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Publication - Research Publication

Unconventional oil and gas: Economic Impact Assessment and scenario development of unconventional oil and gas in Scotland

Published: 8 Nov 2016

Research into Economic Impact Assessment and scenario development of unconventional oil and gas in Scotland.

64 page PDF

1.7MB

64 page PDF

1.7MB

Contents
Unconventional oil and gas: Economic Impact Assessment and scenario development of unconventional oil and gas in Scotland
Footnotes:

64 page PDF

1.7MB

Footnotes:

1. http://www.gov.scot/Topics/Statistics/Browse/Economy/Input-Output. The most recent tables were published by the Scottish Government in 2012.

2. Throughout this report, we refer to DECC projections. It should be noted that DECC has now been absorbed into the new Department for Business, Energy and Industrial Strategy ( BEIS).

3. We have taken a long-term view in this study to evaluate the full economic lifecycle of the industry and to consider decommissioning and after care costs.

4. The BGS articulate some of the uncertainties regarding resource levels: "The relatively complex geology and relatively limited amount of good quality constraining seismic and well data result in a higher degree of uncertainty to the Midland Valley of Scotland shale gas and shale oil resource estimation than the previous Bowland-Hodder and Weald Basin studies... Reserve and recovery estimation is not possible at this stage; in order to estimate the shale gas and oil reserves, drilling and testing of new wells will be required." (See BGS.ac.uk.)

5. The low scenario also draws on input/suggestions received from Scottish Environment LINK and Friends of the Earth Scotland. This does not imply any endorsement of the scenario by these stakeholders.

6. Including the impact of cost reduction through learning.

7. Including the impact of cost reduction through learning.

8. Including capex, opex and decommissioning jobs.

9. Including capex, opex and decommissioning jobs.

10. Converted from GWh to bcf.

11. We assume that demand for gas remains the same over the studied period, i.e. total intermediate consumption in Scotland remains unchanged.

12. On an undiscounted basis.

13. This table excludes the benefits/ disbenefits of CBM. Our analysis demonstrates that in the current context (current price of gas, cost of development, estimated well recovery rates, etc.) the development of CBM may not be economic and may therefore not materialise. As such, we have not included FTE jobs for CBM. For a summary of the analysis on CBM, please see Section 5 (Table 5.1).

14. The difference between total spend and spend in Scotland is expenditure outside Scottish borders on equipment and other requirement of UOG development.Based on total UOG spend.

15. Based on total UOG spend.

16. The impacts estimated in this study are gross impacts of the development of the UOG industry.

17. n.d. - no date.

18. Third Energy will need to seek further permission to produce on a large scale.

19. http://www.gov.scot/Topics/Statistics/Browse/Economy/Input-Output. The most recent tables were published by the Scottish Government in 2012.

20. Employee wages or dividends paid to shareholders are not intermediate inputs, but are included in GVA.

21. It is estimated that the total CBM resource in the UK is 2.9 trillion m3 (102 tcf), and that the recoverable part of the resource is unlikely to exceed 1% due to low seam permeability, low gas content and planning constraints. No separate figures are available for Scotland, but from areal estimates of resources ( DECC, 2010) it is possible that Scottish resources are just 22% of those of the whole UK (Independent Expert Scientific Panel, 2014). Based on this estimate, Scottish resources are 22.44 tcf.

22. This scenario is based on a shorter planning horizon.

23. This scenario also draws on input/suggestions received from Scottish Environment LINK and Friends of the Earth Scotland. This does not imply any endorsement of the scenario by these stakeholders.

24. Total intermediate consumption.

25. Based on experience of some planning applications in the UOG sector in England.

26. As a result of this we have not formally considered the impacts on carbon prices.

27. Including the impact of cost reduction through learning.

28. Including the impact of cost reduction through learning.

29. Including capex, opex and decommissioning jobs.

30. Our analysis demonstrates that in the current context (current price of gas, cost of development, estimated well recovery rates, etc.) the development of CBM may not be economic and may therefore not materialise. As such, we have not included FTE jobs for CBM. For a summary of the analysis on CBM, please see Section 5 (Table 5.1).

31. Converted from GWh to bcf.

32. Cumulative over the period 2018-2062.

33. This table includes the benefits/ disbenefits of CBM. Totals do not add up due to rounding.

34. Totals do not add up due to rounding.

35. The Ocean Gateway area covers Liverpool, Manchester, Cheshire and Warrington.

36. The Ocean Gateway study assumes that 30 sites of 10 vertical wells with 4 horizontal laterals each (40 laterals per production site). This equals to a total of 300 vertical wells and 1,200 laterals

37. Total of 1,000 vertical wells and 4,000 laterals.

38. Seven domains are used to measure the multiple aspects of deprivation. This includes employment, income, health, education, skills and training, geographic access to services, crime and housing ( ONS & The Scottish Government, 2012). We note that potential employment opportunities from the UOG sector in deprived areas may arise from indirect and induced jobs through the supply chain instead of direct highly skilled (specialists) jobs.

39. Tax receipts are calculated on total spend (including Scotland, the UK and the rest of the world).

40. http://www.ineos.com/news/ineos-group/ineos-plans-25-billion-shale-gas-giveaway/

41. This study does not quantify the number of direct, indirect or induced jobs related to the petrochemical sector.

42. For example, the creation of an independent research consortium on hydraulic fracturing, known as ReFINE. The consortium is led jointly by Durham University and Newcastle University, with support from academics across Europe and North America. https://www.dur.ac.uk/dei/resources/briefings/refine/

43. It is worth noting that some of these aspects can be mitigated by delivering water via pipe instead of tankers and by transporting gas away by pipeline without flaring for example.

44. It is estimated that the total CBM resource in the UK is 2.9 trillion m3 (102 tcf), and that the recoverable part of the resource is unlikely to exceed 1% due to low seam permeability, low gas content and planning constraints. No separate figure is available for Scotland, but from areal estimates of resources ( DECC, 2010) it is possible that Scottish resources are just 22% of those of the whole UK (Independent Expert Scientific Panel, 2014). Based on this estimate, Scottish resources are 22.44 tcf.

45. We used the following formula: Total oil energy equivalent/Total oil energy equivalent + Total gas energy equivalent).

46. Representing the costs of staff performing monitoring.

47. Totals do not add up due to rounding.

48. Totals do not add up due to rounding.


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