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IGas in talks over shale energy that could power UK for six years

TelegraphBy Emily Gosden | Telegraph – 9 hours ago..

IGas Energy, the Aim-listed shale gas explorer, is in talks with major landowners and industrial firms in Lancashire and Cheshire about drilling access and gas supply deals.

The company, which last week announced plans to start drilling for shale gas at Barton, Greater Manchester, hopes to agree new partnerships “over the next few months”, Andrew Austin, chief executive of IGas, told The Sunday Telegraph.

IGas believes there could be as much as 172?trillion cubic feet of shale gas beneath its exploration licences, which span an area of 300 square miles in the North West.

If 10pc could be extracted, it could meet the UK’s gas needs for six years.

IGas will need to negotiate access with landowners, as well as gaining regulatory approval, before it can drill new sites. But Mr Austin said businesses in the area were actively keen to grant access in return for use of any gas that is ultimately produced.

“Across our acreage there are a number of large industrial customers with whom we are seeking to co-operate, both on access to sites and also as potential customers directly for the gas,” he said.

“Particularly in the North West, there are a number of people who are aware of the potential positive impact it could have on the security of their own business plans by having an indigenous source of gas available to them.

“The industrial users of gas and large employers in the areas in which we have licences are very enthusiastic that shale gas appraisal is taken on.”

Such bilateral deals have the potential to undercut the costs of getting gas from the National Grid (LSE: NG.L - news) . “You can reduce the transportation charges by delivering directly to their site,” Mr Austin said.

IGas is understood to have had expressions of interest from companies including glass and clay manufacturers. It had previously spoken to Essar Energy, owner of Stanlow refinery.

Since 2008 IGas has had a joint venture with Peel Holdings, a major landowner in the area. Under the deal, Peel gave IGas unlimited access to its entire land holdings for the purpose of identifying suitable sites for drilling for coal bed methane.

The companies also agreed commercial terms for leases of sites if drilling went ahead.

“We continue to talk to others who are large landowners and also consumers because the synergies of working with a group like that are significant,” Mr Austin said

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