First UK shale gas well results positive, fracking in January

First UK shale gas well results positive, fracking in January
London (Platts)--8Dec2010/620 am EST/1120 GMT

Results of the UK's first shale gas well look positive and operator Cuadrilla Resources could move on to fracturing tests in January, aiming to stimulate gas production from the shale, part owner AJ Lucas said.

Cuadrilla started drilling the well, in the Bowland shale near Blackpool in Lancashire, during the summer. The company's co-founder Chris Cornelius said at the time that shale might ultimately meet 5-10% of UK gas needs.

AJ Lucas, an Australian company that is invested in Cuadrilla and also has a direct stake in the UK well, said Tuesday that drilling of the UK Preese Hall 1 well would complete by end of Wednesday.

Initial indications are that the well "confirms and possibly exceeds the original expectations of management as to the prospectivity of the Bowland shale," AJ Lucas said.

The drill rig will be moved to the Grange Hill 1 well some 15 km away for a new well in January 2011. Fracking and testing equipment will then be moved to Preese Hall for a full test expected in January.

Cuadrilla is also considering a third well in the Bowland shale, to be called Anna's Road 1.

The company expects to be able to decide on commercial development of the gas by around the end of the first quarter 2011.

Shale gas production has boomed in recent years in the US, and other regions are now seeking to match the growth. Argentina this week announced a major shale gas find.

But the work is sometimes controversial, particularly the chemicals used with water in fracking liquids. Opponents fear the chemicals could affect the water supply.

Chris Cornelius told Channel 4 News earlier this year: "There are certain cases in the US where certain operators have been documented as having some issues and they do exist, but I think we've done everything here working with HSE [health and safety executive] and the environmental protection agency [the environment agency] here in the UK to ensure that doesn't occur on Cuadrilla's location."

Private equity fund Riverstone Holdings, which manages around $17 billion across six investment funds, and has BP's ex-CEO John Browne as one of its managing directors, invested in Cuadrilla earlier this year.

AJ Lucas has also invested in Cuadrilla Resources and has a direct stake of its own in certain UK operations, alongside Cuadrilla.

Cuadrilla holds acreage in the UK, Netherlands, Poland, Hungary and Czech Republic and plans drilling in the Netherlands early next year, as well as fracking work in Hungary at the end of the first quarter.

--Alex Froley, alex_froley@platts.com