UK fracking spend could hit £33bn
24 Apr 2014
Development of shale gas in the UK may require £33 billion to be spent over the next 18 years and create 64,000 jobs, according to a study published today.
The Ernst & Young (EY) study, commissioned by trade body the UK Onshore Operators Group (UKOOG), forecasts that to drill up to 4,000 horizontal wells between 2016 and 2032 the industry will need to spend in the region of £33 billion.
Industry and Government need to take action now for the necessary infrastructure, supply chain standards and skills to be ready in time
EY report author Chris Lewis
It identifies £20.5 billion of this as needing to be spent on hydraulic fracturing (fracking) activities, £8.2 billion on drilling and completions, £2.8 billion on waste management and £1.3 billion on storage and transportation.
In terms of potential supply chain opportunities the study, Getting ready for UK shale gas, identifies multiple areas, including the following opportunities:
- Specialised equipment and skills for hydraulic fracturing totalling £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.
- A £2.3bn steel requirement in the UK. The report says industry will need “some 12,600km of steel casing of specific diameter and quality” in the coming years.
- The potential for a new £1.6bn rig manufacturing industry. The industry will need up to 50 landward rigs at peak drilling activity and a number of workover rigs. Despite having the capability, “UK fabricators are likely to need some initial support to bridge the gap between the current and the anticipated market requirement”, says the report.
The report anticipates over 64,000 skilled and semi-skilled jobs will be needed at peak production. UKOOG chief executive Ken Cronin said the report showed shale gas could “bring immense benefits to other industries and create sustainable, well-paid jobs”.
EY report author Chris Lewis added: “Our study shows that the opportunity from shale gas in the UK is at such impressive scale. 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.”
