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Shale gas site selection – more than a question of geology

02 July 2015

Kieran Tames from Peel Gas & Oil looks at the role the property industry can play in the emerging shale gas sector in the North of England

With local and national elections over and a Conservative majority government now in place the shale gas industry will be eagerly anticipating an announcement on the 14th UK onshore Oil and Gas Licensing Round. These, alongside the 13th round licences, will determine where shale gas exploration can take place in the UK over the next 5 years.

Having successfully acquired a Petroleum Exploration and Development Licence or ‘PEDL’, licence operators are challenged with selecting the most appropriate well pad site within their licence area. Selecting the right site involves a complex interaction between a number of factors. Firstly, the geology.  Licence operators will want to identify a site that sits above a shale ‘sweet spot’. This means locating a shale deposit with the appropriate geological structure and mineralogy and where there is enough organic content that will be mature for commercial amounts of gas or oil. Once they’ve found this sweet spot, they then need to prove that the reserves are recoverable.

However, geology is only part of the picture. Greater surface activity brings property issues into a much clearer focus than traditional offshore oil and gas exploration. A well pad site needs to meet environmental and social acceptability. The Infrastructure Act has set out further stringent regulatory measures which control where and how exploration can take place, for example not within national parks and other protected areas, which have yet to be fully defined.  The location of a well pad will also need to take into account a wide variety of environmental considerations including ecology, hydrology, proximity to residents, traffic impacts and air quality, to name but a few. When considering where to locate a well pad, licence operators also need to consider the local political and community environment.  This could perhaps be the most difficult and contentious obstacle to well pad development, therefore robust community engagement will be key.

Finally, there are commercial and logistical aspects to consider. Finding and acquiring sites that are available is the first hurdle, but these sites also need to be close to the grid or potential gas users. There are certain parts of the country where the infrastructure is in place to support a shale gas industry, including roads and grid connections, which would seem the logical place for licence operators to locate.

Given the potential complexity, compromises on site selection are likely to be required and it is foreseeable that operators will not be able to position their sites precisely where they may want them from a geological point of view. 

It is in this context that the property industry will clearly have an essential role to play - and should be poised to take advantage.  For while well pad selection itself will bring a raft of property-focused challenges and opportunities, unlocking the development of a thriving, co-located supply chain could underpin northern growth across an expansive list of sectors.

A recent report by economists AMION Consulting highlighted the Ocean Gateway – an area stretching from the Port of Liverpool to Manchester – as a major opportunity to create a shale gas supply chain hub due to its existing infrastructure assets and proximity to the Bowland Shale area.

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