RPT-Britain to launch shale licensing round next summer -govt

LONDON Tue Dec 17, 2013 8:40am EST

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LONDON Dec 17 (Reuters) - Britain's latest licensing round to allow companies to explore for shale gas will be launched in early summer, the government said, forecasting a high number of awards as part of a plan to kick-start the sector.

Geological studies show Britain to have large shale reserves which could reverse a rising dependency on energy imports, but more drilling is needed to see whether the deposits are economic as gas has not yet been proved to flow from the rocks.

Unveiling an environmental assessment on the impact of further shale drilling in Britain, Energy Minister Michael Fallon told reporters on Tuesday he expected strong demand for the licensing round scheduled for mid-2014.

"We could be doubling the amount of onshore licences in this round," Fallon said, adding the government expects to issue 50-150 licences.

The round, Britain's 14th tender for onshore areas, has been delayed by around four years after the licensing process was suspended following earth tremors caused by shale gas exploration in Lancashire, northwest England.

The government's support for shale development comes despite strong local and environmental opposition to the controversial extraction practice of hydraulic fracturing, or fracking, used to develop shale and unconventional gas blocks.

Before the licence round is given the green light, the government must consider responses to its environmental impact report as part of a consultation which will be open until March 28.

"Today marks the next step in unlocking the potential of shale gas in our energy mix," Fallon said, adding that in a high activity scenario, Britain could produce more than three times the country's current gas demand in the 2020s, creating up to 32,000 jobs.

"But we must develop shale responsibly, both for local communities and for the environment, with robust regulation in place," he added.

The environmental report found existing regulations would be robust enough to ensure that the adverse impacts of shale gas production, which critics say include water contamination and heavy traffic near drilling sites, are minimised.

Separately in a letter made public on Tuesday, British Prime Minister David Cameron warned the European Commission not to propose European Union-wide legislation to regulate the nascent fracking industry.

Companies have shown a growing interest in Britain's shale gas resources over the last year, encouraged by a geological study which doubled an estimate of the country's gas resources, and new tax breaks to support shale development.

France's GDF Suez and Britain's Centrica, two heavyweight energy firms, have both signed up for positions in UK shale, while oil major Total has said it would like to explore for shale in the country.

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