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Fracking well
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Third Energy has no idea if fracking is viable in North Yorkshire

According to the mainstream media, UK fracking is back in business.  The decision by North Yorkshire Council to approve an application for further testing of the KM8 well that was drilled in 2013 was reported as the first UK approval for fracking since 2011.  From the coverage, you would be forgiven for imagining that convoys of fracking trucks were already on route to the sleepy North Yorkshire village of Kirby Misperton.  However, nothing could be further from the truth.

The biggest immediate problem facing potential UK frackers is that nobody knows for sure if there is any recoverable shale gas beneath the British Isles.  Even Third Energy – the company that was granted a testing licence – admits that it has no idea what lies beneath the KM8 well.  Hidden amidst the glossy PR announcements on the company’s website is the following admission:

“The purpose of this application is to establish if the gas seen in some samples in this hybrid sandstone shale formation can be made to flow, at what process conditions and for how long. If this flows then we will need to assess how it performs for some months before making any conclusions.” (My emphasis)

This amounts to a big ‘if’.  While nobody has disputed the existence of gas bearing shale formations beneath Britain, critics of fracking have pointed out that unlike the big US shale plays, British geology will add so many additional challenges (such as small fault lines preventing the pressures needed to fracture the shale) that it may yet turn out that no gas can be physically recovered.  There are huge differences between the British Geological Survey estimates (on which UK government policy is based) of how much shale gas might lie beneath Britain and more sober evaluations of how much could be technically extracted.

This, of course, is only the beginning of the industry’s problems.  It is one thing to get the gas out of the ground.  It is an altogether more difficult task to extracted at a price that allows the companies involved to pay off their debts and make profits for their shareholders.  At today’s prices, even if a sufficient flow of gas can be extracted, it is unlikely that it will be able to compete with the North Sea or with LNG shipped in from Qatar.  Remember too that the KM8 well is probably the most promising spot in England for producing shale gas – if it can’t be done there, it can’t be done anywhere.

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