A UK Onshore Operators Group (UKOOG) commissioned report by EY today underlines the development of shale gas in the UK could create a £33bn investment opportunity for British business with the potential to create over 64,000 jobs.
UKOOG’s “Getting ready for UK shale Gas”, forecasts that to drill up to 4000 laterals (horizontal wells) over an 18 year timeframe the industry will need to spend in the region of £33bn in supply chain activities.
The study further estimates that at its peak this supply chain can be the source of around 64,000 jobs directly linked to shale gas exploration sites, indirectly in the supply chain or supporting services as a result of this new investment activity. However, the study warns that the UK needs to work now to lay the foundations for the necessary infrastructure, supply chain standards and skills requirements before developers look overseas.
The study was commissioned to answer three important questions. Firstly what will it take to build a shale gas pad in the UK in terms of supply chain and skills; secondly what are the capabilities in the UK to do so; and finally what would be needed in order to fill the gaps and to stimulate the supply chain and skills the UK already has.
Ken Cronin, Chief Executive of UKOOG, said, “We are building an industry in this country which will not only potentially give the UK energy security and make a big contribution in tax revenues but will also bring immense benefits to other industries and create sustainable, well-paid jobs.“
The findings of the study reveal the following potential for UK industry:
Specialised equipment and skills for hydraulic fracturing totaling £17bn
This includes equipment such as pumps, trucks and blenders, which today are supplied to the industry by third parties and only partially from the UK. This sector provides a massive opportunity for UK-based oilfield service and manufacturing companies to get involved.
A £4.1bn waste, storage and transportation requirement
More work is required by industry, Government and regulators to understand what is possible with respect to localised and centralised services. In addition, investment will also be needed in order to bridge the gap as the industry grows.
A £2.3bn steel requirement in the UK
The industry will need over the next years some 12,600km of steel casing of specific diameter and quality,enough to go from Land’s End to John O’Groats some nine times. The report confirms that the UK has the ability to produce this amount at the right quality, but further research and development is required to make it a reality.
Deirdre Fox, Tata Steel’s Director of Strategic Business Development, said, “This report is an excellent eye-opener as to how big an opportunity the responsible development of a shale gas industry is for the UK economy. The report provides valuable insight into the potential of unconventional gas for some of the UK’s Foundation Industries like steel and what is likely to be required in terms of UK supply chain development for the full value of this new industry to be captured here in the UK.”