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UK Onshore Shale Oil: A View on Viability

By Roddy Irwin

Institute of Directors – 15th October, 2014

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Shale Oil UK?

Two prospective basins

Midland Valley of Scotland

The Wealden Basin

DECC/BGS

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Shale

DECC/BGS

Shales are fine grained laminated rocks

Consist mainly of clays and silts

Some shales have high organic

matter content

If the organic matter (kerogen) is

heated sufficiently, hydrocarbons

can be generated

For shale oil, this heating occurs naturally

through deep burial of the shales

If buried deep enough the shales can be

considered mature for oil and eventually

gas generation

For shale oil, the hydrocarbons must

have escaped from the kerogen and

become trapped in micro pores or fissures

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Shale Oil or Oil Shale?

Oil Shale Shale Oil

Kerogen-rich shale, i.e. organic matter still in its

solid state. Does not contain liquid oil. The source

rock for conventional oil fields. Grades to

carbonaceous shale (i.e. rich in carbon) and cannel

coal. Torbanite is a lacustrine type of oil-shale.

Oil occurs in liquid form in largely impermeable

lithologies. These can be shale, but also adjacent

siltstone, sandstone, limestone etc. Also known as

‘tight shale oil’, ‘tight light oil (TLO)’, ‘tight oil’, ‘oil-

bearing shale’ or ‘shale-hosted oil’.

Oil is extracted by (a) in-situ heating of shale at

depth or (b) mining of shale at/near the surface

which is then retorted.

Yields of 15+ gallons/ton are considered viable (25+

gallons/ton is high grade).

Oil is extracted by horizontal drilling and hydraulic

fracturing.

Kerogen is immature for oil generation. Kerogen is mature and oil has been generated.

Examples: the Green River Formation in the

western USA, Ordovician deposits in Estonia and

Sweden, the Tertiary deposits in Queensland,

Australia, the El-Lajjun deposit in Jordan, and

deposits in France, Germany, Brazil, China,

southern Mongolia and Russia. Historical mining in

West Lothian, Scotland.

Examples: the Bakken Shale, the Niobrara

Formation, Barnett Shale, and the Eagle Ford Shale

in the USA, R’Mah Formation in Syria, Sargelu

Formation in the northern Gulf of Arabia region,

Athel Formation in Oman, Bazhenov Formation and

Achimov Formation of West Siberia in Russia, in

Coober Pedy in Australia, Chicontepec Formation in

Mexico, and the Vaca Muerta oil field in Argentina.

DECC/BGS

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Bakken Analogue: Example of Large Scale Shale Oil Play

Sonnenberg, 2012 AAPG Convention, Long Beach

“What was made in the Bakken, stayed in the Bakken.”

Bakken reservoir unit is tight sandstone enveloped in organic shale

Three Forks reservoir unit is a series of silty dolomites

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US Bakken: Horizontal Hydraulic Fracturing

Continental

Th

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Fo

rks

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Water + Sand + Horsepower = Frack Job

N. Dakota Geol. Survey

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UK Onshore Licence Status

DECC/BGS

DECC/BGS recent study areas

2013 licence status (yellow)

14th round ends 28/10/2014

Areas on offer for future licences

-14th round (blue)

North of England Bowland-Hodder

shale is only prospective for shale gas

Other shale oil and gas plays may exist

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Weald Basin: Shale Prospective Area

DECC

Shale Prospective Area Existing Licences

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Wealden: Cross-section and Current Burial Depth

DECC/BGS

The Jurassic sequences have a limited burial history due to Palaeocene

uplift and inversion related to Alpine tectonic movements.

This means there has been limited opportunity for the organic matter (kerogen)

in the Jurassic shales to be heated sufficiently to produce free hydrocarbons.

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Wealden: Potential for Oil Mature Shales

▪ The mineralogy of clays transforms as soft mud is converted to lithified shale, and the

level of smectite-to-illite recrystalisation can be used as a broad indication of thermal

maturity.

▪ The clay mineralogy of the Weald samples suggests that the majority have reached a

maximum burial depth sufficient to reach the ‘light oil’ maturity zone.

DECC/BGS

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Wealden: Distribution of Organic Shales within Oil Window

Kimmeridge Clay/ Oxfordian Clays

DECC/BGS

Potentially most prospective between Haslemere, Godalming and Crawley

Where Kimmeridge Fm. is up to 1,000 ft thick.

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Wealden: Distribution of Organic Shales within Oil Window

Upper Lias Clay

DECC/BGS

Although the older Lias Clay is more extensive, it is thinner and less oil prone

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Oct 2014 Licence Round (28/10/14)

DECC/BGS

Potentially most prospective/oil mature

area from previous slides

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Wealden: BGS Estimated Shale Oil Volumes

Total Oil In-place Estimates (Billion Bbl)

With Top of Oil Window at 7,000 ft

(2,130 m) Maximum Burial Depth

With Top of Oil Window at 8,000 ft

(2,440 m) Maximum Burial Depth

P90 P50 P10 P90 P50 P10

Kimmeridge Clay 0.41 2.03 4.77 0.11 0.61 1.44

Corallian Clay 0.20 0.52 1.04 0.11 0.30 0.61

Oxford Clay 0.59 1.39 2.46 0.41 0.96 1.70

Upper Lias Clay 0.28 0.63 1.05 0.22 0.52 0.85

Mid Lias Clay 0.33 0.79 1.43 0.27 0.64 1.15

Combined P90 P50 P10

All Jurassic Clays 2.2 4.4 8.6

DECC/BGS

Note: 1. BGS Estimates of the total potential in-place shale oil resource in the Jurassic, Weald study area.

P90, P50 and P10 values are given for each unit. Note that the ‘combined’ resource figures are the

result of a separate Monte Carlo simulation, they are not the sum of the subdivisions.

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Midland Valley of Scotland (MVS) Shale Prospective Area

DECC/BGS

Shale Prospective Area Existing Licences

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MVS: Where the Oil Industry Started

Graham Dean, Reach Coal Seams Ltd.

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MVS: Cross-section and Current Burial Depths

DECC/BGS

The Carboniferous sequences have an extensive burial history.

This means there has been ample opportunity for the organic matter (kerogen)

in the Lr. Carboniferous shales to be heated sufficiently to produce free hydrocarbons

(oil and gas).

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MVS: Potential for Oil Mature Shales

DECC/BGS

Regional overview of est. depth(ft) to oil mature shale (Ro=0.6)

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MVS: Shale Oil Prospective Areas

DECC/BGS

Prospective areas for shale oil in Lr. Carboniferous shale formations

(Depths less than 1,000 ft mining related cut-off excluded)

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Oct 2014 Onshore Licence Round 14 (28/10/14)

DECC

Potentially most prospective/oil mature areas from previous slide

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MVS: BGS Estimated Shale Oil & Gas Volumes Total Gas In-place Estimates (Tcf)

Shale Gas Low (P90) Central (P50) High (P10)

Limestone Coal Formation 1.4 3.2 6.1

Lower Limestone Formation 3.7 6.3 10.8

West Lothian Oil-Shale Unit 16.2 32.6 66.7

Gullane Unit 12.5 32.0 73.2

Combined 49.4 80.3 134.6

Total Oil In-place Estimates (Billion Bbl)

Shale Oil Low (P90) Central (P50) High (P10)

Limestone Coal Formation 0.32 0.79 1.65

Lower Limestone Formation 0.26 0.59 1.15

West Lothian Oil-Shale Unit 1.44 4.07 9.26

Gullane Unit 0.10 0.24 0.53

Combined 3.2 6.0 11.2

DECC/BGS

Note: 1. Estimates of the total potential in-place shale oil & gas resources in the Carboniferous, Midland Valley of Scotland study area

beneath the mining/depth cut-off breakdown by unit. Note that the ‘combined’ resource figures are the result of a separate

Monte Carlo simulation; they are not the sum of the four subdivisions.

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Summary: Wealden Basin

▪ Wealden basin potentially significant volumes

(BGS est. P50 ~ 4.4 billion barrels)

▪ Existing conventional oil production (e.g. Great Oolite)

▪ Limited mature source rock

▪ No shale gas potential

▪ Local aversion to heavy industry

▪ Rural landscape

▪ Fracturing may stress local water supplies and the locals

too

▪ Trespass has been used in law to block under drilling

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Summary: Midland Valley of Scotland

▪ MVS higher potential volumes

(BGS est. P50 ~ 6.0 billion barrels)

▪ More mature source rock

▪ Significant shale gas potential

(BGS est. P50 ~ 80.3 trillion cubic feet)

▪ Coal Bed Methane potential

▪ Existing industrial infrastructure

▪ Less rural, secondary industrial landscape

▪ Abundant local water supplies for fracturing

▪ Scottish law on trespass is lenient compared to England

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Shale Oil UK: Production Potential

▪ None proven.

▪ Only information is from US analogues, esp. Bakken Fm.

▪ DECC has announced resumption of shale gas

exploration/fracturing operations subject to new controls

and approvals (13/12/2012)

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Thank you

Sources

▪ Andrews, I.J. 2014. The Jurassic shales of the Weald

Basin: geology and shale oil and shale gas resource

estimation. British Geological Survey for Department of

Energy and Climate Change, London, UK.

▪ Monaghan, A.A. 2014. The Carboniferous shales of the

Midland Valley of Scotland: geology and resource

estimation. British Geological Survey for Department of

Energy and Climate Change, London, UK.