What does the announcement by IGas actually mean?


  • IGas claims double previous estimate of 4.6 tcf
  • Higher bound estimate for gas in place
  • Actual producible gas is small fraction of this
  • Probably less than a month of gas consumption
  • No chance of even slowing North Sea decline
  • Would require 1000’s wells to produce
  • Not comparable to Polish figures
  • Companies chasing investment cash with spin

On the 2nd April 2012 Island Gas (IGas) Energy announced that after drilling a test well at the Ince Marshes site in Cheshire they believe that there may double the amount of shale gas they initially believed under the acreage they have licensed in the north west of England. The previous estimate was 4.6 trillion cubic feet (tcf) or 130 billion cubic metres (bcm). Here we look at some of the small print that is actually lurking behind these (and similar) numbers.

Diagram of various categories of petroleum. The “initially in place” category contains everything without regard for whether it is economic to extract.

  • It should be noted that the motive behind this announcement by IGas appears to be tout for money/expertise to explore for shale gas in their license areas (IGas is primarily focus on Coal Bed Methane). IGas therefore have considerable interest in painting as rosey picture as possible. This is a general trend in an industry, where almost all their money is coming from investors rather than from selling gas.
  • The 4.6 tcf figure is “gas initially in place” (GIIP) i.e. an estimate of the amount of gas that is trapped in the shale layer, not the amount that could actually be produced. Getting gas out of shale rock is not easy, hence the need for massive slickwater hydraulic fracturing, and even with these techniques the amount of gas recovered can be 10% or less.
  • It should be noted that the 4.6 tcf figure is the highest estimate (3C) of gas in place. The estimates have been worked out in three bands and there is only a 10% chance that the gas in place will be equal to or exceed this figure. The middle estimate (50% chance of being higher or lower) was 1.1 tcf and the lower estimate (only 10% chance of being lower than that) was 0.089 tcf.
  • The combination of the 2 previous points means that a more reasonable estimate of ultimately recoverable gas would be 0.22 tcf (or 6.2 bcm), assuming that IGas’s numbers are vaguely realistic.
  • Cuadrilla Resources have publicised an estimate of 200 tcf for the gas in initially place in their license blocks in Lancashire. However they do not appear to have published any details of how they come to this figure or what it means in terms of probability. If they are using similarly optimistic figures to IGas, then the gas likely to be actually recoverable gas might be around 5 tcf. The British Geological Survey (BGS) has estimated that the whole Pennine Basin of 17,500 km2 might produce 2.1-4.7 tcf of shale gas, so even 5 tcf seems very optimistic.
  • In comparison the annual gas consumption in the UK is about 3.5 tcf (100 bcm) per year so the 0.22 tcf would only supply the UK for about 23 days. Even the upper limit of what the BGS are predicting for the whole Pennine Basin (4.7 tcf) or the 5 tcf which Cuadrilla appears they might be claiming, is little more than a years supply. The total amount of gas likely to be produce from the UK sector of the North Sea is 100 tcf (2800 bcm) of which 81 tcf (2300 bcm) has already been produced.
  • If, for the sake of argument, IGas could produce 4.6 tcf of gas (or a number of companies could produce the 4.7 tcf that the BGS has estimated as an upper bound for the Pennine Basin) that would require drilling and fracking something like 1500 wells, a similar number to all the petroleum wells that have been drilled onshore in the UK in the last 100 years (only one of which has been has had a large slickwater frack performed on it, which resulted in 3 earthquakes that damaged the well).
  • In reality no infrastructure exists in the UK to drill these shale gas wells and even if there was it would take may years for this number of wells to be drilled, so the the possibility of any measurable production any time soon would be pretty slim. The chances of shale gas being capable of even significantly slowing the decline in the North Sea gas production is pretty negligible. The UK sector of the North Sea still produces around 2 tcf (50 bcm) of gas a year but it is declining at a rate of roughly 100 bcf (3.3 bcm) a year. More than 100 shale gas wells a year would need to be drilled to offset one years worth of decline and the nature of shale gas production means that number of wells would have to be continued to be drilled every year just to sustain that 100 bcf of production.
  • The suggestion that these numbers have somehow pushed the UK ahead of Poland in the shale gas league are also very disingenuous. The most recent assessment of shale gas in Poland by the Polish Geological institute while quite likely very optimistic (346-768 bcm) are at least meant to be recoverable resources rather than gas in place. While these numbers do include large offshore areas that seem very unlikely to be ever worth exploiting the onshore only estimate is 230-619 bcm. The comparible likely recoverable resource for IGas would be more like 6.2 bcm which is not particularly impressive. Even taking Cuadrilla’s number at face value would suggest only 140 bcm of actual recoverable gas, but this number is extremely uncertain.
  • It should also be noted that IGas seems primarily interested in Coal Bed Methane production for which they have estimate GIIP of 9.1 tcf, of which around 1.7 tcf might be recoverable. They have three multi-lateral wells drilled at their site at Doe Green, near Warrington, which they are presently in the process of de-watering. As far as IGas is concerned, the main threat to the people of north west England appears to be from expansion of their CBM activities rather than any hypothetical foray into shale gas production. Note significant CBM production would also require hundreds or thousands of wells with all the caveats mentioned above.

The overall picture that presents itself with these sort of announcements is of a mass of spin aimed at keeping investment cash flowing. The actual possible gas reserves behind the inflated numbers are too low and could not be produced fast enough to have any measurable effect on the energy picture in the UK. However due to the hugely intensive nature of unconventional gas production even limited attempts at production would have extremely negative consequences for the communities and the environment.

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