5
What are the opportunities for providers
of technology to the UK shale industry?
The technical and logistical challenges in the UK are
different to those in more spacious countries such
as the US and Canada. UK operators will be required
to exploit shale gas resources safely near residential
areas and areas of outstanding natural beauty.
The uniqueness of the challenges presented in the
UK means that technologies already well adopted
across the Atlantic may not be ideally suited to UK
conditions, or may need to be adapted and improved
upon to suit UK constraints.
The Government therefore aims to stimulate research
and development for minimising emissions from
operations, reducing water demand and minimising
vehicle movements, to reduce the immediate impact
on communities near to exploration and exploitation
sites. The regulations further focus on eliminating
water or gas escapes and reducing the impact of
unintended seismic events.
It is therefore likely that new technologies will be
adopted quickly by operators if this allows them to
operate more safely and efficiently and to meet UK
regulatory requirements. Given the continued volatility
in the oil market, any technology that can reduce the
cost of exploiting shale gas resources will have a
significant commercial advantage. Leading technologies
in these areas, combined with appropriate IP
protection, could generate some powerful monopolies
for their owners.
What are the likely areas for innovation?
Our analysis suggests that interested parties may
be considering innovating in a number of distinct
technical areas.
On the drilling side, innovations which preserve well
integrity and reduce the likelihood of ‘blow outs’, as well
as those which improve acoustic attenuation to reduce
local noise pollution, are likely to be viewed favourably.
For the fracturing process, innovations aimed
at improving isolation of fracturing zones from
surrounding areas are likely to be met with approval,
as they may help to allay concerns over contamination
of drinking water and the local environment. Fracking
process control algorithms which can identify risk
more efficiently and adapt the process to varying
ground conditions or seismic inputs may also
be valuable, along with the associated sensors.
Technology aimed at preventing the escape of
chemicals in the event of top-side malfunctions
could also be hugely commercially significant.
More generally, new logistical equipment may be
required in order to facilitate the safe, quiet and
non-intrusive transport of the extracted fluid away
from more populated locations.
Finally, OUGO’s focus on ensuring end-to-end safety of
the extraction process, from first exploration to closing
down and decommissioning of a well, could place a lot
of value on installation technologies which assist
with later safe decommissioning of the well.
The UK Government has sent out a clear message
regarding its backing for shale gas as an important
future energy source for the UK, having set up
a dedicated department for it (the Office for
Unconventional Gas and Oil, or OUGO) within the
Department for Energy and Climate Change (DECC),
tasked with managing its development in the UK.
However, significant public concerns exist over
techniques used for shale gas extraction, following
tremors experienced in the Blackpool area in 2011,
and issues have been raised around potential
contamination of the environment and drinking
water. During the extraction process, a horizontal
well is drilled and then pumped in stages with high
pressure fluid containing chemicals and propping
agents such as sand. The pressurised fluid fractures
the shale formation and the propping agents hold
the fractures open so that gas and oil can escape
from the formation and be collected via the well.
One of OUGO’s key objectives is to enable
development of the UK’s shale gas and oil resources,
while protecting the environment and safeguarding
the public.
Central to OUGO’s message is that regulation will be
the main tool used to protect both the environment
and the public. The regulation system set out by the
Government is intended to be results-driven, rather
than defining particular methods of exploration or
extraction that should be used, so operators will
have some choice over the technology they use to
satisfy the regulator’s requirements. However, the
Government recommends that shale firms should be
“required to use the best technologies available
to capture emissions from operations”.
The Government’s intention is clearly also to
stimulate research and development for new
techniques to minimise impact on the environment
and the public, while enabling shale gas to form
a real part of the UK energy mix.
