IGas Energy (LON:IGAS) chief executive Andrew Austin has welcomed a report from MPs into shale gas in the UK.
Austin said the 50-page report from the Department of Energy & Climate Change (DECC) acknowledges the substantial benefits to the UK that shale gas can offer.
“Natural gas from shale has the potential to transform the UK’s energy market and boost the economy, create thousands of jobs, generate significant tax revenues and reduce our reliance on imported gas,” he said.
“We note the committee is keen to see exploration proceed quickly in order to validate current estimates and establish the true potential of shale gas in the UK.
“We continue to inform and engage with local communities and are working with the government to establish how those communities can receive and share in the benefits that shale gas could bring.”
His comments accompany the news that IGas plans to start drilling two more wells this year to test the potential resources it has in the exciting Bowland Shale play.
The decision follows extensive evaluation on the Ince Marshes-1 well that involved detailed seismic analysis, as well as petrophysical and geomechanical studies.
An updated risked estimate of total gas in place will be one of the key products of the work.
Other companies operating in the Bowland Shale include privately owned Cuadrilla and ASX-listed Dart Energy, which is on the lookout for a partner with whom to develop its acreage.
The DECC report said shale gas could help secure domestic energy supplies, but it may not bring down prices as it has done across the pond. It added that a more complex geology in the UK, as well as stronger public opposition, could make the American success difficult to replicate.
Shale gas has transformed the US from a massive gas importer to exporter, and prices reflect this over-supply. The hope is shale gas can do the same over here, reducing the UK’s dependence on imports and boosting tax income.
“Some of the factors which facilitated the US revolution, however, do not apply to the UK and so development of the UK’s shale gas industry is likely to be different to the experience of the US,” the report read.
“We conclude that it is too early to say whether domestic production of shale gas could result in cheaper gas prices in the UK.
“It is unlikely that the US experience will be directly replicated in the UK because of differences in geology, public attitudes, regulations and technological uncertainties.”
It comes shortly after George Osborne unveiled plans to introduce a “generous tax regime” to encourage investment in the industry in Britain. It followed the government’s decision to lift a ban on hydraulic fracturing, or ‘fracking’, the controversial process of extracting the gas.
There had been fears over the safety of the method. In 2011, Cuadrilla admitted its activities were the likely cause of two minor earthquakes in Blackpool.
But research from Durham University suggested fracking is not a significant cause of earthquakes. Its experts said fracking releases the same amount of energy as jumping off a ladder.
Shares in IGas rose 9% to 75p each.