LONDON (Reuters) - French oil major Total (TOTF.PA) has extended an option with British shale gas developer Egdon Resources (EGRE.L) to buy a stake in one of Egdon’s shale gas licences, the companies said on Tuesday.
Egdon said in a statement Total had agreed on an option to farm in to its PEDL209 exploration licence in Lincolnshire by Dec. 31, 2018, which would earn it a 36 percent interest. Total’s previous option on the licence had lapsed.
In exchange, Total has agreed to then pay Egdon’s expenses of an exploration programme worth up to 13.47 million pounds, including the drilling of a well.
Large amounts of shale gas are estimated to be trapped in underground rocks and the British government says it wants to exploit them to help offset declining North Sea oil and gas output, create some 64,000 jobs and help economic growth.
But so far only one shale gas well has been fracked and progress has been slow over the past years due to regulatory hurdles and public protests. Environmental groups are concerned that fracking could contaminate groundwater and that it is incompatible with fighting climate change.
Total made its foray into Britain's shale gas industry in early 2014 when it bought a 40 percent interest in two licences in the Gainsborough Trough area in northern England for up to $48 million from Dart Energy, now owned by IGas (IGAS.L). [here]
In the United States, Total has been building a sizeable presence in the shale oil market, most recently buying assets from Chesapeake in September 2016.
Its strategy differs from that of French energy peer Engie (ENGIE.PA), which last month sold its British shale gas interests to petrochemicals firm Ineos.
Reporting by Karolin Schaps, editing by David Evans