A recent news article
about the partnership between Scottish Power,
owned by Spain's Iberdrola, and UK’s Egdon Resources to tap shale prospects in acreage held by the
former has generated a lot of interest within the E&P space in the United
Kingdom. This partnership is propitious, not so much about the fact that a
power generator is now moving upstream along the value-chain to tie in its gas
supplies, but because an industrial house is putting to use its acreage for
exploration and production activities.
Whist land may seem to be the least problematic link in the
chain of operations for an unconventional project, in places other than North
America this is a particularly sticky topic for most project managers trying to
extract either CBM or hydrocarbons from stubborn shale formations beneath the
ground.
Even when the availability of land is identified as a
major hindrance, the root of this problem varies from one geography to another. In
a place like UK, the concerns are mainly environmental with the entire
philosophy of shale extraction being anathema to the Greens. In India, the availability of land is a major issue since most drill sites would
sit on lush pockets arable land whose produce a poor farmer – and a developing hungry country can ill afford to forfeit in exchange for gas (or oil) molecules. In other places like
Indonesia large tracts of land belong to varied indigenous populations who are
loathe to see the influx of drilling crews and large machinery which they see
as in-amicable to their local way of life.
Whatever the reason that a landowner, or his neighbourhood
environmentalist, might have in letting go of his precious acres, obtaining
that 8000 odd sq mtrs required to spud an unconventional well (s)
is hard to come by in some (most) places around the world.
It is in such a scenario where an upstream company requires
land which is either hard to come by, or comes with an assorted set of protesters and tree-hugging/ ply-card bearing/ traffic-obstructing
intelligentsia, an easy to reach plot of land usually within a fenced industrial area and having basic infrastructure can act as manna for an project
manager.
On an average a large industrial unit with spare acreage can add the
following benefits towards a conventional drilling program:
i.
A
prime landowner will make available good quality drilling sites its
land.
ii.
An
industrial unit will have good infrastructure connectivity in the form of used
and unused pipelines in place.
iii.
Existing
water hydrants for water intake and WTPs/ evacuation pipelines for produced
water an easy to install (if not already present).
iv.
Communication/
fibre optic cabling are (generally) in place to link rig SCADA units
v.
Significant
offtaker of gas, (methane) for firing up plants but fertilizer and refinery
complexes also use heavier molecules (Ethane/ Butane) as feedstock.
vi.
Extensive goodwill will exist within the local community on account of having
provided employment opportunities to the local populace.
1- Centrica acquired a 25% interest in PEDL165 in
Lancashire from Cuadrilla Resources Ltd and AJ Lucas for £40 million in cash.
Centrica will also pay exploration and appraisal costs of up to £60 million.
2- GDF Suez acquired a 25% share in Dart's 13 onshore
licences for $12 million with GDF also agreeing to meet Dart's share of
exploration costs within the license areas up to an amount of $27 million.
3- Total acquired 40% interest in two shale gas
exploration licences in Lincolnshire from IGas for $1.6m in back costs and will
fund a work programme of up to $46.5m, with a $19.5m minimum commitment.
