IGas Energy (LON:IGAS) has released a statement welcoming yesterday’s fracking report from an expert panel appointed by the Department of Energy and Climate Change (DECC).

The report was a response to the environmental impact of fracking in the north of England, near Blackpool, after privately owned Cuadrilla Resources had to halt drilling last year following a number of small tremors.

A panel of experts has now concluded that there was no reason why Cuadrilla could not resume fracking operations under tighter regulatory conditions and monitoring.

A six week public consultation will now follow, before the DECC finalises its new set of rules for fracking in the UK.

IGas said today it fully supports the view that if shale gas is to be part of the UK's energy mix there needs to be a good understanding of potential environmental impacts as well as the things that can be done to mitigate those impacts.

The company also said it supports the recommendation for ‘an effective monitoring system and a traffic light control regime’. 

And IGas says it will be responding positively during the consultation period that follows the DECC report.

IGas highlights that it is one of the largest onshore producers of hydrocarbons in the UK with a track record since the early 1980's, including more recently pilot sites for the extraction of coal bed methane in the North West of England.

Its interests include a variety of onshore hydrocarbons including conventional oil and gas, coal bed methane and shale gas.

IGas’s primary focus is coal-bed methane, a type of unconventional gas found in coal seams. But, in January a CBM well in Cheshire hit what IGas described as a ‘very significant’ amount of shale gas. 

It is thought that the Ince Marshes discovery could be at least twice the size of the original pre-drill estimate of 4.6 trillion cubic feet. 

The firm is now undertaking a formal process to find a partner for the shale project after it received a number of approaches over possible farm-ins. Once in place the venture will asses and subsequently develop the potentially significant shale resource.

“As is the case with all IGas Energy sites, we will only start to develop our shale resource following full community consultation and alongside a comprehensive planning process with all relevant agencies including DECC, the HSE and the Environment Agency,” IGas said.

The energy group said that after looking at the data from its first well at the field, near Warrington, reserves could be twice the independent pre-drill estimate of 4.6Tcf.

Elsewhere, the group added that its coal bed methane (CBM) wells at Doe Green have started dewatering and are showing early gas, though the rates have yet to stabilise.

IGas said it had commissioned the export equipment and all three wells are now connected to the facilities. 

The company's production assets, bought in with the acquisition of Star Energy last year for £10 million, averaged production of 2700 barrels daily, 20 per cent ahead of CPR estimates, in the first three months of 2012.

A revised independent resource estimate on the conventional assets is expected by the summer.

It also intends to apply for planning permission to bring the Albury gas field in the Weald Basin on stream in 2013.

Part of Star Energy, Albury was suspended following the drilling of a well for potential gas storage use but IGas has now flow tested a well at the field, which produced at a rate of up to 1.5 MMscf/day (260 boe/d).

Andrew Austin, chief executive, said: "Ince Marshes-1 is a particular highlight, potentially at least doubling the independent pre-drill estimate of 4.6Tcf of shale resource. 

"Our shale potential offers a significant opportunity for the company and to potential partners, in addition to our CBM resource base of over 300 million boe. 

"The UK Government's announcement about a new gas generation strategy and the support given in the budget to the industry are all signs that UK sourced hydrocarbons are going to play an increasingly important role in the future energy mix of the country."

The deal takes the group’s production profile beyond the 2,500 barrels of oil equivalent marker.

The firm’s 1P reserves now stand at 6.5 million barrels oil equivalent, while 2P reserves are 11.1 million barrels and 3P comes in at 16.7 million. Resources are now 241-412 million barrels (1C to 3C) and the in-place numbers range 904 million to 4.1 billion barrels of oil equivalent.

This is the group’s second major completion during 2011, after it acquired the assets of its JV partner Nexen UK in the first quarter, and it greatly strengthens the company’s position.

IGas chief executive Andrew Austin said: "2011 has been a transformational year for our company.

“Taking full control of our unconventional assets earlier in the year and now the acquisition of Star Energy has consolidated our position as a substantial onshore oil and gas company with an extremely exciting future ahead of us. 

“We now have the combination of assets and capability to deliver significant value on behalf of shareholders"

Notably the deal includes a gas sales agreement with PETRONAS, whereby IGas sells its first 150 billion cubic feet of gas to the vendor at market derived rates. In this respect IGas confirmed that that 1,500 boepd of next year’s production has been pre-sold at US$93.4 per barrel (net). 

IGas is paying £110 million to buy Star Energy’s assets. This has been funded by a US$140 million new debt facility through Macquarie Bank.