LONDON May 2 Britain's shale gas companies plan
to drill at least 20 to 40 exploration wells over the next three
years to test the production potential of newly discovered
deposits, making or breaking hopes of a full-scale drilling
The next few years will prove critical for an infant
industry that sees itself as vital to reversing Britain's rising
dependency on foreign gas but which must tread carefully in
order to reassure a skeptical public and vocal environmental
"Around 10 companies at present are looking at drilling 20
to 40 wells before 2015. Some of these will be plain vanilla
exploration wells and some will be hydraulically fractured," Ken
Cronin, chief executive of the UK's Onshore Operators Group,
which represents shale companies, said in an interview on
Many countries including Britain want to follow the example
of the United States, where surging shale gas production has
transformed its energy market, lowered prices and drastically
Shale gas is ordinary natural gas that is trapped in dense
rock formations. It is retrieved through a controversial process
known as hydraulic fracturing or fracking, whereby water and
chemicals are pumped deep underground to prop open rocks, which
leads to fears it could contaminate drinking water.
A preliminary estimate by the British Geological Survey puts
recoverable shale reserves at around 5.3 trillion feet, enough
to meet national consumption for about 18 months.
A year-long ban on drilling was recently lifted after the
government imposed more stringent rules on fracking to reduce
any risk of earthquakes.
Drilling companies will include Cuadrilla Resources, IGas
, Celtic, Dart Energy, Egdon Resources
, Third Energy, Reach, Europa, Aurora and Rathlin among
others, Cronin said.
Although Britain expects to issue an upward revised estimate
of its shale gas resources in the next few months, companies
must drill appraisal wells in order to see how much of that
total amount can be recovered commercially, Cronin said.
"Only when those exploration wells are drilled will we know
the scale of the UK's potential production," he said in an
Although many doubt that UK shale development will come
anywhere near U.S. rates, it could conceivably reduce dependence
on foreign energy and help moderate the forecast trend of rising
"Aside from the tax benefits to the Exchequer (UK's finance
ministry), shale gas could provide an anchor to UK gas prices
when prices in Europe, which are linked to the cost of crude
oil, start to rise," Cronin said.
Unlike in the United States where private landowners receive
royalties from shale gas production, in Britain mineral rights
belong to the crown, a fact that helps explain greater
opposition to fracking by local communities.
In a bid to win over the public, politicians this week
raised the possibility of giving residents near shale
exploration sites access to cheaper gas supplies.
"It is true that some onshore wind farm operators offer
local residents discounted electricity supplies, but that is
only in cases where the energy supplier (utility) also owns the
wind farm," Cronin said.
"None of the shale gas explorers are linked with utilities,
so it would be difficult to offer residents a similar deal," he
One option raised by the UK Parliament's Energy Select
Committee envisages that shale gas companies paying business tax
rates directly to local councils, instead of the UK Treasury.
"The council could then use that money to give residents a
rebate on their council tax, if it so wished," he said.