Scotland Holds Billions of Barrels of Shale Oil, Report Says

Scotland may have billions of barrels of shale oil buried under its most densely populated areas, geologists said today.

Scotland’s central belt, running between Glasgow and Edinburgh, may have 6 billion barrels of oil in place, according to a report by the British Geological Survey. While only a fraction of the resource will end up being viable, the deposits could supplement the U.K.’s 3 billion barrels of proven oil reserves, held mostly in North Sea fields off Scotland.

The oil and gas industry is central to the debate on Scotland’s independence ahead of a referendum in September. The Scottish government says existing fields in the North Sea will underpin the economy of an independent nation while opponents say declining production from offshore reserves leaves the region vulnerable.

“This report will give reassurance to investors who wish to explore for oil and gas onshore in Scotland,” said Ken Cronin, chief executive officer of the U.K. Onshore Operators Group, an industry lobby. The resources “can help replace the U.K.’s growing dependency on imports and balance the decline of the North Sea.”

Bowland Shale

As well as oil, Scotland’s central belt has shale gas in place of 80.3 trillion cubic feet, according to the middle estimate in today’s report. That compares with 1,300 trillion cubic feet in the Bowland shale in northwest England, according to research published last year by the British Geological Survey, or BGS.

Though the figure is a fraction of the Bowland basin, it’s enough to prevent the region from becoming a gas importer in 7 to 8 years, according to an explorer with a license in Scotland’s central belt.

“80 tcf is a lot,” Graham Dean, director of Reach Coal Seam Ltd., said in an e-mail. “Even if only 10 percent is developed, there is more producible gas onshore than offshore Scotland,” where North Sea gas reserves amount to 4.3 trillion cubic feet.

Exploiting the U.K.’s shale resources has been opposed by environmental campaigners and property owners concerned that drilling techniques, including hydraulic fracturing, risk polluting water supplies. Britain’s greater population density will likely make production more difficult than in the U.S., where a shale boom has reversed declining oil and gas output.

Tax Breaks

“We are taking a balanced, evidence-based approach to the development of unconventional gas,” Fergus Ewing, Scotland’s energy minister, said in a statement. “No operator can undertake hydraulic fracturing unless they first gain explicit planning consent for that activity.”

The U.K. government is offering tax breaks to shale drillers to spur development of the resource as North Sea reserves dwindle. The Bowland basin may supply local natural gas demand for half a century at extraction rates of 10 percent, similar to U.S. fields, according to a 2013 report.

Last month, the BGS published a report on the prospects for shale oil in southern England, estimating the Weald basin may hold 2.2 billion to 8.6 billion barrels. The highest estimate in today’s report for Scotland was 11.2 billion barrels and the lowest 3.2 billion barrels.

“Only the broad shoulders of the U.K. can attract investment in new energy sources and maintain the U.K.’s position as one of the world’s great energy hubs,” U.K. Energy Minister Michael Fallon said.

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