Posted on 01/13/2014 11:15:00 AM PST by thackney
France's Total has become the first oil and gas major to enter Britain's shale gas market.
On Monday, the French company announced its acquisition of a 40% interest in two licenses in northern England for up to $48 million.
Total's involvement follows UK shale gas acquisitions in northwest England by GDF Suez and Centrica last year, and serves as a major catalyst to Britain's nascent shale gas industry.
UK Prime Minister David Cameron said on Monday that local officials that permit shale gas development to occur will be able to retain all of the business taxes they collect from the shale gas locations, up from the current 50%. The prime minister's office said in a statement that this commitment will be directly funded by the government.
The initial exploration program will be operated by Britain's IGas. Total will assume ownership of the projects as they reach the development phase.
The UK's shale gas resources are estimated to be sufficiently large to reverse the nation's growing reliance on imports. But so far, only a handful of wells have been drilled to determine the quantity of gas that can be extracted. And only one well has been fracked.
The UK government regards shale gas exploration as an attractive way to increase revenues and has implemented significant tax cuts for firms involved in the emerging industry.
The UK government is preparing for an onshore licensing round this summer that is anticipated to bring in several new and larger players to the industry, including U.S.-based shale exploration firms. The licensing round will access approximately 39,000 square miles of prospects.
50 to 150 new licenses will likely be issued to companies seeking to develop onshore unconventional hydrocarbon resources.
Last year, the BGS estimated that roughly 1.3 quadrillion cubic feet of gas was held within shale formations beneath the Bowland area in northern England. The BGS did not provide an estimate as to the quantity of gas that could be recovered.
As written several months ago on these pages, the stars seem to be aligning for shale exploration in the UK. Total's announcement is but the latest manifestation of the growing recognition of the importance of developing these resources in the UK.
We have concluded that the support of six main UK sectors has rendered it highly likely that shale exploration will begin in the very near future in the UK:
Political Support: Prime Minister David Cameron's encouragement of the practice has been indispensable to advancing initial investment-related and investigatory efforts;
Investment Support: Last summer, the British government introduced draft tax breaks in the hopes of catalyzing investment in shale gas production. The new tax allowance for shale gas would reduce the tax payable on income from shale production from 62% to 30% for oil and gas, the UK treasury reported in a statement.
Industry Support: The willingness of companies such as Total and GDF Suez to seek partnership with UK-indigenous companies indicates industry's nascent receptivity to participating in UK shale exploration;
Geological Support: The BGS's recently completed surveys of northern England, yielding promising reserves estimates, together with the agencies plans to explore southeast England for potential reserves, demonstrates that there are copious shale reserves to be exploited;
Public Support: A recent poll commissioned by Cuadrilla Resources indicates that 57% of the respondents told pollsters they support shale gas exploration in the Bowland Shale.
Scientific/HSE Support: A recent environmental impact study conducted by Public Health England, together with other studies conducted primarily with regard to the NAM shale plays, have consistently demonstrated that fracking itself does not pose serious risks to public health.
OPEC is excrementing bricks over this.
I think they are more concerned at this point over oil bearing shale, than that producing Natural Gas at this point.
Nat Gas has the potential to become significant in displacing oil, but for now, it is more likely to displace coal.
So, who is more unhappy about this? OPEC or the American left?
UK has too much pride in its “pristine” countryside to let too much of this happen.
The Welsh and Scottish coal mines are one thing, but drilling wells in Hertfordshire is taking things a bit too far for their taste.
From what I’m led to believe, extraction isn’t that obtrusive. And the UK can’t afford to ignore this rare bonanza. Britain isn’t an island particularly renowned for its vast mineral resources.
Oh, and the sale gas is located primarily in England’s former industrial heartland in the North, so all the southern yups need not worry about their precious home county countryside being darkened by satanic mills, or any other beastly industrial apparatus.
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