Drill UK Drill...and compares the situation to the UK. Although the chart documents numerous factors, the key aspects that helped the US to face a revolution in the oil and gas …

41 石油・天然ガスレビュー

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　米国のようなシェールガス革命は、欧州では起きないであろうとの見方が広く報告されているが、英国政府や企業は、シェールガス開発に前向きに取り組んでいる。英国では、主に3カ所に有望なシェール層が分布しており、英国地質調査所（British Geological Survey）によると、中部Bowland-Hodder地域では 822 ～ 2,281Tcfのガス、南部の Weald Basinでは 2.20 ～ 8.57Bbblの石油、北部の Midland valley of Scotlandでは49.4 ～ 134.6Tcfのガスと3.2 ～ 11.2Bbblの石油がそれぞれ賦存する（いずれも原始埋蔵量）と評価されている。仮に、北米の回収率8 ～ 20％で試算すると、Bowland-Hodder地域だけでも、63.5 ～ 458.9Tcfの可採量が期待されることとなるが、これは、英領北海の残存可採ガス埋蔵量52Tcfと比較しても大規模な量である。　政府は、企業が円滑に開発を進められるように、いくつかの制度を導入し始めた。しかし、環境活動家や反資本主義的活動家などの影響により、地方自治体レベルでのシェール開発への理解がまだ十分に得られていない。このため、開発は期待どおりには進展してないのが現状だ。一方、ポーランドでは、ExxonMobil、Total、Chevronなどが有望なシェール資源に注目して参入してきたが、技術的困難性や厳しい税制により、既に撤退した。また、フランスでは2011年から水圧破砕が禁止されているが、最近、国会で、45回の水圧破砕が安全に実施されている事例が報告された。ドイツでも、基本的には水圧破砕が禁止されているが、最近、地下3,000m以深での水圧破砕が許可された。デンマークでは、2012年の水圧破砕禁止以降、Totalだけが開発の継続を許可されており、他の企業への拡大も議論されている。　上記のように、欧州では、北米のシェール革命のような革命的な進展を期待するのは難しいと言える。しかし、革命的でなくとも、国民の理解を得た上で、技術革新などにより、安全かつ効率的なシェールガス開発を実現できる可能性はある。特に、英国は、このような取り組みにより、他の欧州諸国へのモデルとなり得る可能性を有しているのは事実である。　本稿では、シェール開発をめぐる米国と欧州との背景の違い、英国を中心としたシェールガス開発への取り組み、政府の制度、英国モデルの実現可能性を考察してみたい。

はじめに

Drill UK Drill（Prim and Properly Please....）

JOGMEC London OfficeOil & Gas Researcher Dulee Ozawa

Introduction

　The verdict is in! According to many experts in the industry, there will be no shale gas revolution in Europe before 2020. And yet, the industry players and t h e U K g o v e r n m e n t a r e k e e n f o r s h a l e g a s developments to take off. Why? Given the success in the US, it is hard to ignore the benefits of a booming shale gas industry and coupled with the estimated gas in place（GIP）numbers, why not be more enthusiastic about shale gas? After all, if we have learned anything from the oil and gas industry it is surely that the

industry is good at overcoming multiple challenges be them political, technological, or environmental.

　The biggest challenge faced in the shale industry today is most likely the lack of one! All over Europe, there is not one single well that is producing shale gas or oil. Although some drilling and testing have occurred in Poland, geological complexities, disappointing flow rates and unfavourable tax regimes, have resulted in most of the major operators to pull out of the region.

Analysis_Ozawa.D.indd 41 2015/05/12 17:42:38

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With Poland now out of the dash for gas race, all eyes have been diverted to the UK where str ingent e nv i r o nmen t a l r e qu i r emen t s a nd h a r d - c o r e environmentalists and anti-capitalist movements have always slowed down any large industrial activity in the country, let alone an onshore drilling and fracking project.

　Despite the doom and gloom that surrounds shale gas developments in the UK, there is a good case for

the UK to build up a shale industry in the future（see Table 1＊1＊2）. This paper will try to present the need for a shale industry in the UK, outline the support shown by the government and point out the possible model for the shale gas drilling in the UK. However, before we venture further in to this topic , i t is necessary to give a brief outline of the success story that the United States（US）has produced, in order to understand the benefits of the industry, and why even a small scale revolution might be beneficial for Europe.

Table1 Solutions and/or recommendations to the potential challenges faced in the shale industry in the UK, as mentioned in our previous reports＊ 1 ＊ 2.

Potential problems for shale developments identified in previous

reports ＊ 1,＊ 2Solutions or recommendations Reference

Lack of drilling data BGS is gathering data regarding the shale rock and organic content from over 100 wells drilled for scientific purposes. However, data from drilling, fracking and testing the flow back rates are much needed.

http：//www.bgs.ac.uk/research/energy/shaleGas/bowlandShaleGas.html

Lack of drilling equipment A report commissioned by UKOOG carried out by Ernst and Young highlighted that the UK Shale gas could create a new onshore supply chain market for equipment, services and skills across a number of industry sectors. The UK could also lead the way in technology and skills across Europe, a significant and untapped market. Recommendations were made to how to ensure that no bottlenecks would be faced, if the shale industry takes off.

http：//www.ey.com/Publication/vwLUAssets/Getting_ready_for_UK_shale_gas/$FILE/EY-Getting-ready-for-UK-shale-gas-April-2014.pdfExperience Service industry

Ground water polution Concerns about pollution of groundwater by fracking fluid are largely based on reports of past practice in the US, where well integreity were compromised and frack foluid compositions were not divulged. In the UK, the regulators will require full disclosure of chemicals used in fracking fluid and they do not permit use of hazardous chemicals. Provided that the regulator enforces this prohibition, hydraulic fracturing fluid poses no risk to groundwater in the UK.

http：//www.publications.parliament.uk/pa/ld201314/ldselect/ldeconaf/172/17210.htm

Land owner does not have the rights to the minerals found subsurface

Mineral rights remain to the crown, but some provisions that benefit the community have been made to incentivise drilling; at exploration stage, £100,000 in community benefits per well-site and 1％ of revenues at production will be paid out to communities.

https：//www.gov.uk/government/policies/providing-regulation-and-licensing-of-energy-industries-and-infrastructure/supporting-pages/developing-shale-gas-and-oil-in-the-uk

Regulation A comprehensive guide and to regulation and monitoring processes have been put forward by DECC, which includes getting permission and meeting the requirements of the DECC, EA, HSE and the local authority for planning permission（see also Fig. 8）.

https：//www.gov.uk/government/uploads/system/uploads/attachment_data/file/283834/Regulation_v3.pdf

Earth quakes DECC introduced new controls and guidelines for operators：use all available geological information to assess the location of faults and avoid fracking near faults; adopt a ‘traffic light’ system that controls whether injection can proceed or not, based on that seismic activity

https：//www.gov.uk/government/uploads/system/uploads/attachment_data/file/283837/Seismic_v3.pdf

Environmental concerns In 2012, the Royal Society concluded that “the health, safety and environmental risks associated with hydraulic fracturing can be managed effectively in the UK as long as operational best practices are implemented and enforced through regulation.”

https：//www.gov.uk/government/uploads/system/uploads/attachment_data/file/256359/Publication_RoyalSociety_2012-06-28-Shale-gas.pdf

Public protests In some deprived areas there are many locals who view shale gas as a means to getting work. The main harm done are the hard-core activist groups said to be funded by Russian money, especially in Eastern Europe.

http：//www.ft.com/cms/s/0/20201c36-f7db-11e3-baf5-00144feabdc0.html

Source：Compiled from various sources given in the reference column.



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　The drama and excitement that encompassed the US shale development brought with it huge benefits to the country in terms of creating jobs, providing a positive economic impact, security of energy supply, and most surprising of all the decrease in the CO2 emissions in the country. To put these in perspective, the Energy Information Administration（EIA）reports that from the start of 2007 through the end of 2012, total US oil and natural gas industry increased by more than 162,000 jobs, which is a remarkable 40 ％ increase, mostly attributed to the rapid shale industry growth＊ 3. A study carried out by IHS concluded that gas production in the unconventional sector, including tight gas and coal bed methane as well as shale gas, contributes more than $49 billion annually to government revenues, and will contribute $197 billion to US gross domestic product by 2015＊4. The CO2 emissions in 2013 were 10％ below their 2005 level＊5. All this was achieved by the rap id g rowth o f t he sha l e industry which has seen production levels increase from a mere 1.3Tcf in 2007 to 11.4Tcf in 2013（see Fig. 1）. Although the current oil price will see a drop in the pace of production of shale oil and gas, EIA estimates that up to 5 0 ％ o f t h e US d ry na t u ra l g a s production will be from shale deposits in the US by 2040（see Fig. 2）＊ 6. Over the last five years, total gas production in the US has grown by 25 ％ and oil production by 60 ％ — an increase in absolute terms of 3 million barrels per day＊ 7 . These are truly astounding numbers of growth to consider and begs the question—what factors and conditions exactly led to this success?

　The factors and condit ions that marched the shale story to success h ave been do cumen t ed by many authors, of which most of the elements

seem to be unique to the US. Without these conditions a similar scale revolution is not possible anywhere in the world. Professor Paul Stevens of Chatham House clearly identifies these points in his paper（see Table 2）and compares the situation to the UK. Although the chart documents numerous factors, the key aspects that helped the US to face a revolution in the oil and gas sector are attributed to 1）the land owner has the rights to the minerals found underground, giving an incentive to explore for potential resources, in fact, during the revolution the term “shaleionaires” was coined for land owners who made their fortune by selling drilling rights to private companies for a large amount of money; 2）numerous E & P companies almost rushed to drill in prospective areas creating a

1. The US success story

1,293 2,1163,110

5,336

7,994

10,37111,415

2007

Bcf

2008 2009 2010 2011 2012 2013　y

U.S. Shale Production

Tcf 2012

19900

10

20

30

40

2000 2010 2020 2030 2040 y

ProjectionsHistory

Source：EIA website, http://www.eia.gov/dnav/ng/ng_prod_shalegas_s1_a.htm

Source：EIA, http://www.eia.gov/forecasts/aeo/mt_naturalgas.cfm

Fig.1 U.S. Shale Production

Fig.2 Projections for shale production


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highly competitive environment that drove the speed of exploration leading it to its success – even the “mom & pop” sized companies attributed to this highly competitive landscape＊ 8; 3）long history of onshore drilling in the US meant that the public were already familiar seeing drilling rigs and equipment scattered around in their surroundings and it also meant that the regulations were favourable for onshore drilling. In

addition to the favourable conditions in the US for shale development, one should not forget the role that technology played to make this success story possible. In fact, the shale revolution is often referred to as an

“overnight sensation that took 30 years in the making” is not without reason. The US government took early initiatives in the testing and the funding of fundamental research, creating the framework for early developers

to success fu l ly app ly the techno logy（through much dedication, belief & grit）for the commercial extraction of shale gas（see Box）. As Paul Steven says, the Shale deve lopments are a true “tr iumph to technology.” All these key aspects paved the way for the US to drill an astounding 30,000 wells in just the four major shale p l a y a r e a s（Mar c e l l u s , H a y e s v i l l e , Fayetteville, and Barnett）in a very short period of time. The United States has been the world's top producer of petroleum and natural gas since 2012, surpassing Russia and Saudi Arabia＊ 9. These astounding achievements may not be replicated at this scale in the UK and elsewhere in Europe, but even a small scale replication in Europe could still prove to be advantageous to the region in terms of job creation, tax revenues and boosting the economy.

Table2 Factors creating the “shale gas revolution” in the United States.

Necessary Conditions USA UK

Favourable geology Yes ??

Lots of drill core data to help identify "sweet spots" Yes No

Weak environmental regulation for fracking Yes No

Tax credits + intagible drilling cost expensing Yes ??

Mineral rights to the landowner Yes No

Pipeline accees easy - large network + common carriage Yes ??

Selling gas into a "commodity supply" market very easy Yes ??

Driven by small entrepreneurial companies Yes ??

Dynamic and competitive service industry Yes No

People familiar with and accepting of oil & gas operations Yes No

Licensing large area with vague work programs Yes No

Significant government investment in basic R&D Yes No

High Liquids contet in the gas Yes ??

Started by rising prices Yes ??

Access to risk capital on a large scale Yes No

Easy access to water Yes Yes

Easy access to futures markets to hedge prices Yes ??

Box Father of frackng：G. Mitchell

・ The father of fracking, George Mitchell, was the embodiment of the American dream. Mr Mitchell had to work his way through university, but graduated top of his class. He left a fortune of more than $2 billion and a Texas landscape studded with examples of his philanthropy.

・ He started injecting high-pressure fluids into the ground to fracture the rock and create pathways for the trapped oil and gas（fracking）and drilling down and then sideways to increase each well’s yield（horizontal drilling）.

・ Fracking; was first tried in the late 1940s and helped along by Department of Energy research in the 1970s. During the 1980s and early 1990s, Mitchell Energy drilled well after well, many of whose sites were determined personally by Mitchell, for 15 years, the company struggled to show that its fracking could produce reliable and economical gas.

・ Running out of funds to keep drilling, an employee decided to substitute water for the more expensive silicone mixture being used. The process worked and in 1997 established that fracking could prove financially viable over the long term.

・ Not long after, Mitchell sold his company for $3.5 billion. By then, fracking was on its way to resurrecting America’s oil-and-gas industry.

・ New horizontal drilling techniques made shale gas wells even more productive, and by 2012, shale gas accounted for about 35 percent of the country’s natural-gas production.

Source：NY Times

Source： Adapted from a conference presentation delivered by Prof Paul Stevens, Chatham House.



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　Historically, UK was mostly dependent on a coal and oil based energy mix, but with the discovery of the offshore gas fields in the North Sea, gas has become a significant component in the energy mix（see Fig. 3）. Since 1970, gas consumption has grown from 14.4 million tonnes of oil equivalent（mtoe）to 47.1 mtoe in 2012. Gas currently provides heat to more than 80％ of the UK homes. Although the overall demand for energy is decreasing in the UK, due to increased energy efficiency and less demand from energy intensive industries , the basel ine need for energy is still quite significant. The North Sea is a mature f ie ld , and production is at an all-time low. The UK energy policy therefore needs to accommodate the void created by the lack of sufficient domestic production. The void in energy is being met by developing renewable resources and also by increasing imports, both of which exposes UK to various risks.

　The UK policy for decarbonising requires UK to cut carbon emissions by 80％ by 2050. As a result, the UK energy policy aims to allow energy from renewables to make up 40％ of the overall energy mix by 2030＊ 10. Although UK has made significant progress in increasing renewables, mainly in the offshore and onshore wind, solar and bioenergy, in the generation of electricity, it is nowhere near the 40 ％ share in the total energy mix（see Fig. 4）. Furthermore, the targets for renewables does not come cost free. Renewable energy plants, although cheap to run they are expensive to build, in addition to w h i c h u p d a t i n g t h e g r i d t o accommodate the extra energy is also

very costly, and all costs would inevitably be at the expense of the energy user. Furthermore, the energy from renewable sources are intermittent which means cheaper coal fired plants are substituted to generate electricity during peak time, which in the end results in the increase of greenhouse gasses, something that has occurred in Germany already.

2. UK’s need for gas

19700

10

20

30

40

50

60

70

80

90

100％

1980 1990 2000 2010 2013 y

Solid fuels Petroleum GasBioenergy and waste Primary electricity（including renewable electricity）

Thousand tonnes of oil equivalent

2013 2015 2020 2025 2030 y

30,000

35,000

25,000

20,000

15,000

10,000

5,000

0

Source： http://futureenergysavings.co.uk/the-uk-energy-mix-where-our-power-comes-from/

Source：DECC, ECUK Table 1.02

Fig.4 Future of energy mix in electricity

Fig.3 Total primary energy consumption by fuel, UK, 1970 to 2013


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　In the past, the North Sea production provided more than the domestic demand and went through a stage as net exporters of gas; however, more than 60 ％ of the gas used today is imported from various regions

（see Fig. 5）. Although UK has relatively good access to foreign gas from various producing countries（see Fig. 5）, it is not completely insulated against price volatility due to potential new geopolitical events or other changes in the market, such a high prices in Asia. Continental Europe imports 89 ％ of Europe’s annual gas demand. Overall, Gazprom supplies 30％ of Europe’s gas, but in many eastern states the reliance is closer to 100 ％ . Since almost half of Europe’s imports from Russia flow through Ukraine, this supply

is always subjected to being a potential hostage to politics. Although the UK does not import gas from Russia directly, apparently 6 ％ of the gas exported from Russia ends up in the UK（see Fig. 6）＊ 11. Furthermore, it is also reported that disruptions in Russian exports to Europe would limit the supply of the stocks available which would inevitably drive prices of pipeline gas and LNG significantly higher＊12. Implications of the Department for Energy and Climate Change（DECC）reports that an unconventional onshore production could mitigate the risks faced by price volatility and geopolitical factors, and also help reduce carbon emissions by switching from coal to gas in our energy mix.

3. UK’s potential for shale gas

　The initial estimates of UK shale were highly variable , 5 .3Tcf in the Bowland basin – Brit ish Geological Survey（BGS）; 26.1Tcf in the UK – EIA; 212Tcf in their licensed blocks alone – Cuadrilla, which prompted the BGS to revaluate their estimations＊7. A

series of publications from the BGS commissioned by DECC have now confirmed the gas in place（GIP） numbers for the three key areas of shale formations. According to the June 2013 BGS report on Bowland-Hodder shales in central Britain, it has between 822 –

Other

Norway

Belgium

Netherlands

Qatar（LNG）

Domesticproduction

Note：Domestic consumption ＝ total UK production-exportsSource：EIA, http://www.eia.gov/countries/cab.cfm?fips=uk

Eastern Europe, Germany,

Other Western Europe,

France,

Italy,

Turkey,

UnitedKingdom,

Source：EIA website, http://www.eia.gov/countries/cab.cfm?fips=rs

Fig.5 UK energy supply 2013 Fig.6 UK receives 6% of gas exported from Russia



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2281Tcf GIP, with central estimates of 1,300Tcf. The Jurassic shale in the Weald Basin in Southeast England has potential for shale oil, between 2.20 – 8.57 Bbbl, with central estimates of 4.4bbl of oil in place（OIP）, as reported in May 2014. Finally, the report on the carboniferous shale of the midland valley in Scotland published in June 2014, suggests GIP between 49.4 – 134.6Tcf, with central estimates at 80.3Tcf and OIP between 3.2–11.2 Bbbl, with central estimates at 6 bbl. Assuming a North American recovery factor of around 8-20 ％ ,this would indicate potentially recoverable resources of 63.5 – 458.9Tcf in the Bowland shale alone.

To put these estimates in context, the UK’s remaining potentially recoverable conventional gas resources are 52Tcf and annual UK gas consumption is 2.7Tcf＊13.　Despite all these positive accounts of estimation, until there is solid evidence from drilling exploration wells, fracking them, and testing their flow back rates, it will not be clear if the commercial exploitation of shale is even viable. For the time being it seems that the potential numbers of GIP are large enough for the government to back various legislations in order to c r ea t e the r i gh t f r ame work f o r t he s a f e and responsible exploration work.

4. Governmental support

　Ever since the drilling activity of Caudrilla caused two small earthquakes in April and May of 2011,（the company imposed a self-moratorium for fracking which was followed by the government to ban fracking in November 2011）both the government and the industry commissioned a huge number of studies regarding the safety of fracking and the potential of shale gas. Since then, the ban was lifted in December 2012 and some coord inat ion o f regu la t ion was witnessed. Since these initial attempts to better regulate the industry, the government has shown their full support by putting together the current system for regulation and monitoring（see Fig. 7）. Furthermore, in January 2014, David Cameron announced that local councils will keep 100 per cent of business rates from shale gas sites, double the 50％ previously received＊14. Additionally, the industry has committed to pledging £100 , 000 f o r commun i t i e s s i tua ted near each exploratory（hydraulically fracked）well, and 1 ％ of revenues from every production site to go to the local council. In autumn 2014, the chancellor announced a range of measures to encourage a shale gas industry in the UK. These included a £5 million fund to provide independent evidence on the robustness of the existing regulatory regime, £31 million of funding to create sub-surface research centres and the setting up of a long-term investment fund from tax revenues derived from

shale for the North and other areas hosting shale gas developments. In January 2015, the Government passed provisions in the Infrastructure Bill to simplify procedures by which the onshore oil and gas and deep geothermal industries obtain underground drilling access 300 metres or more below the surface＊15. The benefits of a booming shale industry were reported in a study carried out by the Institute of Directors in May 2013, which suggested that shale gas production in the UK could support up to 74 ,000 jobs and attract investment of £3.7 billion a year, as well as associated tax revenue, and much of this investment would be in areas with high levels of unemployment＊16. With the stakes so high, it is no wonder that there is a big push from the central government to“go all out for shale”; however, the local authorities, from whom the operator needs to get approval before any drilling occurs, have been reluctant to commit. Just recently, an application by Cuadrilla to commence drilling activity at two locations in Lancashire, detailing all aspects of the drilling which comprised of a report that reached 4000 pages long＊17 was rejected by the local authority due to unsuitable noise and traffic levels. Moreover, another app l i ca t i on to carry out se i smic and pressure monitoring in Grange Hill well, after which the well was to have been plugged and restored to greenfield status was also rejected by the Lancashire council on


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t h e g r ounds t ha t “i t c on s i d e r ed t he application to be contrary to policies in the development plan.＊18” Many experts in the industry feel that these are deliberate moves by the Lancashire council to try and b lock shale developments in any way poss ib le＊ 18 ＊ 19 . One can on ly wonder whether the authorities are reacting to the strong public protests organised by “militant g r e e n a c t i v i s t” a n d “new - a g e a n t i -capitalists”. Since the attempts to develop the shale industry in the UK, there have been swoons of activist groups pop up around the nation, with more than 200 groups to date; however the most vocal and damaging activists tend to not live in the locality. Instead, it is the high profile opportunists such as Dame Vivienne Westwood（fashion designer）and the like that seem to cause more damage than good（see Fig. 8）.

DECC issues a Petroleum and Exploratory Development

Licence (PEDL)

Operator engages in pre-application discussion with local communities, mineral planning

authorities, and statutory consulates (EA , Natural England

and English Heritage)

Mineral Planning Authority screens for Environmental

Impact Assessment

Operator submits Planning Application

Mineral Planning Authority validates, advertises and consults

on application and any Environmental Statement

Mineral Planning Authority decides application. Imposes

planning conditions

DECC Well Consent Granted

Operators drill well

Operators abandons well

Operator carries out Environmental Risk

Assessment

Operator undertakes Environmental Risk

Assessment

Views of Statutory Consultees and local communities sought

BGS Informed and Coal Authority consulted (if

needed)

Operator notifies EA of intent to drill under the Water Resource

Act 1991

Site restoration and Post abandonment

monitoring for defined period

Operator submits copies of data to the

BGS

EA issues environmental

permits

Operator applies for environmental permits

Operator notifies HSE

Source： https://www.taskforceonshalegas.uk/reports

Fig.7 Streamlined regulation and monitoring bodies.

Source： http://www.konbini.com/en/lifestyle/vivienne-westwood-sends-fracking-warning-david-cameron/

Fig.8 Dame Vivienne Westwood(fashion designer)protesting against shale.



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　With all the fuss and hype that surrounds shale gas, one would think that there had never been any history for onshore drilling or any form of fracking in the UK. In reality however, the onshore oil and gas industry in the UK has been in existence for over 150 years. There are around 2,000 wells that have been drilled of which 200 wells have been hydraulically fractured in one way or another＊ 20. In the UK today, there are 120 sites with 250 operating wells producing between 20,000 and 25,000 barrels of oil equivalent a day＊20. What is even more surprising is that UK is home to the largest onshore oilfield in Western Europe, Wytch Farm. Established in 1973 by the then nationalised BG who sold it to BP as part of its privatization process in 1984, and is now operated by Perenco since 2011. In 1997, BP completed a record breaking extended reach well of 10km, where they drilled from onshore to an offshore site under the Poole Harbour, just off Europe’s 4th most expensive real estate area, Sandbanks. Furthermore, there are more than 100 wells（including producers and water injectors）being operated from the Wytch Farm oilfield as of June 2012＊21（much like a potential shale drilling site – shale pad）, which itself is surrounded by a forest, situated in an area classified as an Area of Outstanding Natural Beauty（AONB）. All of which sounds absolutely impossible to achieve in the

current UK mind-set. There are two factors that helped Wytch Farm develop into what we see today： 1）lack of stringent regulation and 2）lack of hard-core anti-capitalist and green movements. However, even without stringent regulation and opinions from green movements, the oil field has hardly seen in major incidents or compromised any health and safety issues in the 40 years of operation - a triumph to the industry and their work ethic. The presence of Wytch Farm gives us hope that future shale developments could follow a similar model, albeit in different economic and political conditions. Despite its similarities, there are stark differences between Wytch Farm and a potential shale well pad. At a shale well pad, there will be a period of high intensity drilling and fracking, which would go on for 12-18 months depending on the number of wells being drilled from a single well pad. But once the production stage is established, visual appearance o f the pad wou ld be res tored to a greenfield status with only a few structures protruding from the ground, whereas Wytch Farm itself looks like large industrial site（see Fig. 9）. In comparison, a shale pad in production looks much more pleasing than a conventional rig that looks like a huge industrial site remaining for a decades.

5. Made in the UK

Source：（i）&（ii）courtesy of Howard Rogers ＊8

Fig.9 Visuals of Shale drilling pads and conventional drilling rig, Wytch Farm.

(i) West Virginia Shale Gas Pad – Drilling Phase (ii) Same Pad, production Phase


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6. The model for shale gas

　In order for shale production to occur in the UK and elsewhere in Europe, it is important to note that implementing a US style fracking model is not going to be possible. Nevertheless, there is also much to be l earned f rom the US exper ience , f or example , implementing more accurate sweet spot targeting in order to limit the number of wells being drilled and thereby limiting the above ground disturbance. Since the development of shale technology, many industry players have become better at targeting the sweet spots through extensive data collection and analysis. Much planning must occur for where the pad can be placed, and maximum number of wells must be drilled from one pad. Since the shale formation of the UK sha l e i s 1 0 t imes th i cker than i t i s i n t he US , multilateral wells could be implemented so that the number of well pads can be kept to a minimum. A Wytch Farm type model would be an ideal solution for the development of shale when there’s a limited area of land to drill on.

　Furthermore, UK having clear and transparent rules and regulations, strongest environmental controls, easy access to data that do not need to be translated into English and being at the heart of a major financial centre, all form a strong case for the UK to take the lead in the quest of shale gas extraction. Of course, more can be done to improve the industry, such as introducing a new regulator that would assume all the duties regarding onshore oil and gas regulations, which are fragmented among DECC, Environmental Agency

（EA）, and the Health and Safety Executive（HSE）, as well as local authorities（see Fig. 7）which was recommended by former chief of the EA, Lord Smith, who heads the Task Force On Shale Gas＊22. However, implementing such a body would probably take two years to establish, another delay the industry would

not need. Nevertheless it is true; UK has the best framework for safe , organised, straightforward development. Apparently in some Eastern European countries, the laws are interpreted in 10 different ways by 10 different people, which make it a very difficult place to establish an industry.

　Attributing to the above reasons, the UK shale industry has seen encouraging signs in the past few years, not by successful drilling, but by the vote of conf idence by investors . In June 2013 Centrica acquired a 25％ stake in Cuadrilla’s exploration licence in Lancashire; Total gained 40％ interest in IGas’s two shale gas exploration licences in Lincolnshire＊ 23 and GDFSuez bought a 25 ％ share in Dart Energy’s 13 onshore licences for £7.4m＊24. These encouraging signs however are sadly hindered by the lack of drilling activity in the UK. It has been nearly three years since the first well that was fracked, but no new wells have been fracked and tested to date. In the meantime, the operators are incurring huge costs in preparing reports for various regulators and spending much of their time and energy trying to educate the public on onshore drilling and shale gas activity. Furthermore, UK developments hang in limbo as it awaits the direction the industry would take with a labour government, if they win in the upcoming general elections in May this year. In order for the shale industry to really take off in the UK, “we need to be lucky in the first five exploration wells. We need good flow rates” – Howard Rodgers, a senior researcher at Oxford Institute for Energy Studies（OIES）. Meanwhile, Scotland has imposed fracking moratoriums＊25 and Wales is trying to follow suit＊ 26. Nevertheless, the industry awaits eagerly for the results from the much talked of 14th licensing rounds that closed applications in October 2014.



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7. The rest of Europe

　The European Union has enough gas trapped in shale to free their reliance on Russian energy supplies for about 28 years, but for now it seems that energy security is not the top priority for the EU nations, but rather it is to wipe out of the dependency on fossil fuels - an EU mantra that on the contrari ly has encouraged the use of a more dirty fossil fuel, cheap coal. Shale gas development efforts in Europe have faced much disappointment in the past few years. But although all eyes are on the UK for the next move in the shale race, other nations in Europe are more advanced in the stage of development（see Table 3）.

　France, although having the highest potential in shale gas resources in place in Western Europe, a fracking moratorium has been in place since 2011. France derives most of its energy from nuclear power, up to 75 ％ , and is often faced with excess energy, which is inevitably used to power electric cars. However, in September 2012, president Hollande pledged to cut France’s nuclear share to 50％ leaving the question open, as to how France would fill the void. Recent activity within France leads one to believe that France might be warming up to shale – a report from the parliamentary Office for the Evaluation of Scientific and Technological Choices（OPECST）supported the shale gas exploration activity highlighting that fracking has been used in France 45 times without harmful consequences t o t h e e n v i r o n m e n t ＊ 2 7 . Germany has taken a very cautious approach to shale and h a d i m p o s e d a d e f a c t o moratorium since 2011 but has recently passed a bill to allow fracking at depths more than 3,000 meters. The shale i n d u s t r y g r o u p s h a v e welcomed the move, but this ha s a l s o spa rked ou t rage among environmentalists＊28.

　Poland with its large resources in place, huge governmental support, keen interest from the locals, large investments by major players such as Chevron, Marathon Oil, Exxon Mobil, Total and ENI, was the front runner in the European race for shale and has seen the most number of wells being drilled, fracked, and tested in the region（see Tables 3 ＆ 4）. However, recent disappointments on the flow rates, difficult geology, and incorporative tax regime, have resulted in almost all the majors pulling out of Poland＊29. Despite these setbacks, the fact is that 90 ％ of Poland’s electricity comes from coal. Poland is required to switch to a cleaner resource in order to meet the European Commission’s carbon emission standards. The government has also implemented new laws and regulations that are more favourable to operate in; however, the outcomes of these are yet to be seen. In Denmark, the US Geological Survey suggested that there were 2.5Tcf of onshore gas resources in the Alum Shale . Although the government issued a moratorium on fracking in 2012, Total is allowed to continue with exploration in Jutland and Zealand, and has plans to carry out test dril l ing this year＊ 30 . Depending on these results and coupled with the experiences in other respective countries, Denmark will decided whether they are to remove the fracking

Table3Active countries of the European Union in the unconventional gas exploration, including coal bed methane and shale.

Country No. of wells No. of wells fracked No. of concessions

Denmark 1 - 2

Germany 6 1 151

Hungary 8 6 18

Romania 3 3 18

Poland 92 41 48

Slovenia 1 - 1

Sweden ＊ 37 - 47

United Kingdom 43 1 188＊： Please note that due to local geology in Sweden, wells are very shallow (150m - 350m) and that

hydraulic fracking is not needed. Source： Provided by Clean tech, Poland LLC, please refer to [email protected] or (+48)

883 307 160 for further details.


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ban or not＊ 31 Denmark is said to be energy self-sufficient for another 10 years, but are looking to boost domestic production , which includes shale gas . Furthermore, according to Nato’s secretary general, most of the protests carried out throughout Europe, especially in Eastern Europe, are said to be handsomely

funded and aided by the Russian intelligence agencies in order to maintain European dependence on Russian gas＊ 32. Such protest activities have caused many de lays in the deve lopment o f the pro jects and sometimes led to majors leaving the area. This was the case for Chevron leaving Romania.

Conclusion

　A s w e c a n s e e , E u r o p e h a s s e e n m u c h disappointment with respect to shale activity in the past few years. The sentiment for shale in Europe is clear, there will be no US-type revolution and it will not be a game-changer in the UK. According to Prof

Howard Rogers, a senior researcher at OIES, “What is needed for a US-style shale gas success is a）good geology b）a regulatory and planning system which allows quick decision-making and c）many upstream players and service companies moving quickly onto

Table4 Active companies of the European Union in the unconventional gas exploration.

Explorers activity in EU-28 between Q4 2014 and Q1 2015

Company Country of Operation Total concessions（change） New Wells

INEOS Upstream UK 9（+7） -

Gripen Oil&Gas SE 23（+1） -

Orlen Upstream PL 9 1

Palomar Natural Resources PL 4 1

AB Igrene SE 25 -

Ascent Resources SK 1 -

BASF - Wintershall Holding GmbH

DE 9 -

ConocoPhillips PL 3 -

Cuadrilla Resources PL, UK, NL 7 -

Egdon Resources UK 35 -

ExxonMobil DE,（PL） 18 -

GDF Suez SA DE, UK 28 -

Hutton Energy UK,（PL） 4 -

Nordsøfonden DK 2 -

Shesa ES 5 -

Total DK, UK 5 -

BNK Petroleum Inc PL, ES,（DE） 4（-1） -

San Leon Energy Plc PL, ES,（DE）,（SK） 15（-1） -

PGNiG PL 10（-2） -

IGas UK, DE 62（-7） -

Chevron （RO）,（PL）,（LT） 0（-8） -

Note： Concessions are decreasing mainly in Poland were some operators abounded exploration activities.Source： Provided by Clean tech, Poland LLC, please refer to [email protected] or (+48) 883 307

160 for further details.



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shale plays and drilling many wells to find the ‘sweet-spots’ and optimise drilling and completion techniques. For the UK the slow pace of b）and c）may prevent success”. For now, this seems like the sad truth in the UK and other parts of Europe.

　Yet, the fact is, UK and the rest of Europe really could do with a little boost in domestic production which could invigorate the economy, bring down CO2 emissions, provide security of supply, and most of all provide jobs to its people. Even if a US-type revolution will not take place in Europe, Europe could still benefit with even just a slow revolution towards shale developments under the conditions for the safe exploitation of the resource.

　Currently, UK is leading the way forward to safe and mindful exploration; albeit the activities of prolific green and anti-capitalist movements affect the speed of the developments both directly and indirectly. Despite what the protestors think, UK’s DECC, EA, and HSE are all working together to regulate the onshore exploration for shale gas as safely as possible. It is important to note that with these regimes in place, the UK shale gas exploration is ensuring that t h e p r o b l ems f a c e d i n t h e US r e g a r d i n g t h e e n v i r o n m e n t a r e n o t r e p e a t e d o n U K s o i l . Furthermore, the current level of public engagement that is required by the operators to perform before a project is launched（although not adequately enough, according the Task Force report ＊ 22）, ensures the pub l i c t o f e e l i n c l uded i n t he a f f a i r s o f t h e i r

neighbourhood. Public engagement is something that many operators omitted to do in the US and have now resulted in bad representation of the industry. Limited land area for drilling purposes also means that the UK would need to increase the number of wells per pad in every way possible, a form of which is already ongoing at Wytch Farm, albeit a conventional oil field. UK is therefore creating its own unique approach to shale exploration, which the rest of Europe could consider as a base model for their own developments.

　We also need to remember that European shale has turned out to be more geologically complicated than expected. Technology that worked in the US does not seem to be fit for their application in Europe. There is very little known about the shales in different areas, such as their form, how they vary, and how they behave when fracked. It is therefore integral that country based research should be well funded in order to facilitate the next technological innovation in the industry. Such research will take time, money and effort, and with the current oil-price environment, expenditure on such fundamental research will not be carried out by the industry players. 　I t i s t h e r e f o r e u p t o t h e c e n t r a l a n d l o c a l governments to push and fund fundamental research that could perhaps lead to technological innovation once again in the oil and gas industry. If UK cannot be the leader in shale production, let it at least be a leader in sha le research and the best model for sha le extraction.

＊1： Tallents A., Oil & Gas Review, May 2011, European Gas Supply & Demand, and the Outlook for Shale Gas, http：

//oilgas-info.jogmec.go.jp/pdf/4/4368/201105_043a.pdf＊2： Tallents A., Oil & Gas Review, November 2012, An Update on Shale Gas in Europe, https：//oilgas-info.jogmec.

go.jp/report_pdf.pl?pdf=201211_047_a％ 2epdf&id=4788＊3： EIA. Oil and gas industry employment growing much faster than total private sector employment http：//www.

eia.gov/todayinenergy/detail.cfm?id=12451＊4： HIS June 2012, The Economic and Employment Contributions of Unconventional Gas Development in State

Economies, ＊5： EIA, U.S. Energy-Related Carbon Dioxide Emissions, 2013, http：//www.eia.gov/environment/emissions/

carbon/＊6： EIA AEO2014 early release overview, http：//www.eia.gov/forecasts/aeo/er/


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＊7： House of Lords, Economic Affairs Committee - Third Report, The Economic Impact on UK Energy Policy of Shale Gas and Oil http：//www.publications.parliament.uk/pa/ld201314/ldselect/ldeconaf/172/17202.htm

＊8： Howard Rogers, OIES, July 2013, UK shale gas – Hype, reality and difficult questions, https：//www.oxfordenergy.org/2013/07/uk-shale-gas-hype-reality-and-difficult-questions/

＊9： EIA, U.S. remained world’s largest producer of petroleum & natural gas hydrocarbons in 2014, http：//eia.gov/todayinenergy/detail.cfm?id=20692

＊10： BBC, Dec 2013, http：//www.bbc.co.uk/news/business-24823641＊11： EIA website, Russia, country analysis, http：//www.eia.gov/countries/cab.cfm?fips=rs＊12： Telegraph, UK gas prices to soar if Russia cuts off supplies to Europe, National Grid warns http：//www.

telegraph.co.uk/finance/personalfinance/energy-bills/11191733/UK-gas-prices-to-soar-if-Russia-cuts-off-supplies-to-Europe-National-Grid-warns.html

＊13： DECC Digest of UK Energy Statistics and website（www.gov.uk/decc）＊14： BBC News, http：//www.bbc.co.uk/news/uk-politics-25705550＊15： Gov.UK https：//www.gov.uk/government/policies/providing-regulation-and-licensing-of-energy-industries-and-

infrastructure/supporting-pages/developing-shale-gas-and-oil-in-the-uk＊16： Institute of directors http：//www.iod.com/influencing/press-office/press-releases/new-iod-report-getting-shale-

gas-working＊17： According to a spokesman from Caurdrilla, mentioned in the Central and Eastern European Shale Gas Conference

2015.＊18： Cuadrilla News, http：//www.cuadrillaresources.com/news/cuadrilla-news/article/statement-from-cuadrilla-

resources-on-refusal-of-grange-hill-planning-application/＊19： Professor Paul Stevens, Chatham House, personnel communication, 2015＊20： UKOOG（United Kindgom Onshore Oil and Gas）website, http：//www.ukoog.org.uk/knowledge-base/history/

what-is-the-history-of-the-onshore-oil-and-gas-industry-in-the-uk＊21： Hydrocarbons Technology website, http：//www.hydrocarbons-technology.com/projects/wytch-farm-oil-field/＊22： Task Force on Shale Gas, https：//www.taskforceonshalegas.uk/reports＊23： BBC News, http：//www.bbc.co.uk/news/uk-25695813＊24： http：//www.bbc.co.uk/news/business-24620791＊25： BBC Online, http：//www.bbc.co.uk/news/uk-scotland-scotland-politics-31016537＊26： Wales online, http：//www.walesonline.co.uk/news/wales-news/end-fracking-wales-welsh-government-8638802＊27： Shale Gas Europe website, http：//www.shalegas-europe.eu/shale-gas-explained/shale-gas-and-europe/france/＊28： The Guardian, http：//www.theguardian.com/environment/2015/feb/14/germany-legalise-fracking-shale-gas-

hydraulic-fracturing＊29： FT Online, http：//www.ft.com/cms/s/0/ffa09b60-6036-11e4-98e6-00144feabdc0.html#axzz3VbGcnv9N＊30： Liam Herringshaw, Durham Univerity http：//theconversation.com/whatever-happened-to-the-great-european-

fracking-boom-38550＊31： Responding to Climate Change Website, http：//www.rtcc.org/2015/02/05/denmark-to-reconsider-fracking-ban-

after-total-shale-tests/＊32： FT online, http：//www.ft.com/cms/s/0/20201c36-f7db-11e3-baf5-00144feabdc0.html#axzz3VxhI1o00



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執筆者紹介

Dulee Ozawa（小澤　ドゥリー）学　　歴：筑波大学大学院生命環境科学研究科博士課程中退。

筑波大学大学院環境科学研究科修了。University of Manchester, B.Sc. with honours in Zoology with Japanese

職　　歴：2014年6月、JOGMECロンドン事務所調査員（石油・天然ガス部門）となり、現在に至る。趣　　味：家族と旅行することと旅行先の料理を家で再現すること。近　　況：最近は、体力いっぱいの2歳半の娘をいかに疲れさせるかが毎日の課題となっています。


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