This document discusses the potential for shale gas development in Lancashire, England. It notes that successful shale gas extraction could provide up to 50% of the UK's natural gas needs and generate hundreds of millions of pounds in private investment. Test wells drilled in Lancashire have found good quality rock with high natural gas content. The document outlines commitments to local communities and potential benefits, such as jobs, economic growth, and funds for education and infrastructure. Shale gas development could transform Lancashire's economy by reducing its gross value added gap compared to the rest of the UK.

1. Unlocking Lancashire's Shale Gas

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3. Overview: Lancashire Shale Gas Potential
▪ Indigenous Shale Gas could provide up
to 50% of the UK’s natural gas
requirements
▪ Lancashire Shale is the only significant
Shale Gas opportunity that could be
producing into the domestic gas market
within the next 5 years
▪ If successful, it offers the opportunity for
hundreds of £millions of private
investment and could generate up to
tens of £millions of local contributions
▪ The local supply chain could deliver a
significant proportion of capital and
operational expenditure
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4. What is Shale Gas?
▪ Like conventional reservoirs, shale rock
contains natural gas that has been generated in
marine deposits, laid down hundreds of millions
of years ago
▪ Unlike natural gas from conventional reservoirs,
gas in shale rock has remained in the source
rock which has low permeability
▪ Fracturing is required to create the connectivity
between microscopic gas pockets, to allow the
gas to flow
▪ Fracturing is a well established technique used
globally over many decades to improve the
reservoir performance of many different types
of rocks
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5. The potential for gas in the Bowland Shale has been assessed by
independent experts
▪ The 2013 study by the British Geological
Survey assessed the resource potential of UK
shales
▪ Central Case in-place estimates
– Bowland Basin: 1,329 trillion cubic feet gas
▪ In context, current UK annual gas consumption
~2,500 billion cubic feet of gas
▪ So, even with a small percentage recovery of
in-place volumes, this could be a very
significant contributor to UK gas for decades
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6. DUKES2016 Chapter 4
Even in the most positive outlook for energy efficiency and
renewables, UK natural gas demand will endure
▪ Majority of natural gas used for
heating, cooking and industry
▪ Small proportion used for generating
electricity
▪ Over 50% of our natural gas
requirement is now imported
▪ Under the greenest scenario we’ll still
be consuming the majority of today’s
natural gas requirement in 2040
Sources: Dukes 2016 and National Grid Future Energy Scenarios 20166

7. Results from our current activities at Preston New Road are very
encouraging
▪ First two horizontal fractured shale gas wells in
the UK
▪ These wells will establish the commercial viability
of Lancashire shale gas development
▪ Completed drilling a vertical pilot well >2.7 km
through both the Upper and Lower Bowland
shales
▪ Recovered >100m of core samples
▪ The most comprehensive data set recovered
from any UK shale well
▪ Excellent rock quality for hydraulic fracturing and
a high natural gas content in several zones within
the shale
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9. Results from our current activities at Preston New Road are very
encouraging
THE TIMES 13th Jan 2018:
“The company’s tests suggest that each well could extract enough gas to meet
the needs of 5,000 homes for 30 years.”
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10. We are a Lancashire based company, and have articulated six
commitments to our home County
1. We will increase energy security for Lancashire
and Britain as we become operational
2. We will carry out our operations to the highest
safety and environmental standards and
communicate openly
3. We will work with local partners to promote
Lancashire as a hub for the UK shale gas
industry with new jobs and economic growth
4. We will prioritise Lancashire suppliers and publish
the amount we are spending
5. We will support local training opportunities for
young people including the National Onshore Oil
and Gas College based at Blackpool & The Fylde
College
6. We will share the benefits of shale gas by
sponsoring educational and sporting projects and
through a local community benefit scheme
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12. What will Shale Gas development look like?
▪ Vision of Shale Gas development specific to
Lancashire setting will be heavily informed by this
year’s activities
▪ US shale development is not a good analogue
– Different rocks
– Different geography
– Different drivers
▪ We will seek to minimise the surface footprint, by
having multiple directional wells from a single “pad”
location, similar in size to Preston New Road
▪ Multiple similar pads could be developed to optimise
resource extraction
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What could future Shale Gas Development mean for Lancashire?
Local contributions enabling local investment
Exploration Well * £100k per exploration lateral
Local Grid Entry *
Potential saving of ~2% on gas price for local
grid entry
Production Revenue >1% gross production revenues
Business Rates 3% gross production revenues (indicative)
Shale Wealth Fund 10% of corporation tax (up to £10m per site)
* For exploration activity only
Photo © P L Chadwick (cc-by-sa/2.0)
Photo © robert wade (cc-by-sa/2.0)

14. What could future Shale Gas Development mean for Lancashire?
Local Supply Chain Opportunities
▪ Getting Ready for UK Shale Gas (2014)*
– £33bn spend on potential supply chain
– 64,500 Jobs in upstream phase
▪ Potential for Lancashire business
– Single production pad = several hundred £m capex
and opex
– Significant proportion of spend will be in Lancashire
– Proportion will increase as industry and supply chain
becomes more established in the local area
– First mover advantage means we will be ideally
positioned for growth across the North
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* Report by UKOOG and EY

15. Lancashire Shale Gas has the potential to transform the County
▪ Lancashire's “Gross Value Added” per capita is only 77% of the UK average
▪ Lancashire strategic economic plan 2014: “Without strategic interventions Lancashire's
GVA gap with the rest of the country is predicted to increase”
▪ Shale Gas could be precisely the opportunity that:
– Puts Lancashire at the centre of the UK’s energy map
– Delivers significant private investment
– Develops local supply capabilities
– Directly contributes to funds for local disbursement
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