Total enters UK shale scene with 40% stake in licenses
The company said this was an important milestone for them
Total has become the first major energy company to enter the UK's shale-gas sector, buying a 40% stake in two exploration licenses in central England. Announcing the move, Patrice de Vivies, Total's senior vice president for Northern Europe, said: "This opportunity is an important milestone for Total and opens a new chapter for the subsidiary in a promising onshore play." The licences, PEDL139 and PEDL140, which cover around 240 square km, lie in the Gainsborough Trough area of Lincolnshire, in the East Midlands region of England.
Total will team up with a number of independents to develop the licences. GP Energy, a subsidiary of Dart Energy Europe, has a 17.5% stake in the licences. Other interest holders are Egdon Resources (14.5%), IGas (14.5%) and eCorp Oil & Gas UK (13.5%).
IGas will act as operator for the initial exploration programme, with Total taking operatorship once the initial exploration work programme is completed. Total will pay $1.6 million in back costs to the partners and fund a fully carried work programme of up to $46.5m, with a minimum commitment of $19.5m, according to IGas. The deal is expected to complete by 30 June. The work programme includes a 3-D seismic survey, as well as the drilling and testing of a vertical exploration well and drilling and testing of a second, horizontal, appraisal well.
Andrew Austin, IGas' chief executive, said Total's entry into the UK shale scene is "a further endorsement of the potential that exists" in developing the country's unconventional gas resources. In June last year IGas said its licence holdings in northern England could have shale-gas reserves of as much as 170 trillion cubic feet (cf) of gas-in-place. Cuadrilla Resources, another of the independents pushing ahead with unconventional gas exploration in the UK, said its holdings in the Bowland Shale, also in England's north, could total as much as 200 trillion cf of shale gas.
While Total is the biggest company so far to have joined the UK's shale-gas hunt, the country's potential has already seen a number of big deals. In October last year, GDF Suez bought a 25% stake in 13 UK onshore licences across the Bowland, which is thought to hold as much as 2,281 trillion cf of shale gas. And in June 2013, Centrica bought a 25% stake in Cuadrilla Resources' Bowland acreage.
Despite strong government support for developing shale gas in the UK, it remains a contentious issue with the public. A group of anti-hydraulic fracturing campaigners have been protesting at IGas' Barton Moss acreage, near Manchester, since November. IGas is planning to start exploration drilling at Barton Moss in the first quarter of the year. This follows a six-week protest outside a drilling site in Balcombe, southeast England, last year.