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British government sees future potential for shale oil

Realizing the full potential will require safeguards and expertise, the government says.

By Daniel J. Graeber
With the right experts and safeguards in place, shale oil has a future in the British energy mix, government agency says. Photo courtesy of U.K. Oil & Gas Investments
With the right experts and safeguards in place, shale oil has a future in the British energy mix, government agency says. Photo courtesy of U.K. Oil & Gas Investments

LONDON, Oct. 13 (UPI) -- Shale oil has a place in the British energy mix, but exploitation will require environmental safeguards and industry expertise, a government agency said.

The future of British energy is uncertain given the downturn in the global oil sector and maturation of fields in the North Sea. Oil & Gas U.K., the industry's lobbying group, said the North Sea oil sector is in for a long period of decline, with less than $1.4 billion in new spending expected in 2016.

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The British Geological Survey, in coordination with the Oil and Gas Authority, said Thursday it completed a study of the shale reserves locked in the Weald basin in the southeast of the country. According to the study, the basin is estimated to hold about 1.1 billion barrels of shale oil, with no significant deposits of gas.

"Shale oil clearly has potential in Britain, but it will require geological and engineering expertise, investment, and protection of the environment," the BGS said in its report.

The BGS said it had no estimate of the amount of oil present in the Weald basin that could be extracted on a commercial basis. New drilling and well tests were needed to determine production rates.

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U.K. Oil & Gas Investments commissioned Ernst & Young earlier this year to examine the future potential of oil production from the Weald shale basin. Inland shale, meanwhile, has the potential to add between $10 billion and $74.6 billion to the British economy in gross value, the commissioned report said.

Operators are working to assess the potential in the shale area by testing the Horse Hill-1 oil discovery. Preliminary estimates made by the company last year put the entire Horse Hill reserve total far greater than the BGS estimate. If its full potential is reached, the future production from the area could provide as much as a quarter of the nation's total oil demand over its lifespan, based on 2014 demand levels.

The field, locked in a geological formation called the Kimmeridge Limestone, is about three miles away from the Gatwick Airport, earning it the nickname Gatwick Gusher.

The government last week sided in favor of oil and gas companies, issuing a 600-page ruling that said shale natural gas work in the country was a national interest. There's enough shale natural gas in the country to help eat away at a reliance on foreign reserves.

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