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The very worst US fracking practice of all arrives in the UK

Potential investors in UK fracking were recently advised that IGas Energy plc has a staggering 11 trillion cubic feet of recoverable UK shale gas within its portfolio.  The claim comes after an assessment by “independent” consultants DeGolyer & MacNaughton, which claims that there is a total of 102 trillion cubic feet of shale gas in place across IGas projects.

The claim will come as news – but not surprise – to anyone who has been following the progress of the shale Ponzi scheme.  This is because to date, nobody knows if there is any recoverable shale gas beneath the British Isles.

A recent article in Scientific American refers to the results of two academic studies of UK shale formations:

“According to a 2013 assessment by ARI, UK shale holds 17,600 bcm of gas. Only 728 bcm of this is judged to be technically recoverable: if that could be profitably extracted, it would satisfy the United Kingdom’s gas needs for about a decade…

“The BGS estimated that the three shale plays it has assessed so far hold around 39,900 bcm of gas, with an uncertainty range of 24,700–68,400 bcm. This is more than the ARI estimate, but that study only considered the most promising rock. The BGS did not attempt to estimate how much of that gas would be technically recoverable.”

If the British Geological Society study is correct, UK shale deposits as a whole contain 1,400 trillion cubic feet; which would be in line with the IGas Claim.  However, the BSG – who have been criticised for being too pro-fracking – concede that for the moment, nobody knows if there is any recoverable shale gas:

“A better understanding of the shale gas resource, and the amount of gas that is potentially recoverable, will come from further geological research, such as that carried out by the BGS.”

Indeed, the Scientific American article is highly critical of the way the BSG research assumes that UK and US shale deposits are the same:

“The two nations have different geological histories. The United States has large deposits of shale that are not too thick and have been folded little over time. The shale in the United Kingdom is more complicated, says petroleum geoscientist Andrew Aplin of the University of Durham, UK. ’It’s been screwed around with more’, creating more folds and faults.”

The ARI study is regarded as being closer to reality.  If correct, this would put the total resource for the whole of the UK at 600 trillion cubic feet; of which, 25 trillion would be “technically recoverable” (not to be confused with being profitable).  If this is the case, then IGas are claiming to be sat on nearly half of all of the recoverable shale gas beneath Britain – a highly implausible claim.  And, indeed, IGas concede (in their final paragraph) that:

“D&M calculated between US$195mln and US$277mln of future cash flows for IGas’s net reserves – and that’s despite IGas having seven fields that presently have zero reserves due to oil prices that render them uneconomic.”

That is, the recoverable resources that they have reported to the UK authorities amount to a big fat zero.

So where does the 11 trillion cubic feet figure come from?  To all extents and purposes, it might just as well have been arrived at by getting someone to walk across the Bowland shale region with a dousing rod.  Indeed, the two recent fracking approvals in Lancashire and North Yorkshire are going ahead precisely for research purposes; and it will not be until a couple of hundred wells have been drilled and fracked that anyone will be able to make a serious calculation of the volumes of recoverable gas beneath the UK.

The 11 trillion cubic feet claim is straight out of the US shale bubble playbook.  It is intended to part gullible fools from their money.  As in the USA, there is little (beyond civil law – which you can’t use if you’re broke!) to prevent shale gas companies plucking figures out of thin air to impress potential investors.  So IGas seems to be following US sharp practice:

Image: Bloomberg
Image: Bloomberg

Of all of the dodgy activities of the fracking industry, this ranks among the worst, because it is not City of London fat cats or Russian oligarchs who are going to lose money when the bubble bursts; it will be ordinary pensioners and savers whose account managers are desperate for a rate of return on investments above the Bank of England’s 0.25 percent.  In the USA today, those gullible fools are in the process of losing their shirts as the entire fracking industry slips into bankruptcy.  But by the time British pensioners and savers realise they’ve been had, the owners of the shale gas companies – and their friends in the Tory party – will have made their millions and shipped them off to the Cayman Islands.

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