Chapter 1 Independent Expert Scientific Panel - Report on Unconventional Oil And Gas
1.1 International interest in the potential exploitation of unconventional oil and gas reserves has increased, largely due to events in the United States over the last decade.
1.2 In 2003, it was widely anticipated that the US would be a key destination for future global gas exports. However, it is now anticipated, principally as a result of shale gas production, that by 2015 the United States could surpass Russia as the largest natural gas producer and could become energy self-sufficient in the next 25 years (International Energy Agency, 2012).
1.3 Additionally, the chemical industry in the US has undergone a revival due to the availability of cheap feed stocks, such that previously mothballed plants are being brought back into production. It is estimated by the American Chemistry Council that $100 billion of new chemical plants will be built between now and 2023, creating over 600,000 jobs (American Chemistry Council, 2014).
1.4 In September 2013, the Scottish Government convened an Independent Expert Scientific Panel to report on the scientific evidence relating to unconventional oil and gas. The remit of the Panel was to deliver:
- A robust, well researched evidence base relating to unconventional oil and gas upon which the Scottish Government can reliably base future policy in this area;
- A well-developed narrative on the environmental and regulatory issues associated with the potential development of unconventional oil & gas in Scotland;
- An assessment of the potential resources available to Scotland.
1.5 On the advice of the Chief Scientific Adviser for Scotland, the Independent Panel has been drawn from experts in the fields of geology, environmental science, engineering and resource extraction to provide a robust, impartial analysis of the available evidence.
1.6 All members of the Independent Panel, whose details are given in Appendix A, agreed to serve unpaid in a personal capacity and not as representatives of any particular institution or organisation. The Chair of the Panel is also the Independent Co-Chair of the Scottish Science Advisory Council.
1.7 The Expert Scientific Panel recognises that, while there is a significant body of existing, peer-reviewed evidence on unconventional oil & gas, it is a constantly evolving area of research and analysis. Therefore, it is important for readers to note that the Expert Scientific Panel concluded its analysis of the scientific evidence on 30 May 2014  .
Unconventional Oil and Gas - An Introduction
1.8 Conventional oil and gas deposits are contained in porous reservoirs (often limestone or sandstone) that have interconnected spaces. These interconnected spaces give rise to permeability that allows the oil or gas to effectively flow through the reservoir to the well (borehole). The permeable rock is usually trapped below a low permeability layer, and laterally by other low permeability rocks or low permeability faults.
1.9 Conversely, unconventional oil or gas deposits, such as shale gas and shale oil, are contained in reservoirs of low permeability, for instance shale rock. In these cases, the oil or gas cannot easily flow through the reservoir, rendering it much more difficult to recover by conventional production techniques.
1.10 Coal bed methane ( CBM) is also regarded as an unconventional source of gas since, not only is it a low pressure system compared to conventional gas but also the gas, rather than being held in pore spaces, is adsorbed onto the coal.
1.11 The existence of unconventional resources has been known for many years. In the last decade a combination of economic and geopolitical factors, together with advances in directional drilling and well stimulation technology, has rendered them commercially recoverable on a large scale.
Economic and Geopolitical Factors
1.12 The last 20 years have seen a more than 20-fold increase in the price of crude oil, together with similar increases in the price of natural gas. This has led companies to focus on developing reserves that would formerly have been judged to be uneconomic. Furthermore, changes in the political landscape have focused attention on developing reserves in areas of the world judged to be more politically stable.
1.13 In terms of technological advances, the two key drivers have been directional drilling and hydraulic fracturing, commonly referred to as 'fracking'. Neither of these technologies are new, in that both have been used in the oil industry for the last fifty years. There has however, as with many technologies, been considerable advancement in the last few years.
1.14 Directional drilling is the ability to deviate the drill head from the vertical in a controlled manner, such that different areas of an actual or potential reservoir can be accessed from a single position on the surface. This innovation has been important in exploiting off-shore reserves, particularly in deeper waters of the North Sea for instance, where the costs of locating a drilling rig or establishing a production platform can be high. In many of the currently producing fields in the North Sea, wells drilled from a single platform will extend out under the sea bed for up to 5 km. Furthermore, at Wytch Farm in Dorset, discovered in 1973 and one of the largest onshore oilfields in Western Europe, directional drilling from on land has allowed oil to be recovered from some 10 km beyond the coastline.
1.15 In producing hydrocarbons from unconventional shale or coal bed methane reserves it is usual to drill a number of horizontal wells through the reservoir. In the case of coal, the natural fractures of the coal are often sufficient to enable gas flow. In the case of shale gas and oil, hydraulic fracturing techniques have to be used to achieve production.
1.16 Hydraulic fracturing involves fracturing the reservoir rock in order to increase its permeability. This is generally achieved by injecting fluid into the well at high pressure to create and propagate fractures a designed distance into the surrounding reservoir rock formation. In shale, the injected fracturing fluid is mainly water (ca. 95%) containing small quantities of sand or similar particulate matter, referred to as the proppant, to prop open the fractures. Small quantities of other additives may also be used to keep the proppant in suspension and increase the lubricating properties of the fluid.
1.17 The fractures created by the technique may only be a few micrometres in width and are usually limited in length to a few tens of metres. Technical advances, particularly over the last decade, have allowed the extent of the fractures to be more accurately predicted, controlled, and remotely monitored using micro-seismic techniques, thus increasing the accuracy and effectiveness of the technique.
1.18 All of the above issues are covered in more depth in the body of the report.
1.19 In this report, the Expert Scientific Panel has attempted to address the issues relevant to the impact of the development of unconventional oil and gas resources in Scotland. These include:
- the potential magnitude of unconventional oil and gas resources in Scotland and their commercial potential;
- consideration of the global status of unconventional gas exploitation and whether the technology exists to allow unconventional gas resources to be extracted safely;
- the key environmental, public perception, and public health challenges surrounding the exploitation of unconventional hydrocarbon resources;
- whether the current regulatory framework is adequate to cope with the development of unconventional oil and gas reserves;
- how the potential development of unconventional oil and gas resources in Scotland would sit with the Scottish Government's commitment to reduce greenhouse gas emissions;
- how to successfully and constructively engage with communities and environmental groups in a meaningful and fact-based debate on the merits or otherwise of the development of unconventional oil and gas resources.
1.20 In addressing these questions, the Panel has not only relied on the knowledge and expertise of the individuals comprising the group ( Appendix 1), but has also received presentations from third parties, including industry representatives, planning authorities, economic experts and non-governmental organisations ( NGOs) ( Appendix 2).
1.21 The Panel has sought, as far as possible, to rely on independently verified data or peer reviewed publications. Wherever possible, peer-reviewed references from academic literature have been used. Several of these have been 'in press' versions that have gone through peer review but which have not yet been published. Overarching reports from academic bodies, such as the Royal Society and the Royal Academy of Engineering, that have been subject to peer review, have also been used, as have reports from geological surveys, such as the British Geological Survey and the Polish Geological Institute. Reports from NGOs or lobby groups have not generally been cited in the text, although these have often provided useful links to peer-reviewed papers and research. Statistics from Government publications and reports have also been cited, which are not typically peer reviewed. On rare occasions, links to newspapers or television articles and blogs have been cited if they are the only factual evidence available (for instance, citing a given policymaker or for an industry view on insurance risk).
1.22 Throughout the report, the Panel has sought, where possible, to set numbers in context. This is not to seek to either minimise or maximise the apparent risks or benefits, but rather to seek to place large and/or unfamiliar numbers into context for readers unfamiliar with science or engineering.
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