Exploration & Production | Top Story | Deals - Acquisition, Mergers, Divestitures
Total Dives into U.K. Shale Gas as First E&P Major Approved for Ops
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Total S.A. has been allowed access to explore for shale gas in Britain, becoming the first major E&P company to do so, according to a report by Reuters.
(Access the deal via Shale Experts' A&D Database)
Total announced on Monday January 13 that it had bought a 40 percent interest in two licenses in the Gainsborough Trough area of Northern England for a price of $48 Million.
Commenting on the acquisition, Patrice de Viviès, Total’s Senior Vice President for Northern Europe, said: "This opportunity is an important milestone for Total E&P UK and opens a new chapter for the subsidiary in a promising onshore play. The Group is already involved in shale gas projects in the US, Argentina, China, Australia and in Europe in Poland and in Denmark, and will leverage its expertise in this new venture in the UK."
Total's involvement in Britian follows shale gas deals with Centrica and GDF Suez.
While not a large investment by Total, this is thought to mark Britian as a strong prospect for unconventional development.
Glynn Williams, partner at Epi-V, an investor in oil and gas services, said: "We expect further international energy companies to follow the lead taken by Total...and ramp up their plans for signing 'farm-in' agreements with UK firms that already have licences to explore UK shale reserves."
Fracing is opposed by environmentalists in the UK as elsewhere due to concerns over contamination of groundwater. England saw protests in the south of the country last summer.
Gas reserves in Britain are estimated at more than 400 times the country's annual gas consumption. The government has thrown its weight behind exploration at a time when rising energy prices have become a hot political issue.
Greater population density and tighter environmental regulation means that Britian is unlikely to see a shale boom in the same manner as the United States.
However, the government has allowed handsome tax breaks for companies involved in the nascent industry and promised financial benefits to local communities affected by shale gas exploration.
France's constitutional court in October upheld a ban on hydraulic fracturing for shale oil and gas.
Poland, which also actively encourages shale gas exploration, has seen a raft of oil and gas companies withdrawing from its program due to poor drilling results and an uncertain legal landscape.