Total Joins UK’s Pursuit of Shale Boom

Total of France is to become the first major oil company to explore for shale gas in the UK, in a big boost for government efforts to create a US-style fracking boom on British soil, according to a Financial Times report on January 10.

The deal will be seen as a big vote of confidence in the UK’s fledgling shale industry. The coalition has made the exploitation of Britain’s unconventional gas reserves a top priority, offering tax breaks to shale developers and promising big benefits to communities that host shale drillers.

Total will announced yesterday a deal to join a shale gas exploration licence in the Midlands currently operated by Ecorp of the US, according to people familiar with the matter. The other partners in the project are Dart Energy and UK-listed Igas and Egdon Resources. George Osborne, chancellor, has argued that shale has "huge potential” to broaden Britain’s energy mix, create thousands of jobs and keep energy bills low.

But the entry of Total will antagonise anti-shale campaigners who are strongly opposed to fracking. They say the process, which involves injecting water, sand and chemicals underground at high pressure into shale rock to release the oil and gas trapped inside, can contaminate groundwater and cause earthquakes. They also worry about the air pollution and heavy traffic resulting from large-scale fracking operations. Shale gas explorer Cuadrilla Resources faced fiery protests by anti-fracking campaigners last summer when it attempted to drill for oil in the leafy Sussex village of Balcombe.

However, ministers have insisted shale gas development should go ahead, citing the broad economic benefits it has brought the US. A boom in North American production from shale means natural gas in the US is now three to four times cheaper than in Europe. Cheap gas has driven down household energy costs for US consumers and sparked a manufacturing renaissance. The coalition says Britain could potentially enjoy a similar bounty. It points to recent estimates that there could be as much as 1,300tn cubic feet of shale gas lying under just 11 English counties in the north and Midlands. Even if just one-10th of that is ultimately extracted, it would be the equivalent of 51 years’ gas supply for the UK.

Ecorp’s licence covers the Gainsborough Trough, a geological basin that is part of the Pendleian Shale in Lincolnshire. Though Total’s investment may be relatively small in value, the area is thought to be rich in gas. Little exploration has occurred there so far. Total has long been interested in investing in the UK’s shale reserves. The company is shut out of its home market, France, which has banned fracking. Total was one of a number of majors who approached Cuadrilla last year about buying into its licences in the Bowland Shale in north-western England, one of the most potentially attractive areas in the UK. In the end, it was beaten by Centrica, owner of British Gas, which bought a stake in the licences last June.

Total will be the second French group to enter UK shale gas sector. Last October, utility GDF Suez announced a deal with Dart Energy, saying it would fund the drilling of up to four exploration wells in the Bowland Shale over the next three years.