Lancashire Shale Drilling Results Could Create Job Boom

Cuadrilla Resources’ recent success in its shale gas drilling program in Lancashire could significantly boost jobs locally in Lancashire and across the UK, the company said Wednesday in a report.

The company estimates that 5,660 billion cubic meters lie beneath Lancashire, and after completing three exploration wells, Cuadrilla said on Wednesday that its license area held enough “gas-in-place” to theoretically supply Britain’s entire annual gas requirement for more than 56 years, the Financial Times reported.

Cuadrilla estimates that total test well activity related to the exploratory drilling phase for shale will support some 250 full-time equivalent (FTE) jobs per year across the UK (assuming that three test wells will be completed per year) and includes jobs within all tiers of the supply chain and so-called induced jobs arising from the personal expenditure of employees.

Approximately 15 percent of the jobs, or 40, are expected to be taken by residents of Lancashire, which lies in northwest England.

“At this stage, very few of the higher value specialist supply chain contractors make extensive use of local labor or have a local base. This is to be expected given the exploratory nature of activities, but would change under a full commercial extraction scenario,” Cuadrilla said.

While test well employment impacts will be relatively short-lived, Cuadrilla anticipates that the full term employment impact peaks at approximately 5,600 full term jobs from 2016 to 2019 with a build-up in the years from 2013 onwards. The overall drilling program will last to 2021.

This estimate assumes 40 well pads with approximately 400 wells drilled over nine years, starting from 2013. At peak activity, 60 completed wells per annum are assumed, which implies the need for circa 10 drill rigs operating in tandem.

Under this scenario, the full term employment impact peaks at 1,700 FTE jobs locally in Lancashire from 2016 through 2019, Cuadrilla reported.

“This scale of the operation will lead to a substantial new clustering of a supplier base in Lancashire and attraction of specialist overseas suppliers to other UK locations,” Cuadrilla said. “Based on the evidence in other UK oil & gas clusters, it is likely specialist training and skills providers will set up base in Lancashire.”

This figure includes 100 FTE long-term maintenance jobs on the well field, which will rise to 160 FTEs when all wells are completed. Cuadrilla said these jobs will last for several decades.

“Based on the experience at the number of other oil and gas locations, we would also expect Lancashire to serve as a long term base for UK shale expertise with firms securing overseas and other UK contracts in subsequent waves of shale production,” the company noted.

Shale Activity Likely to Increase Average Lancashire Wage Level

The influx of jobs will raise the average wage level across Lancashire. A survey of Cuadrilla and its suppliers indicates average wage levels of around £55,000 per FTE per annum, reflecting the high skill levels required throughout the drilling and hydraulic fracturing process both on site and in supply chains.

Average wage levels across Lancashire currently stand at £27,500, “and we would anticipate the average salaries on offer as a result of shale gas activities will be broadly twice that currently on offer on average across Lancashire,” Cuadrilla said.