GDF Buys U.K. Gas Assets, Following Centrica Into Shale
GDF will acquire a 25 percent interest in 13 licenses in northern England’s Bowland basin, it said today in a statement. The company will hand over $12 million in cash and cover 75 percent of Dart’s costs up to $27 million to fund a three-year exploration campaign.
The Bowland basin, potentially holding about 1,300 trillion cubic feet of gas, has already lured U.K. utility Centrica Plc (CNA), which bought a stake in Cuadrilla Resources Ltd.’s acreage this year. Paris-based GDF Suez faces a government ban on hydraulic fracturing in its home country, while British Prime Minister David Cameron has pledged tax breaks to shale drillers.
“We are very confident about the potential of shale gas in the U.K. and its anticipated contributions to U.K. energy security,” said Jean-Marie Dauger, head of GDF Suez’s gas business. The investment “complements the large presence of the group in the U.K.”
Britain is seeking to spur a shale industry to cut reliance on fuel imports as North Sea reserves dwindle. Proponents of hydraulic fracturing, the drilling process known as fracking, say the benefits could mirror the U.S., where shale exploitation helped the country overtake Russia as the biggest gas producer. Others say U.K. circumstances mean there will be fewer gains.
GDF Suez’s acquisition will support the drilling of as many as 14 exploration wells -- four targeting shale gas and 10 coal-bed methane, according to a statement from Australia’s Dart. It follows Centrica’s agreement in June to buy a 25 percent stake in Cuadrilla’s shale licenses, paying 40 million pounds ($65 million) in cash and pledging more to cover exploration costs.
Cuadrilla will apply for planning permission for “half a dozen or so” exploration wells with a view to starting drilling in the first half of next year, it said the same month.
Fracking, which involves blasting a mixture of water, sand and chemicals underground to fracture rock and release fuel, has been criticized by environmental groups for polluting water and causing minor earthquakes. The drilling process has been restricted or banned in France, the Netherlands and Bulgaria.
“Fracking has become a national debate in Britain -- and it’s one that I’m determined to win,” Cameron wrote in the Daily Telegraph newspaper in August. “If we don’t back this technology, we will miss a massive opportunity to help families with their bills and make our country more competitive.”