Industry and academic experts back offshore fracking in North Sea
dimanche 14 septembre 2014
INDUSTRY AND ACADEMIC EXPERTS BACK OFFSHORE FRACKING IN NORTH SEA
By Oil & Gas Financial Journal Staff
International industry and academic oil and gas experts have backed the huge potential benefits of offshore oil and gas fracking (unconventional extraction), extending the life of the North Sea for another century. These experts include a former president of the Wood Group in the Americas and also officials of the UK government.
Their comments follow the publication of a report by an independent business organization, N-56, on a potential “black gold bonanza” for Scotland.
Key report highlights included the following details :
To date, 42 billion barrels of oil and gas have been produced from the North Sea, using conventional production techniques, and there is a consensus that there are remaining conventional reserves of around 24 billion barrels.
Oil and gas recovered from the Upper Jurassic Kimmeridge Clay formation through new techniques could add an estimated 21 billion barrels, almost equivalent to the estimated 24 billion barrels of oil and gas reserves remaining.
On top of the up to £365 billion estimated to be currently obtainable in tax revenues through conventional means between now and 2040, combined with this up to £300 billion from these new sources of oil and gas production would see North Sea oil and gas revenues of up to a staggering £665 billion, more than double the total taxation from oil and gas received to date (£313 billion).
The UK’s economic watchdog, the Office for Budget Responsibility, has put this tax revenue figure at £57 billion between 2014 and 2040.
These report details add their weight to a range of experts who have backed the potential of unconventional oil and gas extraction from under the North Sea, including Dr. Christopher Cornford, a petroleum geophysicist ; Richard Selley, a senior research fellow and emeritus professor of petroleum geology at Imperial College, London ; and Dan Jarvie, chief geophysicist at EOG Resources, the US’s largest shale oil producer.
The Danish state-owned oil company, Nordsofonden, has also described the Danish offshore unconventional shale oil and gas resource as “a potential game changer.”
The UK Department of Energy and Climate Change (DECC) has already granted a license to Trapoil, an independent UK oil and gas exploration company, for unconventional oil and gas in the North Sea. A senior DECC official commented,“They (Trapoil) are developing technology that will enable them to successfully recover oil from this structure, and as there is a considerable amount of this source rock around, it could potentially be an enormous new play for the North Sea. As you may expect, the potential upside for Trap is huge, and, as such, there is a lot of commercial sensitivity around their work.”
Derek Blackwood, former president of Wood Group, the Americas, said, “While I have not had the opportunity to study the geological evaluations for offshore unconventional hydrocarbons, the information provided appears to me to be impressive. One constant in all of the data related to the US onshore shale development story is that projections of production from shale plays has, in my experience, increased significantly each and every year over the last five years and will likely continue for years to come. We have less data available in the UK from drilled wells, but I fully expect that, as we drill more wells, we will increase our projections of recoverable hydrocarbons similar to the US and I think the term ‘game changer’ is likely to be very appropriate to the UK North Sea story.”
Professor John Howell, chair in geology and petroleum geology, University of Aberdeen, said, “We know that shale gas and, more recently, shale oil have revolutionized the US energy markets and are transforming their economy. We also know that the Kimmeridge Clay is a major oil-rich shale, which has generated most of the conventional oil in the North Sea. Its shale oil potential is not in question. Why the Westminster Government is so reluctant to recognize anything like the full potential of the North Sea oil and gas industry is very difficult to understand. Once again, we see how the ingenuity of the oil exploration community continues to add huge potential resources to the already proven reserves of the North Sea.”
Alex Russell, professor of petroleum accounting, and Peter Strachan, professor of energy policy, Aberdeen Business School at Robert Gordon University, agreed that, by exploiting the latest technology to unlock massive offshore shale reserves of oil and gas, the North Sea has the potential to produce previously unmentioned fabulous tax returns, perhaps as high as a conservative estimate of an additional £300 billion from Scottish waters. They noted that reaping the hidden treasures locked in shale deposits has already transformed the economic fortunes of North America and they believe that this success story can be repeated in the North Sea.
Martyn Tulloch, of Tulloch Energy, commented, “It is clear from the number of internationally renowned experts giving their backing to the potential of this, that the prize available to the UK or Scottish government through extracting oil and gas by this method could be colossal. As a nation, we could be sitting on a fortune of black gold that will last for another century. In the face of such compelling evidence from a range of respected international experts unconnected to the Scottish independence debate, a responsible government would do its utmost to encourage the development of its offshore unconventional oil and gas potential.”