British Shale Gears Up for Major Milestone

A UK company is going where no one has gone before, as it prepares to drill the country’s first commercial shale well in the hopes of starting a shale boom that Britain can call its own. The FT reports:

Cuadrilla hopes to start drilling the first of four horizontal shale gas exploration wells at its site on a farm near the village of Little Plumpton soon. A pilot well will be drilled to approximately 3,500 metres deep. Horizontal wells off it will follow at depths of between 2,000m and 3,500m. […]

Lorries brought a drilling rig to the Lancashire site of shale gas explorer Cuadrilla during the early hours of Thursday under police escort, before anti-fracking activists could block the company’s main gate.

The UK has plenty of shale gas—some 1.3 quadrillion cubic feet of it, at last estimate. But local opposition and concerns over drilling’s impacts on communities has kept that gas in the ground. Unlike a number of other European countries that have failed to replicate America’s extraordinary success in shale formations, the resource isn’t the problem for Britain. Rather, the country’s higher population density (as compared to the United States) has made NIMBY concerns all the more pressing.

Compounding that is the country’s lack of mineral rights for landowners—if you own property in the UK, you don’t necessarily own what’s underneath the surface, so you can’t negotiate comfortable deals with shale drillers to compensate you for the disruption of fracking (which, again, is a contrast to the United States where landowners do retain mineral rights and therefore have an incentive to extend invitations to frack).

The British government has tried to get around this, thus far without much success. David Cameron promised affected communities £100,000 and a 1 percent cut of ensuing revenues, but that wasn’t enough to stop protests at exploratory drilling sites. Last August, Theresa May announced the formation of a Shale Wealth Fund for fracked regions, paid for by taxing the companies doing the fracking. That still doesn’t seem to be doing much to sway public opinion on the issue.

But the nascent British shale industry yet grows, albeit slowly, with three companies pursuing exploratory wells. If Cuadrilla can successfully demonstrate the commercial viability of this new well, fracking could start to gain momentum in a country that badly needs some good domestic energy news. We’ll be watching.

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