Ineos, Total and Cuadrilla Pick Up New Shale Licenses

02.09.2015 -

As part of its 14th offshore licensing round – the first in seven years – the UK government has begun selling exploration permits covering 2,700 km2 of land in Yorkshire and the Midlands. At least half of the exploration space is believed to contain shale gas.

Swiss-multinational chemical producer Ineos, the UK subsidiary of French oil and petrochemicals group Total, along with Australia’s Cuadrilla – the only company to have yet fracked in the UK – have already stepped up to buy stakes.

The first tranche of awards covers land not deemed to require further environmental assessment. Licenses for an additional 132 blocks covering parts of northwest England, including North Yorkshire and Lincolnshire, as well as Dorset in the south and the Isle of Wight are to be offered later, probably during the second half of this year.

Energy minister, Lord Bourne, said the license awards are part of the government’s “long-term plan to build a more resilient economy, create jobs and deliver secure energy supplies.” He said investment in shale could reach £33 billion and support 64,000 jobs “while providing a cost-efficient bridge to lower-carbon energy use.”

As part of the UK’s drive to emulate the US shale boom, the government in mid-August implemented a fast-track process to assess all applications systematically and quickly. The procedure, said to be in response to what Westminster regards as local foot-dragging in the face of opposition to fracking, would assure that local councils rule on the bids within16 weeks or face having the decision taken out of their hands.

In its response, the UK arm of international environmental advocacy group Greenpeace said the “starting gun to the fight for the future of our countryside has been fired,” with “hundreds of battles” expected to spring up to protest destruction of rural landscapes. The Royal Society for the Protection of Birds said the 27 blocks currently being parceled out included 53 sites of special scientific interest and three nature reserves.

Altogether in the current licensing round, permitting authorities are said to have received 95 applications from 47 companies. Ineos was awarded three permits, covering 250 km2 in the East Midlands. Another major beneficiary was Total, which snapped up five exploration blocks, while Cuadrilla Resources was awarded two.

Ineos, which now claims to be the UK’s third largest shale gas player, called the award “a further significant step” in its drive to become the largest player. The chemical producer entered the market in August 2015 with the purchase of a franchise from the UK’s Dart Energy. It has pledged to return 8% of its fracking profits to local communities.

Total Exploration & Production UK will own 50% of a permit to exploit an area in Lincolnshire’s Gainsborough Trough. The British arm of Total said it believes its licenses cover an area offering the greatest potential for significant shale gas discoveries in the UK and position the company as a major player.