Massive gas find renews shale debate in U.K.

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Britain's long-simmering debate about the future of shale gas has been shaken up by a new report indicating that one large deposit could contain enough natural gas to make the country self-sufficient for decades.

The announcement came Monday from IGas Energy PLC, one of a handful of companies exploring Britain for shale gas.

London-based IGas said its drilling in northwestern England indicates a deposit containing at least 15 trillion cubic feet of in-place gas, and as much as 172 tcf. This was far higher than IGas's original estimate of nine trillion cubic feet.

IGas, which is 20 per cent owned by Calgary-based Nexen Inc., has been drilling in the Bowland basin, a large rock formation that stretches across much of England. Another company, Cuadrilla Resources Inc., has been exploring the same basin in a different area and has already announced that it has located 200 tcf of in-place gas.

IGas chief executive officer Andrew Austin said the entire basin could contain 500 tcf. "Even if the industry can only extract a fraction of that, combined with North Sea reserves, it could make the U.K. self-sufficient in gas for decades to come," Mr. Austin told the BBC on Monday.

Britain currently uses about three tcf of gas annually and imports roughly half that amount. Typically about 10 to 15 per cent of in-place gas can be extracted, meaning that if the Bowland is as rich as Mr. Austin suggests, it could produce at least 50 tcf.

This is nearly 10 times the British Geological Society's estimate of all recoverable shale gas in Britain. The society has calculated that the country has 5.3 tcf of accessible shale gas; however, it is expected to produce a higher estimate this summer.

The IGas news is certain to add to an already heated discussion in Britain.

While shale gas has revolutionized the energy sector in much of North America, Britain and Europe have been far more cautious. In Britain, the government has been trying to balance the need to find alternative sources of energy with growing environmental concerns about hydraulic fracturing or fracking, the technique used to extract the gas that involves pumping water, chemicals and sand at high pressure into the rock to release the gas.

Many environmental groups oppose fracking and the public has not been entirely sold on it, either. So far Cuadrilla has been the only company fracking in Britain, and it had to shut its operations two years ago after the drilling caused two minor earthquakes. The government has permitted drilling to resume, but the incident raised concerns across the country and sparked protests in many communities.

A recent parliamentary report also raised doubts that shale gas will be nearly as big in Britain as it is in North America. A report by the House of Commons energy and climate change committee questioned whether Britain's shale gas deposits are economically viable and capable of generating enough supply to substantially lower gas prices.

"It is unlikely that the U.S. experience will be directly replicated in the U.K. because of differences in geology, public attitudes, regulations and technological uncertainties," the report said.

The committee also cited problems in Poland. Original estimates put the country's recoverable shale gas deposits at 187.2 tcf. The figure was later slashed to 12.36 to 27 tcf, because of a series of issues that made extracting the gas too difficult and costly.

Others have been more upbeat, however. A study by the London-based Institute of Directors predicted that developing shale gas would create 74,000 jobs and help cut Britain's carbon dioxide emissions by at least 8 per cent.

The government has also taken a new interest in shale gas, offering tax breaks to fracking companies and promising cut-rate gas prices to communities near drilling sites as an incentive to get them onside.

"I want Britain to tap into new sources of low-cost energy such as shale gas," George Osborne, the Chancellor of the Exchequer, said during his last budget speech.