France Oil Giant Is Expected to Seek Shale Gas in Britain
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Version 0 of 1. LONDON — The French oil giant Total is on the verge of becoming the first major oil company to explore for natural gas and oil in shale rock in Britain. Under the deal, which may be announced as soon as Monday, Total would commit about $50 million for a roughly 40 percent stake in licenses held by a group of companies in Lincolnshire in the East Midlands, according to three people familiar with the matter who spoke on condition of anonymity because the agreement has not yet been signed. Total’s participation would be a vote of confidence in the government of Prime Minister David Cameron, which has been trying to promote shale gas as an alternative to declining production of oil and gas in the North Sea, despite opposition from local communities and environmental groups. Total, a major offshore oil and gas producer in Britain, apparently wants to expand its role. Surging production of oil and gas from shale rock has sharply lowered energy prices in the United States and helped make its industry more competitive, though it has also brought criticism from environmental advocates. Britain, however, is the lone country in Western Europe that has encouraged the exploration of shale gas, which is produced through hydraulic fracturing, or fracking, which uses a high-pressure mix of water, sand and chemicals. Analysts say that if shale gas production is successful in Britain, countries like France and Germany, which are thought to have considerable shale gas potential, might reassess their thinking. So far, shale gas exploration in Britain has been led by a handful of small companies. Other large European oil companies, including BP and Royal Dutch Shell, have taken a cautious approach to British shale gas. Shell’s chief financial officer, Simon Henry, has said that the company was wary of attracting the protests and news media attention that accompanied some onshore drilling efforts in Britain. Total has already attracting some of that attention, even before an official announcement. “Total, a French company who can’t frack in their own country because the French government has stopped the French countryside being ripped up, have now turned their sights on the U.K. countryside, where the U.K. government seems happy to allow the industrialization of our green and pleasant land,” the environmental group Greenpeace said in a statement on Saturday. Britain is thought to have substantial shale gas resources. The area where Total is planning to drill is part of a wide region in central England that the British Geological Survey, a research organization, said last year might contain 1,300 trillion cubic feet of gas. If 10 percent of that gas could be produced, it would be enough for about 45 years of British gas consumption at current rates. But too few wells have been drilled and tested to know whether the resources can be exploited commercially. John Browne, a former chief executive of BP who is the chairman of Cuadrilla Resources, a company exploring for shale gas in Britain, said in late November that the industry needed to drill 10 to 12 wells to determine whether British shale gas was viable. The Gainsborough Trough, the geological formation where Total plans to explore, has not been investigated for shale gas and oil, but Igas Energy, a British company, has conventional oil and gas production in the vicinity. Igas, eCorp International of Houston and Dart Energy are among the holders of the land where Total is planning to invest and are likely to become the French company’s partners. Total’s potential investment was first reported by The Financial Times and The Telegraph. |