IGas slams return of UK shale gas fracking moratorium

UK shale gas developer IGas has strongly criticized the government's decision to reimpose a moratorium on hydraulic fracturing -- or fracking -- in England, saying the decision deprived the country of 270 Tcf of estimated gas in the company's resource in the East Midlands.

The government confirmed in a statement Oct. 27 it was re-imposing an effective moratorium on fracking, after new prime minister Rishi Sunak said in Parliament on Oct. 26 that he would return to the pledge made in the ruling Conservative Party's 2019 manifesto.

His predecessor Liz Truss had scrapped the measure during her short tenure as prime minister.

IGas said it was "shocked and disappointed" at the decision to reinstate the de facto ban, saying the measure would not help ease the energy and cost of living crises.

The company said shale gas could be sold at a guaranteed contracted price "well below" European prices.

Platts assessed the price of UK day-ahead natural gas at 60 pence/therm Oct. 27, down from 196 p/th a month ago, S&P Global Commodity Insights data showed.

IGas said it had "a significant recoverable gas resource in the Gainsborough Trough," with an estimated 630 Bcf of gas per square mile, which would equate to 270 Tcf if applied to the company's entire acreage in the East Midlands, meeting up to 19 years of the UK's gas demand at expected recovery rates.

"We continue to believe and assert that fracking for shale gas can and will be done safely and in an environmentally responsible manner," IGas Interim Executive Chairman Hopkinson said. "In light of the Government's totally unwarranted U-turn and, in the interest of our shareholders, we reserve the right to pursue any legal process available to us to recover the losses that we have incurred."

Fracking moratorium

New business and energy secretary Grant Shapps said: "As set out in the manifesto, we will not support shale extraction unless the science shows categorically that it can be done safely.

"In line with the British Geological Survey report on the scientific advances in hydraulic fracturing since 2019, forecasting the occurrence of large earthquakes and their expected magnitude owing to shale gas extraction remains a challenge with significant uncertainty," he said in the Oct. 27 statement.

"We will again take a presumption against issuing any further hydraulic fracturing consents," he said. "This position, an effective moratorium, will be maintained until compelling new evidence is provided which addresses the concerns around the prediction and management of induced seismicity."

Future fracking consent applications would be considered on their own merit, Shapps said, but cautioned that shale gas developers should take the government's position into account when considering new developments.

The UK put in place a moratorium on fracking in England in November 2019 after an analysis of the environmental impact of work at Cuadrilla Resources' site at Preston New Road.

Cuadrilla was forced to suspend work at the site after a magnitude 2.9 tremor occurred in August 2019.

In September, the British Geological Survey's scientific review into shale gas extraction said there was only limited understanding of UK geology and onshore shale resources, given that only three test wells had been fracked in the UK to date.

Shale gas potential

It is estimated that the Bowland Shale gas formation in northern England alone holds as much as 37.6 Tcm of gas. Just 10% of that volume could meet UK gas needs for 50 years, according to Cuadrilla.

However, several academic studies have suggested the true resource is much lower. In 2019, research from Nottingham University said resources within the Bowland Shale formation could be up to five times lower than previous estimates suggested.

The research, supported by the British Geological Survey, said economically recoverable reserves of Bowland shale gas could be less than 10 years of current UK gas consumption -- implying a ceiling of around 800 Bcm.

There are also growing doubts about whether the geology in the UK is suitable for a large-scale shale gas industry to develop.