The Russia-Ukraine war and its impact on energy prices have pushed the UK government to reevaluate the prospect of hydraulic fracturing to produce shale gas domestically.
The decision announced this week comes more than 2 years after UK regulators effectively banned the tight-rock stimulation technique.
Any potential policy reversal will hinge on the work of the British Geological Survey (BGS) which will “advise on the latest scientific evidence around shale gas extraction,” according to a government statement. The BGS is expected to submit its findings by the end of June.
“While shale gas extraction is not the solution to near-term price issues, it is right that all possible energy generation and production methods are kept on the table following the unprovoked invasion of Ukraine by President Putin’s regime,” read the government statement.
The UK imports less than 5% of its natural gas supply from Russia, but like the rest of Europe the nation has been faced with soaring gas prices since last year and especially since the outbreak of the war in Ukraine. This week, UK gas futures contracts for May were trading above £233 ($304 USD) per 100,000 BTUs, representing over a 450% increase year-over-year.
An indefinite moratorium on onshore hydraulic fracturing was ordered in November 2019 after the UK Oil and Gas Authority (OGA) published a report that found existing technology was unable to predict induced seismicity, or tremors, that were the result of subsurface stimulation.
The report was prompted by a magnitude 2.9 seismic event that likely occurred as the result of activating a previously undetected strike-slip fault in August 2019. The small earthquake occurred during the hydraulic fracturing of a multistage horizontal well operated by Cuadrilla Resources in the northwest county of Lancashire.
The BGS will examine if there are new methods for predicting or reducing the risk and magnitude of seismic events in Lancashire as well as other parts of the country. Further, the BGS will consider whether such methods are applicable to the UK’s geology and suitable to its relatively high population density.
Other key objectives include an assessment of how induced seismicity as the result of hydraulic fracturing compares to other industrial activities, such as coal mining and construction, along with a review of whether current definitions of “safe thresholds” are still justified.
The UK government highlighted that the BGS review will not involve the drilling of new test wells or seismic monitoring but instead will be “a desk-based exercise.”
Cuadrilla Responds
The UK government issued the first signal that it may soften its position on hydraulic fracturing on 31 March when it lifted an order for Cuadrilla to plug and abandon its two horizontal gas wells by the end of June.
The two wells are the first and only to be hydraulically fractured onshore in the UK and will instead be temporarily abandoned until at least June of next year. Cuadrilla concluded that the initial flow tests of both wells showed “the presence of a very high-quality natural gas resource” but that the seismic event and subsequent moratorium prevented it from confirming whether the wells are capable of commercial production.
The UK-based production company issued a response that was both supportive and somewhat critical of the recent government decision to review its policies around seismicity.
“The government clearly recognizes the huge potential that shale gas offers this country, and this review may be a tentative first step towards overturning the moratorium and exploiting that potential,” Francis Egan, CEO of Cuadrilla, said in a statement.
He added, "Anyone who has been following the science since 2019 will be surprised if the government in fact needs three months to take stock of the clear evidence that already exists."
Egan also pointed to the conclusions reached in a technical report commissioned by the OGA and published in 2020.
The independent analysis within the report concluded that the seismic events recorded during the stimulation of Cuadrilla’s first well in late 2018 were “practically imperceptible to people at the surface” and that the classification of the largest seismic event on the second well—the magnitude 2.9 tremor—“was difficult to justify.”
Authors of the technical report offered several recommendations for improving seismic monitoring and magnitude analysis.
However, the report also concluded that the hydraulic fracturing of the second well led to multiple seismic events that “were widely felt” and that the magnitude 2.9 event was reported by local residents to have caused cosmetic damage to buildings, i.e., plaster and wall cracks along with falling stones.
Easing Up on Red Lights?
Separate analysis by technical experts has criticized the UK regulatory system which uses the “traffic light” approach to seismicity.
Though this is a widely accepted approach to mitigating induced seismicity, the UK’s version issues a red light—or a mandatory shutdown of operations—when seismicity above magnitude 0.5 is detected during hydraulic fracturing operations. Such small magnitude events are termed as “microseismic” and are considered to be of minimal risk to people or property.
In comparison, regulators in the US state of Oklahoma, which saw hundreds of earthquakes caused largely by saltwater disposal well activitylast decade, uses a traffic light system that calls for injection operations to shutdown if they are linked to a seismic event registering at or above a magnitude 3.5.
