Accessability Links

Blog: Too Soon to Join the Fracking Fraternity?

Would the UK government’s plans to exploit the country’s shale deposits accelerate the decommissioning of the North Sea?


The world is awash with cheap oil (although no-one seem to have told my local petrol stations) and high-cost areas such as the North Sea have had a troubled year with the downturn.

Whilst I can partially understand our government’s plans to follow the revolution onshore in the USA, over here in the UK what would that mean for the North Sea?

Over 6,000 square miles of the UK have been earmarked for Shale gas exploration and Westminster believe this would create hundreds of jobs and secure the UK’s gas supply for many years to come.

It probably would, but, choose a full throttle approach and the effects would certainly be felt under the cold waters of the North Sea, where in this low price environment only the very best fields remain cost effective.

Going full steam ahead to exploit “cheap” gas in the UK can only lengthen the current negative effects on the region.

Decommissioning was a word hardly uttered at $100 a barrel. Fields were kept on stream using expensive Enhanced Oil Recovery techniques but, in the current climate, operators are shying away from high cost environments and looking to balance the books wherever possible.

Investment still continues in some areas, but with some of the stalwart fields of the North Sea heading for their twilight years, the addition of “cheap” UK gas supplies can only accelerate their demise.

In the calendar year to date, 11 North Sea wells have been drilled, compare this with 29 in 2013 and 77 in 20072 and decline in activity is immediately apparent.

In contrast to the USA, the effects felt of this scenario are lessened because the Gulf of Mexico is a far less mature region for oil and gas exploration. Large scale deep-water discoveries are still economically viable, but, having said that, offshore drilling activity has certainly reduced.

No-one quite knows how long this depression will last but, with various CEOs reportedly planning for a substantial period of low prices, surely new investment in areas like the North Sea will take a back seat and decommissioning will take a greater role.

Now decommissioning is a crucial part of the industry and will of course always happen once fields have reached the end of their life. I am simply postulating that a full blooded UK shale gas revolution would accelerate this profoundly and have immediate detrimental effects on our long standing offshore industry.

One of the chief advantages to North Sea development is the already existing, extensive offshore infrastructure. If this is removed then those advantages disappear.

Whether that would drive Scotland to independence is a debate for another day.

Surely Westminster’s focus should be on helping our offshore industry rather than accelerating its decline? The UK’s onshore reserves have been there for millions of years and are not going anywhere fast.

There will be a time more suited to exploit these (and we will probably be grateful for their existence) but here and now in this environment, it simply can’t be time to join the fracking fraternity.

References
1 - Telegraph
2 - Gov.UK

Written by Mark Whales - Senior Consultant, Drilling & Reservoirs





More Energy News: