Shale Pioneers Plan Next English Wells After Fracking Causes Earthquake

Photographer: Paul Thomas/Bloomberg

Employees manoeuvre a drill pipe slip towards the drill shaft at Cuadrilla Resources Ltd.'s shale gas exploration site in Singleton, U.K. The company plans to start fracturing again next year as debate intensifies on shale’s potential in the U.K. Close

Employees manoeuvre a drill pipe slip towards the drill shaft at Cuadrilla Resources... Read More

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Photographer: Paul Thomas/Bloomberg

Employees manoeuvre a drill pipe slip towards the drill shaft at Cuadrilla Resources Ltd.'s shale gas exploration site in Singleton, U.K. The company plans to start fracturing again next year as debate intensifies on shale’s potential in the U.K.

The sound that woke Caroline Murphy after midnight on April 1 was so loud she thought a car had crashed into her house. She doesn’t feel any better knowing it was the U.K.’s first recorded earthquake caused by natural-gas exploration.

“It sounded like something had hit the house and literally jolted us out of bed,” Murphy, said at her home in Singleton, a village of about 900 in Lancashire, northwest England. “It was like a car or crashing metal. It was such a loud sound.”

Murphy’s home is within three miles of a drill site belonging to Cuadrilla Resources Ltd., an explorer that says it’s found more natural gas trapped in the local shale rock than Iraq has in its entire reserves. The magnitude 2.3 tremor that shook Murphy, and a second weaker quake on May 27, forced Cuadrilla to suspend hydraulic fracturing, the process of blasting sand, water and chemicals into shale that’s made the U.S. the world’s largest natural-gas producer.

The company plans to start fracturing again next year as debate intensifies on shale’s potential in the U.K. The earthquakes are another argument for campaigners who say fracking, as the technique has become known, blights the landscape and risks polluting water supplies -- an issue in this part of England, where farms grow cabbages, zucchini and radishes using water from underground aquifers.

“They say they’ve been fracking for years and years and it hasn’t caused any problems,” Murphy, an artist and designer, said in an interview. “I say: ‘You caused an earthquake. To me, that’s a big issue.’”

Economic Rewards

Supporters of shale gas say the U.K. can’t afford to overlook the potential. The North Sea fields discovered in the 1970s that made the U.K. self-sufficient are running dry and the country will import more than half its gas supplies this year. The prospect of plentiful, cheap gas -- prices have fallen about 75 percent since shale drilling took off in the U.S. -- could help the economy, said Tim Yeo, who chairs parliament’s energy and climate change committee.

“It is likely the U.K. has quite substantial shale gas reserves and there may be sufficient resources to replace a significant amount of reserves,” Yeo, a member of the governing Conservative Party, said in a telephone interview. “Shale is good from a security point of view. It gives us some degree of protection from international gas prices.”

Poland, Europe’s biggest holder of unconventional natural gas, has granted more than 100 licenses to companies including Exxon Mobil Corp. (XOM) and Chevron Corp. (CVX)

A Freak Event

“The real opportunity for this area is the ‘Aberdeen effect,’” said Rob Green, head of enterprise and investment for the Blackpool Bay Area Co., a local regernation agency. Aberdeen is the hub of the U.K.’s offshore oil and gas industry. “The U.K. certainly has that potential to take an early lead.”

Eric Vaughan fractured his first well in Ohio more than 20 years ago. Now Cuadrilla’s chief operating officer, Vaughan said the earthquakes were a freak event, caused when the process disturbed a fault line.

The fault “has to be stressed just right, brittle and ready to go already, and we drilled that well into a spot,” Vaughan said as he toured one of Cuadrilla’s three drilling sites. The amount of water and energy used was “nowhere near enough to actually create an earthquake. You couldn’t pull anything about the shale from that.”

Nonetheless, there have been other earthquakes associated with shale gas production. The Oklahoma Geological Survey said a study of time and geology showed a possibility that fracking a well near Elmore City on Jan. 17 had caused a series of 43 minor tremors over a period of 24 hours.

First Tremor

The first tremor set off by Cuadrilla was on April 1 and measured 2.3 on the Richter scale, strong enough to be felt, but unlikely to do any damage. A weaker quake of 1.5 was recorded in May. Cuadrilla halted fracking operations and will not resume them until the U.K.’s Department of Energy and Climate Change has reviewed the situation, Vaughan said. A spokesman for the department said the assessment is ongoing.

Cuadrilla, backed by Riverstone Holdings LLC, a private equity investor that includes former BP Plc Chief Executive Officer John Browne among its directors, wants to start fracking again. The company said its first wells showed the shale rock it’s exploring may hold 200 trillion cubic feet of gas. While only a fraction will ever get drilled, 10 percent of that amount is enough to supply the U.K. for about six years.

“The shale is very thick throughout this area,” Vaughan said in an interview. “The rock itself is a similar shale to some of the plays in the U.S. One of the differences here is there’s just a lot more of it.”

Production

Cuadrilla plans to fracture three wells next year, he said. If the wells prove potentially profitable, the driller will need to apply for a separate production license, requiring further environmental and planning assessments. Production could start as early as 2013, economic development advisers Regeneris Consulting said in a report commissioned by Cuadrilla.

The biggest debate over shale drilling is whether it risks polluting water supply. Although France has banned fracking because of the risk of contamination, a U.K. parliamentary committee report in May found no evidence shale drilling threatens underground water supplies. In the U.S., the Environmental Protection Agency expects to complete a report into shale and drinking water in 2014.

Cabbage Field

Cuadrilla drilled through a local aquifer to reach the shale layer, which starts 6,000 feet (1,829 meters) below the surface. While the resource isn’t used for drinking water, it is pumped for the irrigation. The company has taken extra measures to seal the drill pipe from water-bearing rock, Vaughan said. Campaigners said they’re concerned about local farms.

“We don’t want to see the same mistakes being made as in the U.S.,” said Graham Bentley, member of local opposition group Ribble Estuary Against Fracking. “There’s the increase in traffic, the issue of contamination, air pollution and this area is a strong growing area that supplies many of the large supermarkets.”

For Doreen Stopforth, who can see a Cuadrilla drilling rig from the window of the house she’s lived in for 39 years, the issue is simpler. What works in the plains of Texas isn’t suitable for her corner of Lancashire.

“One morning we got up and it looked like we had NASA outside, in the middle of a cabbage field,” the retiree said. “It’s not like America. It’s so vast. Here it’s heavily populated.”

To contact the reporter on this story: Kari Lundgren in London at klundgren2@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net

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