London — The UK shale gas industry was given a significant boost on Monday as explorer IGas said it had observed "significant" shale gas indications at its Springs Road exploration well and the onshore industry body upgraded its shale gas production forecasts.
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In addition, UK shale gas pioneer Cuadrilla Resources said it was remobilizing its efforts at its flagship Preston New Road site in northwest England where it plans to resume hydraulic fracturing -- or fracking -- at two existing wells later in the year.
IGas said Monday it had encountered a hydrocarbon bearing shale sequence of over 250 meters, including the upper and lower Bowland Shale, with the first Springs Road well near Nottingham, saying the results represented a major advancement in the prospectivity of the UK's shale gas resources.
The results of the well come on the heels of Cuadrilla late last year resuming shale gas hydraulic fracturing in the UK for the first time since 2011 and "promising" results from IGas' Tinker Lane shale gas site.
"We have recovered high quality hydrocarbon bearing cores at our Springs Road site," IGas CEO Stephen Bowler said.
"The data gathered to date shows that there are significant prospective resources in our East Midlands acreage and is another important step for the UK onshore industry," Bowler said.
The company said that further analysis of the well was currently being conducted, which would give it greater insight into the resource potential and shale characterization. This will be used for future appraisal and development of the wider East Midlands area, it said.
The UK is expected to become increasingly dependent on gas imports as North Sea gas production declines, with IGas, Cuadrilla and others promoting shale gas as part of the solution to reducing that dependence.
Analysts were impressed by the find at Springs Road. "This looks like an excellent result, and while it is too early to speculate on potential resource volumes, the thick shale section bodes well," analysts at Cantor Fitzgerald said.
The UK shale gas industry has been building momentum in recent months following years of inactivity. Last month, fellow UK shale developer Ineos -- a partner with IGas at both Springs Road and the previously drilled Tinker Lane well -- said the results of the Tinker Lane well were "potentially hugely promising" for UK shale.
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Tom Pickering, chief operating officer at Ineos Shale, said the tests at Tinker Lane found an average level of 60.7 cf/mt of gas compared with an average for the Barnett shale in the US of 39 cf/mt.
"These are the highest readings in the UK that we have ever seen and give a glimpse of the possibilities that UK shale can provide if given the chance," Pickering said.
An IGas spokesperson said Monday that it was too early to speculate on the size of the basin, but that the results at both Tinker Lane and Springs Road were promising and that the initial Springs Road findings were on par with a "commercially viable" US shale play.
The increased activity in the UK shale gas sector comes as onshore industry body UKOOG said Monday it saw increased UK shale gas production potential.
According to a 2013 study from the UK Institute of Directors, the central forecast of shale gas production per well was 3.2 Bcf (90 million cu m) over a period of 20 years.
But, following analysis, UKOOG said these estimates had been revised upward to a central case scenario of 5.5 Bcf per well, an increase of 72%.
This, it said, was in line with the best performing US shale basin, the Marcellus, adding that for a site with 40 deep drilled horizontal wells there would be enough gas at peak to heat 500,000 homes.
"This is a very significant upgrade to previous estimates," UKOOG CEO Ken Cronin said.
Cuadrilla CEO Francis Egan said the latest forecasting showed the potential of the UK shale gas sector.
"We should not underestimate what is at stake here for the UK. We have a rich resource of high quality shale gas which would flow directly into the local grid with minimal treatment," Egan said.
"The forecast is clear that 60 [shale gas] sites could reduce our reliance on imports by 50%," Egan said.
The British Geological Survey estimates that the Bowland Shale alone could hold up to 1,329 Tcf (37.6 trillion cubic meters) of gas in place.
With a recovery rate of 10%, that would mean recoverable reserves of as much as 3.8 Tcm, enough to meet the UK's current gas demand for almost 50 years.
However, Cuadrilla and Ineos have this year complained about the restrictions on fracking, saying the regulations were too strict and were hampering investment.
The government, however, has said there are no plans to revise the current regulatory framework.
-- Stuart Elliott, firstname.lastname@example.org
-- Edited by Jonathan Dart, email@example.com