Shale gas could point to oil reserves

THE presence of shale gas in the North West could indicate reserves of shale oil, tipped as the “next energy revolution” in a report by the accountancy group PwC.

According to its study, global shale oil production has the potential to reach up to 14 million barrels a day by 2035, which could push down oil prices by 25-40%.

The development of shale oil in the UK would contribute directly to investment, employment, economic growth and greater energy independence, says PwC.

Shale gas exploration is already underway in parts of Lancashire and Salford, and the government has promised tax breaks for this sector.

Chris Green, tax partner and UK nuclear and renewables leader at PwC in Manchester, said: “Lower global oil prices due to increased shale oil supply could have a major impact on the future evolution of the world economy by allowing more output to be produced at the same cost.

“These effects could build up gradually as shale oil production rolls out across the world to produce an estimated rise in global GDP of around 2.3%-3.7% in 2035. This would be roughly equivalent to adding an economy the size of the UK to total global GDP in that year. For the UK alone, the benefit of lower than expected oil prices could be around £30-50bn at today’s values.

Shale oil is extracted in the same way as shale gas – through hydraulic fracturing, or fracking, where water is pumped underground at high pressure.