Skip to content

London Stockbroker-Belt Hunts For Shale Oil Riches

Nidaa Bakhsh, Bloomberg

The rolling country south of London is called the stockbroker belt for the residents who pay 50 percent above the U.K. average to live in pristine villages. The advent of shale oil under their lawns may shatter the idyll.

Two areas of Surrey and Sussex hold 700 million barrels of recoverable shale oil, or more than a year’s supply for Britain, the U.S. Energy Information Administration estimates. The advent of drilling near mansions in the Wessex and Weald basins may widen the nation’s shale-energy debate, which has focused on gas in northwest England, hundreds of miles from London.

Broker-Belt Braces as Britain Seeks First Shale Oilfield

#Securing permission to frack in the Weald, a heartland of the ruling Conservative Party, may also set a precedent for similar projects elsewhere in the U.K. Source: Geography Photos/UIG via Getty Images

“The rock in the Weald is splendid, it’s extremely good for shale oil,” said Fivos Spathopoulos, a visiting lecturer of petroleum geology at London’s Imperial College who studied the basin for about seven years. “If it works, it’ll be big but we won’t know exactly how big until we drill.”

Celtique Energie Ltd., backed by U.S. private-equity firm Avista Capital Partners LP, is among companies seeking to pump shale oil in a geological area that’s similar to France’s Paris Basin, where fuel reserves have been found. They’re attracted by U.K. government plans to give tax breaks to stimulate a shale industry that can buoy domestic supply as North Sea output dwindles and imports rise.

Celtique plans to drill a well next year at Fernhurst in West Sussex, where the average house price tops 471,300 pounds ($722,000), property website Zoopla shows. While hydraulic fracturing, the water-intensive drilling process known as fracking, isn’t initially planned, Celtique may apply for such a license should it find shale oil, according to a presentation.

New Idea

“The reason why we’re excited by this position is it has multiple objectives for both conventional and unconventional” drilling, Chief Executive Officer Geoff Davies said in an interview in London. “It’s a new geological idea.”

While the Weald and Wessex basins aren’t virgin territory for drillers — companies including IGas Energy Plc (IGAS) already produce crude from conventional wells — drilling deeper layers of rock and exploring shale deposits may “significantly” increase the area’s potential resources, Davies said.

The U.K. government said June 27 that shale-gas fields in northern England are twice as large as previously estimated, potentially big enough to meet demand for 47 years.

Proponents of fracking say the benefits could mirror the U.S., where the exploitation of shale formations helped the country overtake Russia as the biggest producer of natural gas in 2009 and boosted crude oil output.

Full story