David Dewar, The Arrival of Fracking
A new word – fracking – has gradually entered into the English language. It is short for hydraulic fracturing, a drilling process by which gas can be produced from “tight” rock several thousand feet underground. The process requires water, together with sand and various chemicals, to be pumped underground to create enough pressure to release the gas from the rock. The tight gas can then flow back to ground level with the water and residual chemicals. The UK government is keen to exploit fracking as a means to exploit shale gas reserves which are located in central Scotland and a broad band across northern England. These potential reserves have been independently estimated to be around 26 trillion cubic feet i.e. four times what remains of the UK’s North Sea proven reserves. However, drilling companies which have been given licenses to drill exploratory wells have repeatedly run into stiff and successful opposition from protest groups which oppose any shale development on environmental grounds. Key concerns revolve around process water seeping into underground aquifers and minor earth tremors due to underground rock movement.
In the US where the fracking process has been successful and largely accepted by the US public the impact on gas production and associated oil production has been remarkable. In little more than a decade shale production represents more than half of the US total oil and gas output. In global terms that means more than 10% of gas and 7-8% of oil. It is this “shale revolution” which other countries like Russia, China, Argentina and Saudi Arabia are seeking to replicate. The steep increase in US tight oil and gas output has led to exports of gas and oil as well as a surge in the rate of domestic oil refining. As a result the UK has become a new export destination for US oil and gas exports. Imports of ethane gas for petrochemical feedstock are now 1 million tonnes per year while fuel products like diesel and jet kerosene total around 4mtpa and seem likely to rise. It is the UK government’s hope that domestic fracking would be able to eliminate these US imports and also imports of methane gas from Europe, Qatar and Russia in order to provide a more secure supply for local power stations.
David Dewar is an oil and gas consultant based in London. His services include leading or supporting strategy and business development projects and providing advice and insight on topical issues.