Oil rush in the Home Counties FROM CITY AM
BILLIONS of barrels of shale oil have been discovered under a swathe of southern England, a government report will announce this morning.
While only a fraction of the discovery is expected to be recoverable by domestic shale companies, the find will kick-start a drive to start the process of fracking for oil in the region.
The Department of Energy and Climate Change is due to announce the discovery, made by the British Geological Survey, at 10am, covering findings in an area known as the Weald Basin that includes Surrey, Sussex, Kent and Hampshire.
It follows a similar British Geological Survey study last year, which identified that there could be as much as 1,300 trillion cubic feet of gas in shale rocks in northern England.
Today’s discovery could have implications for the UK’s long-term energy security and prompt more hydraulic fracturing in Britain.
The government is also expected to announce additional compensation for communities affected by fracking today, on top of the existing payments of £100,000 per fracking site and one per cent share of profits from the locations.
Research by the Inst-itute of Dir-ectors in January showed that the proceeds of the UK’s shale gas investment could soon reach £3.7bn annually and support up to 74,000 jobs.
In the US, almost one quarter of the country’s natural gas extraction is shale and the energy sector has seen a string of deals for shale gas operations across the globe.
Fracking in the US has become so widespread and profitable that it has led to speculation that the country could overtake Saudi Arabia as the world’s largest oil producer by 2020 or sooner.
Companies such as Cuadrilla and IGas have already begun exploratory drilling at UK sites.
But environmental campaigners are opposed to shale gas due to the fracturing technique used, which they claim can cause earth tremors.
Fracking involves pumping water, sand and chemicals into rock at high pressure in order to extract oil buried in the rocks deep underground.
Last month, shares in IGas jumped 11 per cent after the government indicated that energy companies would be able to explore for shale gas without permission from private landowners.
The planned move is expected to be revealed shortly as part of a new infrastructure bill that is aimed at encouraging investment into the UK’s burgeoning shale gas industry.
The Department of Energy and Climate Change in March closed its 14th round of licensing for companies to bid on exclusive rights that cover exploration for shale gas as well as conventional gas and oil in the UK.
This licensing round covered the Weald Basin. However, results of the bidding have yet to be disclosed.