UK shale plans rapid expansion

13 January 2014 Last updated at 13:41 GMT

UK shale plans 'substantial' drilling expansion

By Edwin Lane Business reporter, BBC News

How fracking recovers natural gas from shale

The companies at the forefront of the UK's nascent shale gas industry are planning a "substantial" expansion in the number of drilling sites.

IGas, one of the four companies partnering with French oil major Total, says it is planning to explore new fracking sites across the UK.

Total is investing at least $21m (£12.7m) in UK shale gas.

Energy minister Michael Fallon said he expects up to 40 shale gas sites to be drilled in England over next two years.

"This is going to be a crucial step for the industry," said a spokesman for the United Kingdom Onshore Operators Group (UKOOG), an industry body. "The amount of sites, planning permission permitting, is going to go up quite substantially."

So far just one exploration well has been drilled in the UK - in Fylde near Blackpool.

'Not every village'

Energy minister Michael Fallon said there could be "some 20 to 40" exploration wells drilled in the next two to three years, but said these would not be "all over the country".

"You're not going to see wells in every village or every field. You're going to see 20 to 40 exploration wells and then we'll see exactly where the companies are most likely to get it out," he told the BBC.

But IGas said it would be applying for permits for "extensive surveys" to identify potential new fracking sites in north-west England, where it already holds licences, but would also seek permits to survey areas of the East Midlands and south England.

The UKOOG trade body estimates that 40 wells would mean 10-20 drilling sites, as each site hosts more than one well, covering an area of two to three football pitches.

Confidence

The industry has been encouraged by Total's investment, which will see it take a 40% stake in two exploration licences in Lincolnshire, partnering with IGas, Dart Energy Europe, Egdon Resources and eCorp Oil & Gas.

Shares in Egdon Resources rose 45% in morning trading. IGas was 13% higher and Dart Energy rose 13%.

Total is the first "major" oil firm to invest in UK shale, following the smaller French firm GDF Suez, which signed a £24m exploration deal with Dart Energy in October.

British Gas owner Centrica also bought into licences owned by Cuadrilla in a deal worth up to £160m in June.

The size of the investments remain small, however, compared with the tens of billions of dollars spent by companies like Total every year.

But the investment is seen as an initial vote of confidence in the industry. The UK is seen as one of the most promising shale gas sites in Europe.

The British Geological Survey estimates there may be 1,300 trillion cubic feet of shale gas present in the north of England alone.

Speaking on the BBC's Daily Politics programme, Mr Fallon said the shale gas industry "could - I repeat could - make a huge difference to our economy".