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Allowing some fracking keeps Scotland on track for a much bigger prize

The surge of interest in British shale oil and gas has focused on central Scotland in recent days. A forward look at national planning to 2019 was published by the Scottish government on June 23. It has…

Shale deposits in West Lothian. Scottish Shale, CC BY-SA

The surge of interest in British shale oil and gas has focused on central Scotland in recent days. A forward look at national planning to 2019 was published by the Scottish government on June 23. It has been followed by the release of a British Geological Survey (BGS) assessment of unconventional resources in place.

From the historical evidence, Scotland had good prospects in shale hydrocarbons. The region west of Edinburgh created the oil shale industry of James “Paraffin” Young, who mined organic shale from two-metre-thick seams. He refined a multitude of products from oils to soaps, which lit and cleaned his customers.

Along the way Young invented the first incarnation of the vertically integrated oil company, from resource to consumer, which still makes multinational profits today. Central Scotland also has a history of small-scale gas production, from coals and from isolated conventional sandstones.

Central Scotland v Bowland

So clearly a hydrocarbon system has been “worked” in the past. But even before the BGS report we knew from the geology that the 2km to 4km thicknesses of Bowland shale in England was not present, and the geographic area was smaller. Sure enough, the report indicates that we are not now heading for a new North Sea-style oil rush as predicted by some commentators for the “large and uninhabited and desolate areas” of the Bowland basin in Lancashire, Yorkshire and Northumberland.

Instead, Scotland looks more like a slow-burning fuse leading to a potentially useful, but less-than-spectacular outcome, like the Weald in Kent. Is exploitation of these Scottish shale oil and gas deposits worth the effort, and can it be achieved with minimal environmental and community impact?

The estimate of resources in place by the BGS is smaller than that for Bowland –- 80.3 trillion cubic feet of gas (compared to 1300 trillion cubic feet in Bowland) and six billion barrels of oil (versus 4.3 billion in western Bowland). This Scottish shale oil is potentially the real prize, being at shallow geological depths and in restricted geographic areas.

As with all such estimates the potential recovery rate is unknown. It is typically taken to be 10% of the hydrocarbon present. For gas that means about 20 years' supply for the entire Scottish requirement of current gas use -– or more realistically maybe 15% of Scottish supply for 100 to 140 years. It is also worth bearing in mind that the current reports are focused only on central Scotland. Potentially suitable geology exists in small or thin quantities around the offshore Clyde and Forth estuaries, the Moray Firth, Orkney, and the inner Hebrides - which could potentially supply gas for local use.

Divergence

The Scottish government has control of surface land use, environmental regulation, and planning – although ownership and exploration of deep hydrocarbons remains with Westminster. Not surprisingly given the different approaches to energy from the two jurisdictions, Scotland looks to be heading down its own route here. Rather than the “most favourable world regime” to encourage drilling and production promoted for England, the Scottish planning approach so far is more cautious.

Dawn for unconventional hydrocarbons in Scotland? Calin Tatu

The Scottish government’s planning proposals have been influenced by experience with onshore wind developments. The proposals include negotiating on a case-by-case basis to leave “buffer zones” between a drilling site and the nearest human residents; specifically enforcing dialogue and consensus with local communities; robust risk assessments; and much more explicit protection for wild land, including a “green network” in central Scotland.

None of these hurdles are particularly tough or unusual. Any reputable developer used to shepherding onshore wind proposals through planning in Scotland would expect all of them. Yet it does seem to signal that Scotland is heading towards a more environmentally inclusive treatment of unconventional hydrocarbons than the aggressive push for speed delivered from Westminster.

The Scottish requirement in practice

How then would a considerate and wise developer attempt to proceed? The first essential would be to gain the exploration rights, so we can expect to see some competitive interest over bidding for perceived hot spots in the forthcoming 14th onshore licensing round.

Then there is a need for real and specific information. In spite of its long history of coal mining, there is very little modern information in central Scotland from boreholes recovering rock core, or regional seismic reflection images deeper than 1km, so surveying and exploratory drilling is probable (and has taken place to a limited extent already).

Developers will have a mountain to climb in terms of providing information to the affected public – who in many cases have already been heavily conditioned by environmental interest groups and scary stories from parts of the USA with lax legislation.

While several boreholes in central Scotland have already been fracked, it’s clear that perceptions have changed. Much better surveying, information, and monitoring of existing baseline conditions will be required before any serious commercial operation gains consent.

Supposing that local public consent is achieved, is it “right” to extract and use shale hydrocarbons? A report in 2013 by the chief scientist of the UK department of energy and climate change made clear that there is no guarantee that unconventional hydrocarbons will reduce the UK’s carbon footprint, and indeed are likely to increase the world’s global carbon emissions.

And if “fugitive” leaks of methane occur from poorly engineered onshore drilling and production, the reported national emissions of Scotland could increase. That’s a difficult situation for a country seeking to deliver the world’s most ambitious carbon reductions. So carbon cleanup has to be an essential part of the deal.

Scotland’s options

There would seem to be three main options. First, the English model – drill and extract as fast as possible, using multinational corporations as the workforce, and hope that the lower-cost energy and taxes on production are a sufficient recompense.

Second is a conditional acceptance that extracting a fossil resource for a limited timespan could provide a one-off injection of wealth into a community, which could enable development of genuinely sustainable industries.

That might include considering that the chances of keeping a skilled petrochemicals industry with Ineos at the Grangemouth petrochemical plants and refinery complex would benefit from the security of lower-cost feedstock for the next decades (Ineos recently signed a deal to import fracked gas from the US from 2016-17).

Grangemouth’s petrochemicals plant produces two million tonnes of products annually, so if Scotland’s produceable shale oil were directed to Ineos, that is a 40-year life of low-cost feedstock. The price of feedstock is 50%-70% of bulk chemicals costs, so that would enable a globally competitive site to continue operations.

Using shale oil in industry could also solve an emissions problem, as fitting carbon capture onto these centralised larger industrial units makes Scottish unconventional oil production a low emissions proposition, secure against future climate legislation. By contrast, extracting shale gas to burn for heat and power looks like a low value proposition, with hard-to-control extra emissions.

Or third, Scotland could choose to make a divestment statement and keep that fossil carbon in the ground. Option two provisionally looks most wise to me. Knowledge of, and confidence in, an assessment, drilling and extraction system can be developed slowly during five to 10 years of preparatory and test drilling investigation work, required before any production could get underway.

Not only does this potentially benefit the likes of Grangemouth, it also establishes a system for what comes after shale gas and oil – underground coal gasification – where very large Scottish resources are probable in the upper, mid and outer Forth, the Clyde and Canonbie. Drilling to convert those coals into gas deep below ground needs even more work to develop, but could provide domestic carbon resources into the medium future, potentially replacing the North Sea.

Being able to extract that much fossil hydrocarbon requires that environmental quality and carbon cleanup are essential, and are explicitly built in to any proposals. So if Scotland starts that now with shale oil, and keeps its renewable ambitions intact to develop home-grown secure low carbon electricity, the direction of travel could be about right.