The United Kingdom Shale Gas Market (Historical Report Series)

The UK is a net importer of natural gas and has been a net importer since the 1970s. The only exception was a period in the mid 1990s to mid 2000s when production overtook consumption and new natural gas discoveries were reported. Since then natural gas production has been falling dramatically along with natural gas reserves. The R/P ratio for gas reserves in the UK is reported as 4.9 years.

In 2009 natural gas accounted for 47% of consumption as natural gas been increasingly part of the energy mix. The replacement of coal-fired plants with natural gas has resulted in 38% of primary energy consumption from natural gas.

LNG counts for a quarter of imported gas, and Norweigan imports for over half of all imports.

These imports could potentially be replaced by domestic unconventional gas production including shale gas. The Department of Energy and Climate Change has identified the best onshore shale resources as the Upper Bowland Shale of the Pennine Basin, the Kimmeridge Clay of the Weald Basin and the Lias of the Weald Basin. Many of these sites are located near well-protected beauty spots which makes gaining approval for shale gas projects extremely challenging.

Development of shale gas has been slow. Only three onshore oil and gas licences were awarded to shale gas projects in the 13th Round of Onshore Oil and gas licensing in 2008. The furthest along is the Preese Hall site owned by Cuadrilla Resources, where one exploration well has been drilled.

iGas Energy is the main developer of unconventional gas resources and has identified potential shale and coal bed methane resources in the UK. In 2005 its subsidiary, IGL, entered into a joint venture agreement with Nexen in Canada, which has experience developing coal bed methane. Based on the country’s current projects, NRG Expert expects that coal bed methane will be the company’s main focus for the foreseeable future.

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