call" and said shale gas was a good opportunity for Europe to move away from Russian gas.

Russia provides around a third of Europe's gas, with most of that going to central and southeastern Europe rather than Britain, but Britain will begin to import gas from Russia under formal contract for the first time this year.

British domestic gas production from the North Sea basin is declining, and it imports most of its gas from Norway or via liquefied natural gas shipments.

North Sea gas production will fall to 19 billion cubic metres (bcm) by 2030 from 108 bcm in 2000, Minister of State for Energy Michael Fallon said at the Chatham House event.

"Without shale we are forecasting we will be importing 70 percent of our gas by 2025, which equates to a 10 billion pound ($16 billion) per year import bill," he added.

For shale gas production to begin within four years, Britain would have to opt out of all applicable EU legislation and of regulations by its local authorities.

Local opposition to fracking has been another obstacle.

Shale gas is ordinary natural gas trapped in dense rock formations. In the fracking process, water, sand and chemicals deep are injected into rock formations to release hydrocarbons.

Cuadrilla has been repeatedly targeted by protesters and environmentalists concerned about groundwater contamination, earthquakes and the expansion of fossil fuel use.

"There is no short circuit through this. It will take a lot of cups of tea in parish councils until it becomes a 'so what?' question," Egan said. ($1 = 0.6011 British Pounds) (editing by Jane Baird)

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