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Page added on January 12, 2014
France to invest in Britain’s shale gas
Total (TOTF.PA) is set to become the first major oil company to invest in Britain’s nascent shale gas industry, boosting the industry’s profile in a country seen as one of Europe’s strongest prospects for unconventional oil and gas development.
The French group is set to commit 30 million pounds ($50 million) to drilling for shale gas in Lincolnshire, in central England, sources familiar with the matter told Reuters. A Total spokesman would not confirm any details, but said an announcement would be made on Monday.
The investment is tiny in oil industry terms – and especially small in the context of the tens of billions of dollars spent every year by Total, one of the world’s top five investor-controlled oil and gas groups.
However, having such a large player as a partner will be a feather in the cap of industry minnows Dart Energy (DTE.AX), Egdon Resources (EGRE.L), IGas (IGAS.L) and eCORP, with which Total will partner on two exploration licenses. The news will also allow Britain’s coalition government to argue that its incentives for developing unconventional oil and gas reserves are working.
“It’s hardly a drop in the pond really, but the government wants to get shale going and having the big boys in there helps,” said Andrew Monk, chief executive of the resources-focused investment bank VSA Capital.
A new set of UK land auctions next year could be pivotal, he said, adding: “We’ll see more deals and a bit more positioning between now and then”.
Geological studies show Britain to have large shale reserves, which could reverse a rising dependency on energy imports, but more drilling is needed to see whether the deposits are economical.
Britain’s government has thrown its weight behind shale gas exploration despite strong local and environmental opposition to the controversial extraction practice of hydraulic fracturing, or fracking – one of the techniques used to develop shale and unconventional gas blocks.
Along with a handful of other countries including Poland, the UK is seen as a test case for the prospects of unconventional gas and oil development in relatively crowded, wealthy, post-industrial western Europe.
Shale developers have made big money in some less populated parts of the industry’s birthplace – the United States – but in populous New York State, fracking remains prohibited. It is also outlawed in Total’s home country, France.
More generally, landowners in Europe often do not own the rights to the minerals under their feet, unlike those in the United States. This removes a key motive for development and complicates life for would-be drillers.
Total said last year that it would be interested in signing up for a position in Britain’s shale gas resources. Two large utilities – France’s GDF Suez (GSZ.PA) and Britain’s Centrica (CNA.L) – both agreed deals in 2013 to enter the sector.
Australian-listed Dart could not immediately be reached for comment. UK-listed Egdon and IGas declined to comment.
9 Comments on "France to invest in Britain’s shale gas"
rockman on Sun, 12th Jan 2014 1:31 pm
“Geological studies show Britain to have large shale reserves” A misstatement: The British Geological Survey estimates a possible significant amount of shale gas RESOURCES…not RESERVES.
The British Geological Survey (BGS) in association with DECC has completed an estimate for the resource (gas-in-place) of shale gas in part of central Britain in an area between Wrexham and Blackpool in the west, and Nottingham and Scarborough in the east. The estimate is in the form of a range to reflect geological uncertainty. The lower limit of the range is 822 tcf* and the upper limit is 2281 tcf, but the central estimate for the resource is 1329 tcf.
This shale gas estimate is a resource figure (gas-in-place) and so represents the gas that we think is present, but not the gas that might be possible to extract. The proportion of gas that it may be possible to extract is unknown as it depends on the economic, geological and social factors that will prevail at each operation.
Shale gas clearly has potential in Britain but it will require geological and engineering expertise, investment and protection of the environment. It will also need organisations like the BGS to play their part in providing up-to-date and accurate information on resources and the environment to the public, industry and Government.
mike on Sun, 12th Jan 2014 2:57 pm
My understanding of the geology of the gas bearing rocks is that they are mainly palaeolithic shales, heavily folded and faulted, and therefore very cosrly to exploit. The Cameron government imagines the UK will replicate the success of the Marcellus, making the country independent of imported (mainly Russian) gas and the country will surge to number one in the European economic league table overtaking Germany. Cameron’s wet dream.
Northwest Resident on Sun, 12th Jan 2014 5:06 pm
From a complete non-expert’s point of view, all this activity aimed at extracting shale fuels brings to mind an image of a bunch of hardcore drug addicts, almost out of their “main stash”, now desperately crawling around on the floor and rummaging through the garbage trying to find any last pathetic amount of that drug they are so addicted to.
Never mind that fracking and shale gas extraction leaves a stinking, smoking, toxic scar on the landscape where nature once existed — that’s just the price we have to pay for “progress”.
adamc18 on Sun, 12th Jan 2014 5:50 pm
I suggest that anyone who thinks that fracking is going to be politically acceptable once people realise what it will do the beautiful countryside and pretty villages of rural England. There has been massive opposition to wind farms, but they are nothing to the thousands of drilling sites and 1200 heavy truck movements to each one which fracking involves. My response to anyone in England who likes the idea of fracking is to take a look at g-earth views of Donie, Texas.
rockman on Sun, 12th Jan 2014 6:07 pm
Mike – A reminder: “shales” don’t produce commercial quantities of oil/NG. In the US there are a great many shale formations and the majority of them have been proven to contain little if any commercial reserves. Remember the stat: 80%+ of US shale production comes from just two of those many dozens of shale formations…and the US is THE expert in making hales work. And many of those shales are just above and below the Eagle Ford Shale. In fact, large areas of the EFS hold no commercial production. “Shales” are not the future solution for the world’s energy problems. Only that minority of shales will be of any benefit. It will take a good many exploratory wells to determine if English shales will offer any significant value for them.
mike on Sun, 12th Jan 2014 6:50 pm
Rockman – I am fully aware that the majority of shales formations will yield little of no gas or other hydrocarbons. There are some locations in the UK that do show the promise, however. Where I live, drilling down through the Jurassic to deeper formations before WW1 produced some oil, but not in quantities that made exploitation worhtwhile. Then in the fifties at the same location, there was more exploratory drilling that established gas as well as oil was present in various of the deep beds. But still not worthwhile to exploit. Now, wwith the price of oilrising, and the fall off of gas from the N Sea, this and other areas are being pushed assources that wil be sufficient to make UK gas independent. Untold riches are being promised, and the BGS is fully supportive of the drive to exploit this mineral wealth. My feeling is that 1 there is a lot of propaganda being pumped out te ensure capital for exploration and to shut up the “Luddite” opposition and 2 the complex geology of the possible source rocks will make exploitation in the majority of places simply not worhth wile even at todays prices. The se rocks are mostly not nice undisturbed beds of sedimentaries like I understand the American Bakken and Marcellus and Eagle Ford; they are old formations crunched up and deformed in the Hercynian and Caledonian orogenies.
rockman on Sun, 12th Jan 2014 10:05 pm
Mike – Interesting. Perhaps some of those early less than profitable efforts might lead to more testing given your NG shortages. The “new” Eagle Ford play in Texas is not new. I drilled and frac’d my first EFS well over 25 years ago. With prices at that time it wasn’t much a well or play. And I horizontally drilled and frac’d my first fractured reservoir well 20 years ago. That trend turned into the hottest oil play on the planet in the 90’s. But only because oil prices at the time made it work.
Always the same in the oil patch: follow the money.
Kenz300 on Mon, 13th Jan 2014 5:21 am
We would be better off investing in wind and solar energy rather than more fossil fuels or nuclear.
rockman on Mon, 13th Jan 2014 1:08 pm
Kenz – And there’s the problem, eh? Who is “we”? Are you part of “we”…do you now invest in fossil fuel extraction? Is “we” the oil companies? Is “we” the public? Is “we” the govt?
Obviously there is no monolithic “we”. The oil companies invest in what helps to maintain their stock value. If ExxonMobil announced they were getting out of oil/NG and going into alts their stock will go down the toilet…along with the equity of their shareholders. And if enough oil companies abandoned fossil fuels how would the economy function with reduced supplies? Not very well IMHO. Should the govt be doing the majority of alt investments? The govt isn’t a company…all they can do is fund alt companies. There could be some value there if those investments are chosen wisely. But even private enterprise picks losers from time to time. And how many $trillions would the global govt’s have to invest and where would those monies come from?
It’s nice to talk about a transition period…especially if you think in terms of starting 40 years ago. But we didn’t start then. And IMHO we really haven’t started yet to any serious degree. Record breaking global oil production. More coal production during the first decade of this new century then during any previous decade. The US and global economies trying to recover during a period of record high oil prices.
So there’s the choice much of the world doesn’t feel it has a choice to make: decrease development of fossil fuels for the benefit of alt development. Can the govt force such a transition? IMHO not so much of question as to whether they have the means to do so but the desire to do so. Around the globe the govts, including the US, are some of the biggest supporters of fossil fuel development. Thanks to surging exports the US has just moved into 4th place. And the vast majority of that high sulfur coal is coming from govt lands. From a govt that is intent or expanding our coal export terminals. If the non-profit motivated fed govt is pushing fossil development should one expect the private industry to not do the same?
Bottom line: there is no “we” working on developing a solution that moves us as quickly into the alts as is needed.