Shale Gas: What Does It Mean For UK Contractors?

With IGas having recently started drilling in one of the protest sites near Manchester, the question arises for the future of shale gas and what effect this may have on the oil and gas industry.

IGas have previously stated that there may be up to 170 trillion cubic feet of gas in the areas it is licensed to explore but the recent drilling is at an exploration stage only to find out what type of gases are there. Andrew Austin, chief executive of IGas, has made it clear that the business was a long way from making any application to install fracking equipment at the site, an extraction method for shale gas which has come under much controversy over the past year due to the potential risks expected after experiences in the US.

A study by Public Health England, an agency of the Department of Health, concluded that the “potential risks to public health from exposure to the emissions associated with shale gas extraction are low if the operations are properly run and regulated" which are welcome findings to the UK Government who are pushing for the UK development of shale gas.

The British Geological Survey completed an estimate for shale gas resource in the UK to be around 1329 trillion cubic feet (this represents the gas thought to be present and not what might be possible to extract which would depend on social, geological and economic factors). The BGS have stated that “Shale gas clearly has potential in Britain but it will require geological and engineering expertise, investment and protection of the environment.”

Contractors in the oil and gas industry may see an increase in opportunities as their expertise becomes required with shale gas production and potential increases in pay for specialist skills. A PwC report published in February predicted that the Scottish oil industry could benefit if shale deposits are exploited and by lending expertise overseas. The UK economy could also be boosted by an energy price fall. Alastair Geddes, a director in PwC's oil and gas team, stated that "Shale oil represents yet another exciting opportunity for the industry, particularly oilfield services companies.”

However, a survey conducted by Oilandgaspeople.com of over 30,000 Oil and Gas industry workers found that the industry believes that the government’s drive to shale gas production will make growth within the whole of the oil and gas industry unsustainable with the biggest risk to the oil and gas industry in the future being not enough qualified staff available to meet demand.

Kevin Forbes, CEO of Oilandgaspeople.com stated that “Shale gas represents a significant opportunity for the UK to meet its energy security targets, but the Government needs to realise that the UK needs equipment, rigs and qualified staff that are in short supply. There is a risk that the push for shale gas could have consequences for the Oil and Gas Industry as a whole, with an increase in demand for staff pushing up wages and reducing the pool of skilled oil and gas contractors still further.”

The oil and gas industry is experiencing a serious skills shortage at current which will only worsen with the production of shale gas and investment also increasing in the North Sea. Kevin Forbes calls upon the government and energy companies alike to invest in people in order to solve the problem, otherwise the UK will not have the required workforce to fulfil shale gas projects.