The rolling country south of London is called the stockbroker belt for the residents who pay 50 percent above the U.K. average to live in pristine villages. The advent of shale oil under their lawns may shatter the idyll.
Two areas of Surrey and Sussex hold 700 million barrels of recoverable shale oil, or more than a year’s supply for Britain, the U.S. Energy Information Administration estimates. The advent of drilling near mansions in the Wessex and Weald basins may widen the nation’s shale-energy debate, which has focused on gas in northwest England, hundreds of miles from London.
“The rock in the Weald is splendid, it’s extremely good for shale oil,” said Fivos Spathopoulos, a visiting lecturer of petroleum geology at London’s Imperial College who studied the basin for about seven years. “If it works, it’ll be big but we won’t know exactly how big until we drill.”
Celtique Energie Ltd., backed by U.S. private-equity firm Avista Capital Partners LP, is among companies seeking to pump shale oil in a geological area that’s similar to France’s Paris Basin, where fuel reserves have been found. They’re attracted by U.K. government plans to give tax breaks to stimulate a shale industry that can buoy domestic supply as North Sea output dwindles and imports rise.
Celtique plans to drill a well next year at Fernhurst in West Sussex, where the average house price tops 471,300 pounds ($722,000), property website Zoopla shows. While hydraulic fracturing, the water-intensive drilling process known as fracking, isn’t initially planned, Celtique may apply for such a license should it find shale oil, according to a presentation.
“The reason why we’re excited by this position is it has multiple objectives for both conventional and unconventional” drilling, Chief Executive Officer Geoff Davies said in an interview in London. “It’s a new geological idea.”
While the Weald and Wessex basins aren’t virgin territory for drillers -- companies including IGas Energy Plc (IGAS) already produce crude from conventional wells -- drilling deeper layers of rock and exploring shale deposits may “significantly” increase the area’s potential resources, Davies said.
The U.K. government said June 27 that shale-gas fields in northern England are twice as large as previously estimated, potentially big enough to meet demand for 47 years. It said explorers have promised incentives including a 1 percent share of production revenue to communities where shale gas is pumped.
Proponents of fracking say the benefits could mirror the U.S., where the exploitation of shale formations helped the country overtake Russia as the biggest producer of natural gas in 2009 and boosted crude oil output.
Yet the drilling technique, which involves blasting a mixture of water, sand and chemicals underground to release fuel from rock, has raised the ire of environmental groups and residents who fear ground-water contamination.
“I have grave concerns about our water supplies,” said Anne Hall, a former county councilor in Balcombe in West Sussex, where driller Cuadrilla Resources Ltd. plans an exploratory well and “No fracking” signs are widespread. “The possible impact on surrounding towns and villages would be catastrophic.”
The concern is echoed in other villages in southeastern England, where house prices averaged 208,479 pounds in March, compared with a national average of 138,150 pounds across nine counties excluding London, according to the Land Registry.
While Cuadrilla says it isn’t initially planning to frack at Balcombe, drilling has already been set back after lobbying from Friends of the Earth prompted the regulator to insist on additional permits. The company has previously fracked in the northwest county of Lancashire, where two years ago it caused tremors that led to an 18-month moratorium on the practice.
Cuadrilla, chaired by former BP CEO John Browne, and Celtique reject suggestions that drilling in the Weald will be disruptive. The noise will be quieter than bird song, according to London-based Celtique. Cuadrilla’s site, no bigger than a soccer pitch, will be screened by woodland, the Lichfield, England-based company said.
While shale drilling in Lancashire has also faced opposition, the need for jobs in that region, traditionally a more industrial area, is a counterbalance to the protest, according to Imperial College Professor Richard Selley.
“By analogy with the U.S. shale-gas experience, shale-gas production will be a big boost to employment,” Selley, of the Department of Earth Science and Engineering, said. “This will be of greater benefit to Lancashire than in the Weald due to far higher unemployment in the north of England.”
To contact the reporter on this story: Nidaa Bakhsh in London at email@example.com