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British Geological Survey points to significant shale gas and oil resources in Scotland's Midland Valley

Out-Law News | 02 Jul 2014 | 10:26 am | 2 min. read

A report into the likely shale oil and gas resources located in the Midland Valley of Scotland has estimated that there may be  80 trillion cubic feet of gas and six billion barrels of oil.

The British Geological Survey (BGS), which published the report, said that exploratory drilling was now needed in order to establish the extent to which these fuels could be "technically and commercially recovered". Recoverable reserves tend to be "substantially lower" than the total amount of gas and oil in place, and this was particularly true across central Scotland due to the complex geology of the area, it said.

"Reserves cannot be calculated at this stage before drilling and testing take place," said Professor Mike Stephenson, director of science and technology at the BGS. "The Midland Valley of Scotland has complex geology and a relative lack of data compared to the previous DECC-BGS Bowland-Hodder and Weald Basin studies."

Planning and energy law expert David Ross of Pinsent Masons, the law firm behind Out-Law.com, said that the results of the survey were "encouraging news" for Scottish developers. Shale gas deposits in the Midland Valley could provide around 27 years' worth of Scotland's gas demand if even only one tenth of the volume estimated by the BGS turned out to be recoverable, he said.

"The BGS survey underlines the huge potential for shale gas and oil to make an important contribution to the UK's energy mix, in addition to creating a previously estimated 5,000 to 10,000 long term jobs in Scotland or up to 74,000 jobs in the UK," he said.

"We simply don't know how much shale oil and gas is recoverable across the UK though and the BGS survey acknowledges this important point. This makes the granting of consents for carrying out exploratory work even more important - particularly as we are approaching an announcement on the all-important 14th round of onshore licences. Potential investors in UK shale gas will be following developments closely, but would welcome steps which support further drilling to allow more accurate recovery assessments to be made," he said.

Last week, energy minister Michael Fallon told an industry conference that the UK government would change the terms of onshore extraction licences granted to shale gas firms ahead of the 14th licensing round, which is expected before the end of this month. The government plans to replace existing acreage rules with a system that would allow gas to be extracted from a wider area, while at the same time introducing new disclosure rules that would require licensees to submit reports about each well involving hydraulic fracturing. The confidentiality period for this information would also be reduced, from four years to six months.

The UK government is keen to explore the potential for regulated exploitation of shale gas as a means of reducing the country's natural gas imports and improving security of energy supply. Following previous surveys, the BSG has estimated that there are 1,300 trillion cubic feet of gas in the Bowland region in the north of England, and around 4.4 billion barrels of oil in the Weald basin in the south of England.

"We know that shale gas alone won't be able to supply all of our energy needs, but the environmentally responsible exploration of shale gas could contribute to our energy mix," said Fallon.

"Scotland has long been at the forefront of energy innovation and continued improvements in our renewables output, in tandem with developing a new shale oil and gas industry, offers a diversity which goes some way to improving the UK's security of energy supply," said energy and environmental law expert David Ross.