Energy company Centrica plc, the owner of British Gas, announced on Thursday that it has paid £40m to investment partners Cuadrilla Resources Ltd (Cuadrilla) and AJ Lucas for a 25% interest in the UK shale Bowland exploration licence (PEDL165) in Lancashire. Exploration and appraisal costs of up to £60m will also be paid by Centrica.
AJ Lucas is an Australian specialist service provider to the energy, mining and infrastructure sectors, while Cuadrilla, an independent UK energy company operates the Bowland licence and has drilled three exploration wells to date.
Shale formation thickness and the presence of natural gas has been confirmed in initial data obtained from the drilling, which indicates that there could be 200 trillion cubic feet (tcf) of gas within the Lancashire Bowland Shale licence, however the company stated that further drilling will be required to establish commercial viability.
The shale gas would be extracted by the new and controversial technique of fracking, which involves drilling deep into the earth’s crust using highly pressurised jets of water mixed with sand and chemicals to release pockets of natural gas or deposits of oil,that can then be extracted. However, environmentalists are said to believe the practice has inherent dangers and can trigger earthquakes and contaminate underground water deposits.
A recent report from the UK’s Institute of Directors, titled Getting shale gas working, suggests that natural gas from shale in the UK could lower imports in 2030 from 76% to 37% and nationwide investment could reach £3.7bn annually , with 74,000 jobs being supported across the industry and its supply chain
Centrica’s International Upstream managing director, Mark Hanafin, said: “With North Sea gas reserves declining and the UK becoming more dependent on imported gas supplies, it is important that we look for opportunities to develop domestic gas resources, to provide affordable sources of gas to our customers, and to deliver broader economic benefits to the UK.”