Shale Gas Development Potentials of the Jurassic Weald and Wessex Basins, South-East England: A Techno-Economic Evaluation

To reduce reliance on imported gas, boost dwindling revenue and guarantee energy security in the face Brexit; the UK government developed active interest in shale gas. This was demonstrated through incentives to encourage investment in the sub-sector, allay environmental concerns and chart a gas transition future. Favourable geology of Balcombe locality, where successful wells had been drilled for conventionals, is explored in this paper, which builds an operational and business case for re-appraisal and development of the Weald-Wessex Basin Jurassic shales. As sustainable hydraulic fracturing for shale gas has been deployed in the US, Canada and Denmark; same could be achieved in the UK. The study area covers 10,825 km² of southern Britain extending from Salisbury westwards to Ashford eastwards, Southampton south-westwards and Portsdown-Middleton Fault southwards to the South coast. 117 exploration, 31 appraisal wells and 100 development wells had been drilled in Weald, of which 26 are discoveries or prospects. Internal rate of return (IRR), net present value (NPV), payback period and other economic indicators were modelled in cash flows using Excel spreadsheets. Input data were culled from relevant literature and gaps filled through guided assumptions about geological, engineering and economic parameters for the case. Model results were calibrated by multivariate sensitivity analysis to evaluate the impacts of changes in CAPEX, OPEX and gas prices on IRR and NPV. Permitting and planning requirements were examined and costs keyed into the model. The generated outputs will be discussed vis-a-vis strengths and weaknesses of the fiscal regime and incentives to develop the business case. Preliminary analyses indicate Balcombe's commercial viability over a 30-year period, considering its substantial pay zone. The most promising Lower Kimmeridge Clay has maximum shale thickness of 2,146ft and total critical depth above 1,312ft for an exploratory well to establish the presence of shale gas. Sensitivity analysis indicates that NPV would be more sensitive to gas price; 20% decrease in gas price yielded $955m increase in NPV but decreased the IRR. It was inferred that high-handed environmental laws, planning constraints and bottlenecked permitting processes would negatively impact investments in shale gas frontier areas. Further amendments were thus proposed for the UK fiscal and permitting regime to attract greater involvement by operators. The outcomes of this work are hoped to rekindle exploration interest in the Weald and Wessex Basins, whose shale gas prospectivity had largely been written off by pundits without the concrete and convincing evidence that elaborate subsurface investigation offers. It is possible from geological observations over the years that both basins must have attained greater maturity with greater prospects for economic deposits that can shore up the UK's proven reserves.