France's GDF Suez to boost UK shale exploration
PARIS/LONDON (Reuters) - France's GDF Suez GSZ.PA is the second heavyweight energy firm to dip a toe into British shale gas exploration after taking a 25 percent stake in onshore projects in northern England and Wales.
The Paris-based company said on Tuesday it would team up with Dart Energy DTE.AX to develop 13 licenses in the western and eastern parts of the Bowland Basin, which has already attracted investment from Britain's Centrica (CNA.L: Quote).
This will be another boost to Britain's bid to exploit shale-gas deposits after the government unveiled incentives earlier this year to drive investment in the sector and renew hopes of reducing the country's growing reliance on imports.
Shale gas has helped transform the U.S. energy market, lowering gas and coal prices, and offers Britain, Europe's biggest gas user, a means of bolstering its falling natural gas production.
Centrica, parent of British Gas, paid 40 million pounds ($63 million) for 25 percent of the Bowland Shale in Lancashire, owned by license operator Cuadrilla Resources and its Australian private-equity backer A.J. Lucas (AJL.AX: Quote).
Under the terms of the new agreement, GDF Suez will pay Dart Energy $12 million in cash upfront and will fund $27 million in exploration and appraisal costs. It will then own a quarter share of 13 UK onshore licenses.
"We are very confident about the potential of shale gas in the UK, and its anticipated contributions to UK energy security," said Jean-Marie Dauger, executive vice-president, GDF Suez, with the transaction due to complete by the year-end.
GDF Suez said the funding would support exploration over three years, including drilling up to four shale gas exploration wells and 10 coal bed methane exploration wells.
In June, Britain doubled its estimate of shale gas resources in the Bowland shale area to 1,300 trillion cubic feet. Continued...