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UK unconventional gas producers confident before lawmakers' panel

London (Platts)--1Mar2011/956 am EST/1456 GMT

Cuadrilla Resources hopes to start f racking operations at the UK's f irst test shale gas well within weeks, CEO Mark Miller told lawmakers Tuesday .

The company started drilling its Preese Hall well in Lancashire last summer, and is now preparing f or f racking operations, he told the House of Commons Energy
and Climate Change Select Committee.

In a conf ident perf ormance bef ore the members of parliament, Miller said that industry best practice would ensure the operations were saf e, and that it was "near
impossible" that f racking liquids could escape f rom the well.

That would only happen with a badly designed well, Miller said. Ev en if it did happen, it was possible to use instruments to pin-point the f ault in the well casing
and apply a remedial cement job within three to f iv e day s.

While one MP raised the BP Deepwater Horizon incident as ev idence that wells could go wrong, Miller said he was "v ery conf ident" of the company 's procedures,
and that well designs were also checked independently .

He added that the entire drilling site was cov ered in a thick plastic, with grav el on top, and that the plastic -- hard to cut ev en with a knif e --would prev ent any
surf ace spills that might occur f rom soaking into the ground and possibly contaminating local water supplies.

The ef f ect of shale gas exploration on groundwater has become a controv ersial issue in the US and worldwide.

Questioned by Albert Owen MP, Miller admitted that he would not want to drink his f racking solution, used to open up pores in the shale rocks to release gas. But
he added "there's a lot of things in my household I wouldn't drink." Cuadrilla's actual f racking solution was 99.8% water and sand, he said, plus small amounts of
f riction reducer and biocide.

The f riction reducer enables large v olumes of water to be pumped down the well without exceeding the pressure limits of the well. The biocide is to stop bacterial
growth in the water -- bought f rom the local water company -- while it is held in tanks awaiting f racking operations.

Asked about the amount of water required f or f racking, Miller said that drilling a well required about 1,000 cubic meters, and f racking another 12,000 cu m. In total
that was about f iv e Oly mpic swimming pools a well. But he said the local water company -- United Utilities -- was able to prov ide that.

Andrew Austin, CEO of onshore explorer IGas Energy , told the committee his company had potential shale assets, but was currently f ocusing on another
unconv entional gas source: coalbed methane.

Austin's company aims to hav e the f irst commercial CBM site onstream in the UK during 2011.

He said that CBM did not require any chemical use at all, since unlike shale gas it was at shallower depths. IGas has carried out f racking operations on its Doe
Green site in the UK, but used only water, though it may consider re-entering and f racking with water and sand in the f uture.

Both Miller and Austin said that unconv entional gas production of f ered gains f or the UK, including potential f or new jobs, with a serv ice industry expected to build
up within the UK if the industry takes of f , and then potential to export workers and expertise f rom the UK abroad.

Both executiv es also said the UK's regulatory regime seemed "f it f or purpose." Miller said that compared to the US one possible adv antage was that the UK
approach took a more indiv idual look at each site.

Cuadrilla is the UK's f irst shale gas driller. The company is owned 41% by inv estment group Riv erstone, 41% by Australian serv ices group AJ Lucas and the
rest by management.

Env ironmental groups hav e called f or a moratorium on f racking in the UK until f urther scientif ic studies hav e been completed, and receiv ed backing f rom
shadow energy minister Huw Irranca-Dav ies, although the gov ernment is in f av or of exploration continuing.

Later in the ev idence session, shale gas expert and author of the "No Hot Air" blog Nick Grealy pointed out to the committee that whereas many groups came
bef ore the energy committee seeking subsidies f or their technologies, "the shale gas industry wants to giv e y ou money ." Unlike carbon capture and storage or
of f shore wind, shale would not need taxpay er support, but would make contributions to the Treasury . "Nobody is here with their hand out," Grealy said.

MPs were preparing f or a site v isit to Cuadrilla's operations. Cuadrilla is meanwhile getting ready to launch a website explaining its work to the public. In a mov e
towards greater transparency , CEO Miller already has some v ideos where he explains f racking techniques activ e on y outube.

--Alex Froley , alex_f roley @platts.com

Similar stories appear in European Gas Daily . See more inf ormation at http://bit.ly /EuropeanGasDaily

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