Some more comments on the BGS Weald report

Now that the dust has settled from the BGS Weald report, the general consensus is that the numbers are a little disappointing, with 4.4bn bbl not comparing particularly favourably with over 100bn bbl in the Bakken Shale, for example, or the 40bn bbl we have extracted from the North Sea.

Perhaps we've all been spoiled by the numbers from the Bowland shale, so that anything less than world class numbers comes as a disappointment. Some outlets seem to have been a little confused by the report's conclusion that there was no prospectivity for shale gas, thinking this to mean no prospectivity for any kind of hydrocarbon-bearing shale.

In terms of value, if we assume a 10% recovery rate, at £80 per bbl, 440 million bbl is still worth 35 billion. Nothing like the £1 trillion of recoverable gas estimated to be in the Bowland shale in the northwest, but not to be completely sniffed at either. I anticipate that we'll still see operators looking to develop the Weald resource, especially if oil looks like staying at £80 per bbl or more. But it's not going to change the UK energy landscape in the way the Bowland shale gas numbers could.

I would't be surprised if certain operators will feel privately that their acreage has more in it than the BGS have estimated. After all, we can never know the true numbers until we drill more wells specifically targeting the shale - in the same way that we'll never know if the huge Bowland shale numbers are accurate until we start drilling.

The other issue is recovery rates. The higher viscosity of oil compared to gas means that recovery rates for shale are not as high as for gas. I have little doubt that operators in the Bakken are already trying to find ways to increase their recovery rates. We've seen something similar in the US shale gas plays, which have been around a little longer, with recovery rates seeming to increase year-on-year. For a smaller resource estimate, maximising recovery rate will be particularly important.