UK oil and gas firm IGas Energy (IGAS) made front page headlines around Britain this week after the company announced that its licences in north-west England could hold between 15 and 172 trillion cubic feet (Tcf) of shale gas.
Although we caution that the estimate is very preliminary by nature, this is considerably higher than previously thought, and IGas pegs the most likely amount of gas in place at around 102 Tcf in an area covering about 300 square miles of Cheshire.
Recoverable resources will, of course, be much lower due to the technical difficulties of extracting shale gas - likely around 10 to 15 per cent of the in-place estimate - but this is nevertheless a very promising development for the fledgling UK shale gas exploration industry.
IGas' chief executive Andrew Austin told several media outlets that there is potentially enough gas within the company's licences to curtail Britain's imports of gas for at least a decade. Mr Austin says IGas plans to drill and appraise two shale gas wells starting in the fourth quarter of this year.
Too much hot air?
While there are plenty of reasons to be excited about IGas's announcement, there is also a lot to be said for being cautious and sceptical about the future of shale gas in Britain. As we explained in an Investors Chronicle feature on fracking for UK shale gas in February, not one company has extracted shale gas in the UK at commercial rates as of yet. Indeed, there has only been one shale gas well drilled and fracked in the UK - by private firm Cuadrilla Resources in 2011 - and that programme had to be put on ice because of seismicity concerns.
Proven American extraction techniques will not necessarily work immediately across the pond - as many disappointed explorers and jaded investors have witnessed first hand in Poland and Hungary. Often, technologies have to be tweaked and several experiments have to be run to find the 'sweet spots' that led to the dramatic ramp-up in production in the US.
Certainly, local environmental opposition and the burdensome UK permitting process are worrying enough. Cuadrilla Resources recently had to push back its scheduled fracking programme until 2014 as a result of green lobbying and a desire to complete every environmental study possible.
