The U.K. may more than quadruple its natural gas reserves, based on IGas Energy Plc’s estimate of the fuel held within the 300 square miles of shale formations the company is licensed to drill in the northwest of England.
IGas Energy, which plans to start drilling this year, surged 13 percent to 104.75 pence in London, the most since Jan. 2. Its licenses probably hold about 102 trillion cubic feet of gas, the company said today in a statement. Should 30 percent be extractable, U.K. reserves would jump about 30 tcf compared with BP Plc’s estimate now of 7 tcf.
“Gas in place of about 100 tcf is highly significant, both relative to IGas’s existing resource base and the U.K.’s existing gas reserves,” said Laura Loppacher, an analyst at Jefferies Group LLC in London. “U.S. shale recovery factors are generally estimated to be 10 percent to 30 percent with current technology.”
The IGas estimate of gas in place on its licenses comes on top of rival Cuadrilla Resources Ltd. saying its fields may hold as much as 200 tcf in the same region. The announcement may add to pressure to provide tax breaks and other incentives to spur drilling as reserves in the U.K. North Sea dwindle.
U.K. Prime Minister David Cameron said today that rules on energy drilling should be changed to make shale production easier. “Old rules” designed for offshore drilling must not “hold us back today,” he told lawmakers in a statement.
The government lifted an 18-month moratorium on hydraulic fracturing, or fracking, used to exploit shale deposits in December after the completion of an investigation into two small earthquakes near Blackpool caused by Cuadrilla’s drilling. The company has delayed exploratory testing until next year to carry out environmental assessments.
IGas’s study of its resources “supports our view that these licenses have a very significant shale gas resource with the potential to transform the company and materially benefit the communities in which we operate,” IGas Chief Executive Officer Andrew Austin said in a statement.