With the American shale industry growing at a phenomenal rate, and close to making the country energy independent, many observers are casting envious eyes across the Atlantic.
In fact, the recent 25% fall in the price of oil is being viewed by many as an attempt by OPEC to scupper the industry, with the Saudis saying an oil price of less than $80 a barrel could seriously damage almost half the US shale oil industry.
But ongoing innovations are cutting US production costs with one North East company playing a part in these developments.
When Bryan Bunn launched Wynyard business Nortech Solutions in 2012 he envisaged having a crack at the US shale gas industry and things have moved on at a rapid speed since.
It was a little over a year ago that Bryan Bunn returned from Pittsburgh with his first contract to supply engineering design support for a new compressor station to support shale gas recovery in Pennsylvania and this has laid the foundations for further work.
Nortech is now close to signing some new contracts which could help boost job numbers at its Wynyard Park base.
Since its 2011 launch the Nortech Group, a professional engineering design and project management company targeting the oil and gas, chemical, energy and iron and steel industries, has grown rapidly and now employs 80 people with annual revenues of £8.9m.
Mr Bunn said: “We saw the opportunities in being able to provide engineering and project support to the oil and gas sector in the North Sea and once that had been achieved successfully it was always our plan to take that model further afield, and apply it to other geographies, including the US.”
Nortech has been successful in the Northern US, and in particular in the Marcellus shale gas market in Pennsylvania.
He explained: “The Marcellus and Utica in Ohio are ideal markets for our expertise in processing hydrocarbons.
“A significant volume of the gas in these fields is wet and rich in hydrocarbons and this fits in with our proven experience in the petro chemical sector where we have designed processing plants to deal with a mixture of hydrocarbons from the same source materials.”
The Nortech managing director explained how the Gulf Coast is the US shale gas hot spot and how this sucks in most investment providing opportunities further north.
He said: “There are a lot of start-up companies in Pennsylvania going after the shale gas and they have limited resources, which is providing fantastic opportunities for UK companies.
“The centre of gas processing in Pennsylvania is Pittsburgh; this is a former steel town and while there are lots of design and engineering skills in the area as a result of the steel industry, gas processing expertise is slowly catching up.
“The companies in the States are more than capable of providing general project management and dedicated local designer support with the higher end process and technical engineering being supplied from our Wynyard office.
“They need the expertise we have and we are talking to a number of potential partners looking for the type of experience we have.
“The UK has a good reputation in the US and across the world for the quality of our engineers and designers, and we can offer high level skills to potential partners which are greatly appreciated in the US.”
One of the first pieces of work Nortech successfully completed was for a gas processing facility in Houston, Pennsylvania, where the shale play has been increased in size by 200%, with further moves in place to double that capacity.
“The potential out there for companies such as ourselves is literally massive and the more work we secure in the States then the better this positions us for when the shale industry takes shape in the UK and Europe.
“We are cutting out teeth in the US. We find that while it’s not necessarily an open door to all, the door is certainly not locked,” he added.
Moving on to the potential for a UK industry Mr Bunn said: “The UK will shortly be importing more of its energy needs than it generates, we will become energy negative, and we will therefore have to get cracking on developing our shale gas reserves as part of a national integrated energy solution.
“At this stage it is not being handled particularly well, there is public concern about fracking. A lot of people are frankly scared and the Government needs to step up efforts to remove these fears and constraints and spread the positive message about the industry; shale gas can be a significant part of the solution we are looking for in the UK.
“America has cut its carbon emissions faster than any developed country solely down to its shale industry as it has half the emissions of coal.
“But when it does happen in the UK the environmental and safety concerns will mean there are high entry levels for companies wanting to break into the market. There will be a demand for serious companies with proven shale gas experience and expertise.”
Mr Bunn is confident the company can double its annual revenues in the next few years and it currently has enough space for 120 people at its Wynyard Park offices.
“It’s not rocket science. Our only limitations at the moment are our size. As we grow we aim to be a company that remains flexible and responsive and I can see us having 20 people working on US shale gas contracts in time,” he said.
Mr Bunn explained how Nortech is currently in talks about a prospective development which will see the construction of 3,000 miles of new gas pipeline in Pennsylvania.
“There are thousands of wells which have the gas and are waiting to be connected to a delivery source, literally thousands, and the pipeline needs to be constructed, supported by compressor stations at 10 miles intervals
“The real challenge for America is not getting the gas but in collecting and processing it.
“The market is huge. It’s just so big. At the moment the Americans are focused on speed to market with acceptable wastage and they need to find smarter solutions going forward.”
He added: “The speed of development is phenomenal. The Americans have a real can do approach and we need to get a move on. It’s an amazing place, a glimpse of what we may see here in the future.”
14th round of applications for fracking rights IS now closed
The latest round of applications to drill for oil and gas on the UK mainland closed last week.
The 14th round, as it is known, was the first for six years since the potential of fracking for shale gas became more widely known.
At this stage it is not yet known what the level of interest has been with Department of Energy and Climate Change telling The Journal last week that no announcements will be made until next year.
While most of the best shales run from Lancashire into Yorkshire, and in a large area south of London, there are some present in the North East and exploration plots have been made available to prospective operators in Round 14.
The Government recently introduced a streamlined planning process for shale gas applications which was due to be tested last weeks with an application by Cuadrilla Resources in Lancashire, but the application was deferred.
Lancashire County Council also has a second application from the company, while Egdon Resources has an application in with Lincolnshire County Council and IGas with Cheshire County Council for a proposed site near Ellsmere Port.
It is now almost three years since the Government imposed a moratorium on fracking in the UK following tremors at a site near Blackpool.
It later emerged that the drilling had taken place on a fault in the seam, and in-depth research and papers by bodies such as Durham University have found the risks of earth tremors from fracking to be low compared to other manmade triggers, such as mining, geothermal activity or reservoir water storage
The Durham research has also concluded that it is “incredibly unlikely” that fracking at depths of 2km to 3km below the surface, where most shale operations take place, would lead to the contamination of the shallow water aquifers which lie above the gas resources.
The Government is keen to seen an industry develop in the UK with parts of the country sitting on vast reserves.
The Bowland Shale in Lancashire is estimated to contain 1,300tcf (trillion cubic feet) of shale gas and if only 10% of this was recovered it would meet the UK’s domestic gas needs for 50 years.
While the moratorium on fracking was lifted last year the UK still labours to get out of the starting blocks, in marked contrast to the US.
From a standing start the growth of the US shale oil and gas industry has been phenomenal. It has so far created one million jobs, is expected to create almost two million more by 2020. It has put an extra £750 in the pocket of every household, slashed energy bills by over two-thirds and will make the US energy independent by 2018.
While the current oil price of $80 a barrel, down by a quarter from June, this low price is said to be threatening production and exploration activities across the numerous US shale basins, but continued technical advances are helping cut costs.