French energy giant Total is preparing to deliver a major boost to Britain’s search for shale gas by investing close to $50m (£30m) in exploration in the East Midlands. The deal, expected to be announced on Monday, will see Total take a stake of about 40pc in licences in Lincolnshire, sources told The Daily Telegraph. Total will be the first international oil and gas major to throw its weight behind Britain’s nascent shale gas industry, in a move that will be hailed by ministers as a huge vote of confidence in its potential. Ministers hope that shale gas, extracted through the controversial process of fracking, could provide an important new source of energy for the country as North Sea resources dwindle. Britain is believed to have vast shale gas resources but very little drilling has been done to test how much gas can actually be extracted.
Total is expected to commit about $45m to a drilling programme, as well as paying about $2m in past costs, sources said. The deal is understood to involve licence areas PEDL 139 and 140, which span more than 90 square miles in the so-called Gainsborough Trough geological basin. The existing partners in the licences - Dart Energy, IGas Energy, Egdon Resources and eCORP – are all believed to be involved in the deal, transferring part of their stakes to Total. Fracking, which involves pumping water, sand and chemicals into the ground to extract gas trapped within rocks, is banned in France due to environmental fears. Total has made no secret of its desire to acquire UK shale interests, complaining last summer it was “frustrated” at the lack of information on potential new licence areas that will be offered up for exploration by the Government this year. Total has also been in talks with other UK shale companies about acquiring stakes in their licences. Monday’s deal will make Total the second French company to buy into the search for UK shale, following GDF Suez, which signed a £24m exploration deal with Dart Energy in October. British Gas owner Centrica bought into licences owned by Cuadrilla in a deal worth up to £160m in June. Attempts at shale gas exploration in the UK have attracted fierce opposition from environmental campaigners. Ministers and the shale industry are next week expected to confirm further details of cash benefits for communities near fracking sites, intended to help win public support. The industry has so far promised £100,000 for every well that is fracked and a 1pc share of revenues if gas is produced, and is expected to set out how those funds will be administered. Ministers have indicated that the 1pc share could be increased at a later date if shale proves successful but have resisted calls from the Local Government Association to give communities a legal right to a 10pc share. Michael Fallon, the energy minister, told The Daily Telegraph last month that “imposing too high a levy on revenues could make shale gas projects unprofitable and leave the gas and oil in the ground”.
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