April 19 (Bloomberg) -- The thickness of shale rock in northwest England will allow gas production with minimal disruption above the surface, the head of the explorer aiming to drill in the area said.
Shale in England’s Bowland basin is about three times as thick as the Marcellus deposit in the northeastern U.S. according to a geologist at the U.K.’s Keele University. That will allow horizontal wells to be stacked on top of one another, minimizing the number of well-heads on the surface, said Francis Egan, chief executive officer of Cuadrilla Resources Ltd.
“It’s quite unique, the thickness of the shale,” Egan, who joined the company last year from BHP Billiton Ltd., said in an interview in London. “What it opens up is the possibility of stacked laterals so you stack them like a staircase minimizing the surface footprint.”
Hydraulic fracturing, the technique that blasts water, sand and chemicals at high pressure to release trapped oil and gas within rock formations, has been blamed for earth tremors in Lancashire, northwest England in 2011 that led to an 18-month moratorium on the process known as fracking. The U.K. government lifted the ban in December and is preparing tax breaks to encourage drillers as it seeks to expand domestic energy sources amid declining production from the North Sea.
“The Bowland is unlike anything we’ve seen anywhere in the world,” Chris Hughes, commercial director at NuTech Energy Alliance Ltd., said yesterday at a shale gas conference in London. U.S.-based NuTech, a privately owned oilfield services company, analyzes reservoir data.
Cuadrilla estimates its licenses contain at least 200 trillion cubic feet of gas, twice the reserves of Iraq, and at least 10 percent of that will be recoverable.
“We have good technology now for directional drilling,” Ian Stimpson, senior lecturer in the department of geology at Keele, said by phone. “That allows wells to go off about 10 kilometers sideways in all directions from one pad.”
The Bowland may be 790 meters thick, according to Stimpson, who has studied seismic data from the resource. That is “unusually thick” compared with 270 meters in the Marcellus, a key region for U.S. shale gas production, and 150 meters in the Lublin basin in Poland.
“Our geologists saw the source rock and the thickness surprised them,” said Egan, 51. “We haven’t even got to the bottom of it yet.”
Cuadrilla, based in Lichfield, delayed exploratory testing at a site near Blackpool until next year while it carries out an environmental impact assessment. It expects production in 2015 or 2016, Egan says.
Dart Energy Ltd., a Sydney-listed coal-bed methane and shale gas explorer, said it also plans to drill exploratory wells in its Bowland acreage in 2014 and expects to complete a joint venture agreement this year.
Local communities are concerned about noise, disruption, increased traffic, falling house prices and a “general industrialization of the English countryside,” environmental group Greenpeace said on April 10.
The U.K. may earn billions of pounds in revenue from shale, Egan said. Even at a recovery rate of 10 percent, the gas extracted would be worth 140 billion pounds ($215 billion) at current prices, he said.
Cuadrilla, which also holds licenses in Poland and Holland, doesn’t trade and is backed by private equity group Riverstone Holdings LLC and Australia’s AJ Lucas Group Ltd. Its directors include former BP Plc CEO John Browne.
AJ Lucas said in February that Cuadrilla was in “advanced” talks with a leading energy company to sell a stake in its U.K. operations. AJ Lucas, which holds 43 percent, didn’t name the potential investor.
“Companies have approached us and AJ Lucas,” said Egan, who worked for 20 years at BHP Billiton Ltd. and eight years at Marathon Oil Corp. “If you look at the history of the oil and gas industry, it’s a joint-venture business.”
Cuadrilla doesn’t have any immediate plans to list publicly, Egan said. “We’re well-funded for the exploration phase,” he said.
The company is looking at other opportunities in Europe, Egan said. It’s just completed a 2D seismic study in Poland and hopes to shoot 3D next year before drilling a well, he said.
“It’s a huge opportunity,” Egan said. “People are looking to the U.K. If it can be done properly here, it can be done anywhere.”
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