The UK’s nascent shale industry is reportedly poised for a major boost with British Gas owner Centrica (LON:CNA)said to be close to joining the so-called energy revolution.
Centrica is now in the final stages of talks to buy a stake in Cuadrilla, a privately owned first mover in UK shale, according to a Bloomberg report.
Although the industry remains very much in its infancy experts believe the UK’s shale resources could go some way to filling Britian’s energy gap and has the potential to dramatically reduce gas prices – as it has in America.
Given Centrica’s position as a leading gas supplier in the UK, and also as an operator with nearby assets in Morecambe Bay, its backing would be seen as a significant endorsement.
Cuadrilla is chaired by former BP chief Lord Browne and it was the first to strike gas in a UK shale play.
Following successful well tests in the Bowland shale, in the countryside near Blackpool, it believes it has more than 200 trillion cubic feet of gas in the ground.
While it can't all be recovered economically - shale operations usually have recovery factors between 10 and 30% - that amount of gas would equate to over 50 years of the UK’s gas needs.
Cuadrilla isn’t the only firm with significant shale resources. Only this week AIM quoted IGas Energy (LON:IGAS) revealed an assessment of its shale assets in the North West of England was also host to large volumes of gas.
IGas’s low’ estimate suggests some 15.1 trillion cubic feet (tcf) of gas in place, with a ‘most likely’ estimate 102 tcf. The ‘high’ estimate provides a figure of 170.3 tcf.
The AIM quoted firm is also believed to be seeking industry partners, however, it is expected to carry out an upcoming two-well drill programme first.
Like in the US, the extraction of shale gas in the UK has its critics largely relating to fracking – or hydraulic fracture stimulation – which is used to unlock the gas from the ‘tight’ rock formations.
Cuadrilla’s fracking operations caused minor tremors which caused work to stop temporarily in 2011. And following furthe investigation a moratorium on fracking in the UK was lifted.