LONDON (Reuters) - Britain offered shale gas exploration licences for the first time in seven years on Tuesday, awarding new sites to companies including IGas (IGAS.L) and France’s GDF Suez (ENGIE.PA).
Prime Minister David Cameron has promised to go “all out for shale”, hoping it will help reduce dependence on energy imports and generate additional tax revenue, despite opposition from environmental campaigners.
Many other European countries, including France and Germany, have banned the use of shale gas hydraulic fracturing, or fracking, due to environmental concerns. Britain is estimated to have decades worth of gas needs underground but so far has no shale gas producing wells.
All of the new licensing blocks are in England as parliaments in Wales and Scotland have imposed moratoriums on fracking due to the public’s environmental concerns.
The new licensing round, delayed since the start of the year, offered 27 new shale gas and conventional exploration blocks and attracted 95 applications from 47 companies, the government said, showing developers are still interested in exploring for the unconventional fuel in Britain.
The government also offered new blocks on Tuesday to explorers Egdon Resources (EGRE.L) and Cuadrilla Resources, as well as Swiss chemicals company INEOS.
“We are keen to move quickly to evaluate the potential of this resource, and determine if we can economically produce gas from our licenses,” said Gary Haywood, chief executive of INEOS Shale, in a statement.
The licences, around half of which relate to conventional oil and gas drilling, will be formally awarded once further assessments are carried out on a second tranche of 132 blocks that could be awarded at a later date.
INEOS has applied for shale gas licences in Scotland as part of a $1 billion investment plan but has so far been unable to proceed due to the moratorium.
However, progress has been slow because of opposition by local residents and environmental campaigners. Some are concerned about groundwater contamination from chemicals used in the hydraulic fracturing — or fracking — process, while others fear the potential impact on property prices or tourism.
Despite these concerns, the government fully supports shale gas development and Tuesday’s licence awards show it intends to continue pushing it forward.
Last week, it changed planning guidelines to fast-track applications for fracking after local politicians in northwest England rejected two Cuadrilla planning permits in June.
Cuadrilla said on Tuesday it would work with the local communities in its new licence areas from the start.
additional reporting by Simon Falush, editing by David Evans and William Hardy