1 Shale Gas Exploration and Hydraulic Fracturing East Riding of Yorkshire Council 11 th April, 2016

2 Who we are What is Unconventional or Shale Gas UK Shale Gas Areas Operations Economics

3 Cuadrilla – who we are Formed in 2007, UK company Early entrant to shale gas in Europe Technical expertise in geology and oil and gas operations Backed by industry-specialist funds Partnerships with Centrica and Engie/GDF Suez UK Exploration assets Bowland basin ≈ 293,000 acres Weald basin ≈ 192,500 acres UK 14 th Round offers Cleveland basin and Gainsborough trough ≈ 314,800 acres

4 What is Unconventional or Shale Gas?

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6 Why is Hydraulic Fracturing Needed?

7 UK Shale Gas Areas

8 DECC/BGS Shale Gas Study Central Case Estimates Bowland Basin –1,329 tcf gas Midland Valley –80.3 tcf gas –6.0 billion bbl oil Weald Basin –4.4 billion bbl oil

9 Wells/Licenses Cuadrilla’s licence blocks within East Riding: SE74 SE75 SE84 SE85 TA05 TA15 TA16 TA17 TA07a

10 Programme of work OperatorBlock(s) Work Programme All PartnersTypeFirm commitment Drill or Drop CUADRILLASE74 & SE84 CUADRILLA RESOURCES LIMITED, GDF SUEZ E&P UK LIMITEDSnew 2D1 well CUADRILLASE75 CUADRILLA RESOURCES LIMITED, GDF SUEZ E&P UK LIMITEDSnew 2D1 well CUADRILLASE85 & SE95 CUADRILLA RESOURCES LIMITED, GDF SUEZ E&P UK LIMITEDSnew 2D1 well CUADRILLA SE87b, SE88c, SE97a & SE98c CUADRILLA RESOURCES LIMITEDS 1 well CUADRILLATA05 &TA15 CUADRILLA RESOURCES LIMITED, GDF SUEZ E&P UK LIMITEDSnew 2D1 well CUADRILLATA07a &TA08 CUADRILLA RESOURCES LIMITEDS1 well, new 2D & 3D CUADRILLATA16, TA17 & TA18 CUADRILLA RESOURCES LIMITEDSnew 2D1 well

11 Operations

12 Seismic

13 Drilling

14 Hydraulic Fracturing Injects fluid into rock at a high enough pressure to cause the rock to fracture. Fluids can be water based, hydrocarbon based, acids, liquid CO 2, gaseous N 2, foams and various combinations. Fluids must be approved by the EA and be non-hazardous to groundwater. The fractures are held open with proppant after the hydraulic pressure is released. Typically silica sand. At greater depths or pressures, ceramic proppants can be used. Common sizes are 20/40 mesh (0.853mm-0.422mm) and 40/70 mesh (0.422mm-0.211mm)

15 Frac Suite on Preese Hall-1

16 Hydraulic Fracturing in USA

17 Development is in the subsurface Modified from a Petrobakken presentation. Multi-well pad

18 After drilling and fracturing the equipment is removed (Artist’s impression, production pad 2013) Elswick facility For the next 25 years the site looks like this

19 UK Energy – Electricity is vital but less than 20% of energy demand The challenge is much more than “Keeping the Lights On” Data Source – Dept. of Energy & Climate Change Heat: 84% of homes heated by gas Cooking: 61% homes use gas for cooking Electricity: Around 1/3 electricity generated from gas Manufacturing: 500,000 jobs in chemical and pharmaceutical industries depend on gas (ethane, propane etc) as a raw material Products: Gas used to make almost anything – clothing, plastics, toothpaste, medicines, cosmetics, adhesives, tyres Food production: Key component of nitrogen-based fertiliser – spread on 75% of UK farmland Transport: Natural gas cleaner than diesel – potential in buses and trucks Sustainability Gas provides back-up electricity when wind doesn’t blow Used as a raw material to manufacture renewable energy hardware Glass recycling furnaces need 1 million cubic metres gas per day

20 Future gas use scenarios (Source: National Grid Future Energy Scenarios 2014) Gone Green Slow Progression No Progression Low Carbon Life

21 Send Billions of £ to the exporters or…: (Source: IoD calculations) Potential contribution from Shale

22 The UK regulatory process is thorough Statutory bodies Department of Energy and Climate Change (DECC), The Environment Agency (EA) The Health and Safety Executive (HSE) The EA and HSE continually monitor operations –March - August 2011: EA visited the Preese Hall site 10 times (7 unannounced visits) Minerals planning authorities approve all surface operations Environmental permits issued by the EA comply with: EU Mining Waste Directive EU Industrial Emissions Directive EU Groundwater Directive EU Water Framework Directive Other relevant legislation Other consultees Natural England National Grid Public Health England Parish Councils Yorkshire Water

23 This EASAC analysis provides no basis for a ban on shale gas exploration or extraction using hydraulic fracturing on scientific and technical grounds… North Atlantic Group of the European Geological Surveys "The Survey Directors are concerned that frequent misleading media messages regarding exploration and exploitation of raw materials and geo-energy have the potential to obscure scientific results and conclusions, and may ultimately lead to poor decisions for Society." "Often dangers are evoked where there are none. When fracking for production of natural gas there are widespread fears in the population, most of which are unfounded from geoscientific perspective." The health, safety and environmental risks associated with hydraulic fracturing (often termed ‘fracking’) as a means to extract shale gas can be managed effectively in the UK as long as operational best practices are implemented and enforced through regulation. The currently available evidence indicates that the potential risks to public health from exposure to the emissions associated with shale gas extraction are low if the operations are properly run and regulated. European studies The areas of health, wellbeing and safety surrounding an onshore industry do not appear to present significant risks, although a degree of uncertainty is present. The technology exists to allow the safe extraction of such reserves, subject to robust regulation being in place. The Scottish Government, Edinburgh 2014 A total ban on hydraulic fracturing can not be justified on the basis of scientific and technical facts.

24 Getting Ready for UK Shale Gas Main Findings & Recommendations Main Findings £33bn spend on potential supply chain 64,500 Jobs in upstream phase Recommendations Define an investment case to develop required skills at pace Define common pad and hydraulic fracturing standards, setting detailed specifications for UK suppliers Encourage investment for UK-based capabilities in specialised areas like steel, rigs, hydraulic fracturing equipment as well as shared infrastructure for water treatment, waste disposal and gas processing.

25 What a successful shale gas industry has to offer Unsubsidised private investment Job creation Energy security contribution Shale Wealth Fund Community benefit for local people

26 Thank you