Government and industry told to act now to increase shale gas supply chain capability

Will Green is news editor of Supply Management
24 April 2014

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24 April 2014 | Will Green

Around £33 billion of investment in supply chains will be needed to realise the potential of shale gas in the UK, according to a report.

The report, by EY and commissioned by the United Kingdom Onshore Operators Group (UKOOG), said this investment would bring up to 4,000 wells into production between 2016 and 2032 and generate around 64,500 jobs.

A total of £17 billion will be needed for specialised equipment and skills for hydraulic fracturing or 'fracking'; £4.1 billion for waste, storage and transportation; £2.3 billion for steel; and £1.6 billion for drilling rigs.

The report warns that the oil and gas industry “needs to act now to prevent shale gas supply chain and skills constraints” and government, developers and industry groups should work together to define an investment case, set standards and increase UK-based capabilities.

Ken Cronin, UKOOG chief executive, said: “The industry and the government will need to work together in order that the recommendations of this report are fulfilled. If the UK takes advantage of this opportunity many of its companies will be in a favourable position as other countries in Europe develop their own shale gas industry. It is early days and we have a lot of work to do in terms of working with the communities involved, understanding geology, flow rates and the cost base. Keeping the economic benefits in the UK of the supply chain is not a given, but the potential level of benefits as highlighted in this report should make it an economic imperative that we should.”

The report said at peak production in the 2020s shale gas could potentially represent more than a third of UK annual gas consumption, equivalent to heating more than 20 million homes.

Chris Lewis, report author and partner advisory services at EY, said: “This is a unique opportunity to secure the future of next generations of energy users, but industry and government need to take action now for the necessary infrastructure, supply chain standards and skills to be ready in time.”

Business and energy minister Michael Fallon said: “This government is fully committed to ensuring the UK not only benefits from the energy security shale gas could provide, but also maximising the economic benefit across the country. It’s time to get ready for shale.”



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