Shale Round Boosts Prospects For Exploration
BMI View : The country's first shale licensing round raises prospects for increased unconventional exploration in the UK, the speed of which has been sluggish to date. We maintain however that regulatory and social hurdles could hamstring the process, despite the new round.
The Department of Energy and Climate Change has launched its 14th onshore licensing round, the first in six years. Applications need to be made by end-October with licenses to be awarded within 12-18 months.
While the round could result in a pick-up of exploration in the UK, we maintain that it will take years for the UK's potential shale gas resources to translate into significant reserves and production. Our forecast sees a continuation of the gas production decline trend until the end of our forecast period in 2023. We forecast that gas output will fall from 39.31bcm in 2013 to 33.05bcm in 2018. From the early 2020s, shale gas production will begin to kick-in and stem the decline in the UK's gas output, with output hovering around 30bcm by 2022-2023.
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