London, 22 September 2011

Frost & Sullivan: The buzz in the European gas sector was given a further boost with the announcement by Cuadrilla Resources that preliminary drilling results close to Blackpool, Lancashire, indicate approximately 200 trillion cubic feet (TCF) of shale gas reserves.

Analysts expected shale gas would be found – Blackpool sits on one of three major shale gas basins in Europe, known as the Carboniferous marine basin, which stretches across England, the Netherlands, North West Germany and South West Poland. But the size of the find was more than expected. Based on a reasonable assumption that 20% of the gas is recoverable, this means that the UK has gained 40TCF of gas reserves. This comes just six months after the EIA estimated that the UK had 20TCF of technical recoverable shale gas reserves in the entire country (the 40TCF comes from just one basin).

To add further context, the UK’s gas reserves have been declining for some years now and the country is becoming increasing dependent on imports. The remaining reserves in the North Sea are estimated at 9TCF, which would meet UK gas consumption for three years. This find means that UK reserves have technically now increased by 400%.

These numbers could be revised further – it is likely that other players in the UK will now accelerate drilling programs. Technological advancements could mean that more of the 200TCF found could be recovered – a 40% extraction rate would double recoverable reserves to 80TCF.

This discovery is also likely to provide a boost to exploration in Europe. France has banned hydraulic fracking, the process used to extract shale gas, but Eastern European countries have had no such qualms. Poland is thought to sit on reserves that could make it a major gas player.

The size of this UK find should not actually be surprising. The truth is that no organisation in Europe can forecast reserves with a reasonable degree of certainty because adequate geological analysis has not been carried out and this takes time; the industry is much less developed than the US. But if results like Cuadrilla’s keep coming in, shale gas could well prove to be the energy game-changer in Europe that it has been in the US - and this would have far reaching implications beyond just the energy sector.

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