French oil & gas giant Total says it will invest approximately $50 million in the United Kingdom’s nascent shale sector, focusing on gas exploration in the East Midlands.
Total is set to pay $1.6 million to acquire 40% shareholding of two exploration licenses in the geological basin – Gainsbrorough Trough – located in Lincolnshire, an area believed to have rich gas deposits.
This is the first major foreign multinational to invest in Britain’s shale sector, which the government is keen to exploit after seeing the benefits to the US economy.
The shale gas boom in the United States has brought the price of gas down, making it now up to four times cheaper than in Europe. Lower energy costs have triggered a manufacturing recovery in America.
The UK is in a prime geographical position as far as shale is concerned, with an estimated 1,300 trillion cubic feet of shale gas in 11 counties in northern and central England, according to the British Geological Survey.
The Financial Times says that if just one tenth of the gas reserves in those 11 counties were extracted, the country would have half-a century’s worth of gas.
Total is also funding a $45 million exploration program over an area covering 250 square kilometers. The company will buy into two licenses currently owned by Egdon Resources, IGas, Dart Energy and eCORP.
UK offering incentives to developers and local residents
The government has told communities which are affected by shale gas drilling that they will receive £100,000 ($165,000) in community benefits plus 1% of production revenue if gas is found and extracted.
Generous tax benefits have also been offered to shale developers.
Anti fracking protests
Fracking, shorthand for hydraulic fracturing, is a technique used to recover gas and oil from shale rock.
Bore holes are drilled down into the earth, after which a high-pressure liquid mixture of water, sand and chemicals are injected into the rock to release the gas inside.
In the US fracking has prompted environmental concerns. Huge amounts of water are required, which may have an impact on the surrounding environment. There is also concern that the chemicals, which are potentially carcinogenic (cancer-causing), may leak out and contaminate groundwater around the site.
According to the oil and gas industry, fracking is only hazardous if it is not done properly. Industry experts insist it is not an inherently dangerous technique.
Lawrence Carter, a Greenpeace campaigner said it is ironic that Total, a French company has had to come to the UK for exploration because “the French government has stopped the French countryside being ripped up.” The UK government, he adds, seems quite happy to “destroy our green and pleasant land.”
Greenpeace warns that the British government is going ahead with the sale of much of Britain for drilling with no public mandate.