Industry Trend Analysis - Quick View: UK Shale Remains Distant Prospect - OCT 2017

The Latest: After extensive delays, numerous bureaucratic hurdles and growing grass-root opposition, hydraulic fracturing is set to resume in the UK as Cuadrilla Resources begin drilling at its Preston New Road site.

Implications: We remain sceptical over the longer-term viability of shale gas in the UK, with extensive testing required to better understand the potential shale resources in the country before tangible production is possible. The results of upcoming drilling tests in several onshore licenses across the UK will be crucial for future momentum of unconventional exploration in the country. Grass-root opposition and bureaucracy will remain the key barriers to progress. Specifically, disappointing early results from these wells will likely dent public support for shale development even further. This is significant in that there is potential for renewed resistance from local councils - answerable to the local electorate - to oppose hydraulic fracturing applications and on-the-ground protests could still continue to delay company operations as seen in Lancashire and North Yorkshire.

What ' s next? Even with a tick up in momentum and an increase in the number of shale wells, it will likely take an absolute minimum of five years and many more wells before there is a better understanding of the UK's below-ground potential. Furthermore there is no guarantee that exploration will translate to commercially viable development of the UK's shale resources. This is most notably typified by Poland, with the country unable to commercially produce from its prospective shale acreage despite extensive drilling.

Drilling Activity Continues At Glacial Pace
UK Onshore Exploration Wells Drilled
Source: UK Oil & Gas Authority, BMI.

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