LONDON Jan 11 Total is set to become
the first major oil company to invest in Britain's nascent shale
gas industry, boosting the industry's profile in a country seen
as one of Europe's strongest prospects for unconventional oil
and gas development.
The French group is set to commit 30 million pounds ($50
million) to drilling for shale gas in Lincolnshire, in central
England, sources familiar with the matter told Reuters. A Total
spokesman would not confirm any details, but said an
announcement would be made on Monday.
The investment is tiny in oil industry terms - and
especially small in the context of the tens of billions of
dollars spent every year by Total, one of the world's top five
investor-controlled oil and gas groups.
However, having such a large player as a partner will be a
feather in the cap of industry minnows Dart Energy,
Egdon Resources, IGas and eCORP, with which
Total will partner on two exploration licences. The news will
also allow Britain's coalition government to argue that its
incentives for developing unconventional oil and gas reserves
"It's hardly a drop in the pond really, but the government
wants to get shale going and having the big boys in there
helps," said Andrew Monk, chief executive of the
resources-focused investment bank VSA Capital.
A new set of UK land auctions next year could be pivotal, he
said, adding: "We'll see more deals and a bit more positioning
between now and then".
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
Britain's government has thrown its weight behind shale gas
exploration despite strong local and environmental opposition to
the controversial extraction practice of hydraulic fracturing,
or fracking - one of the techniques used to develop shale and
unconventional gas blocks.
Along with a handful of other countries including Poland,
the UK is seen as a test case for the prospects of
unconventional gas and oil development in relatively crowded,
wealthy, post-industrial western Europe.
Shale developers have made big money in some less populated
parts of the industry's birthplace - the United States - but in
populous New York State, fracking remains prohibited. It is also
outlawed in Total's home country, France.
More generally, landowners in Europe often do not own the
rights to the minerals under their feet, unlike those in the
United States. This removes a key motive for development and
complicates life for would-be drillers.
Total said last year that it would be interested in signing
up for a position in Britain's shale gas resources. Two large
utilities - France's GDF Suez and Britain's Centrica
- both agreed deals in 2013 to enter the sector.
Australian-listed Dart could not immediately be reached for
comment. UK-listed Egdon and IGas declined to comment.