LONDON: Britain’s bid to exploit shale-gas deposits was boosted yesterday as utility Centrica Plc bought a quarter stake in a major gas-bearing formation in northern England, ahead of expanded drilling next year.
Shale gas has helped transform the US energy market, lowering gas and coal prices, and offers Britain, Europe’s biggest gas user, a means of bolstering its falling natural gas production.
Centrica, parent of British Gas, paid £40m ($62.8m) for 25 percent of the Bowland Shale in Lancashire, owned by license operator Cuadrilla Resources and its Australian private-equity backer A J Lucas.
Britain’s biggest energy provider will invest £60m in developing Cuadrilla’s Bowland licenses and a further £60m depending on production and exploration tests.
“This is a big step forward for shale in Great Britain and starts to move it beyond the speculative,” said Richard Sarsfield-Hall, principal consultant at energy consultancy Poyry.
The deal marks Centrica’s first-ever shale gas exploration project after it recently branched out into liquefied natural gas (LNG) imports from the United States and Qatar to offset rapidly declining North Sea production.
“This gives us an option of going into shale at a good price to establish what’s down there,” a Centrica spokesman said. “A lot of people are saying that sounds quite cheap, but that’s because we’re buying into an exploration licence rather than buying gas in place,” the spokesman said.
Cuadrilla previously said its Lancashire licences could contain as much as 200 trillion cubic feet of gas-in-place, although recoverable volumes are expected to be significantly smaller.
Britain’s energy ministry expects to update domestic shale gas recovery estimates by the end of July, in what is widely expected to be a major upgrade. But experts say only exploration drilling can determine the extent of recoverable deposits.
Although shale gas is ordinary natural gas trapped in dense rocks, it is retrieved through a controversial process known as hydraulic fracturing, or fracking, whereby water and chemicals are blasted deep underground to prop open rocks. Some environmental groups say the process is unsafe and could contaminate drinking water supplies.
Reuters
