Centrica talks show UK shale promise but big guns watch and wait

Fri Jun 7, 2013 10:28am EDT
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* Hopes for Britain's shale industry rise on Centrica interest

* But big oil companies still favour U.S. shale, other emerging plays

* Investment in UK shale likely to remain small til reserves are proved

* Small company IGas says positive results will attract funding

By Sarah Young

LONDON, June 7 (Reuters) - A significant new investor in Britain's shale industry suggests there are prizes to be had, but big oil companies are unlikely to cough up serious funding until they have more reassurance about the size and shape of UK reserves and regulations.

British Gas owner Centrica is in talks with driller Cuadrilla about buying a stake in its north-west England field, a source with knowledge of the discussions told Reuters on Friday, renewing speculation about whether Britain can follow the United States into energy independence by using shale.

Europe's largest gas consuming nation could have shale resources of more than 200 trillion cubic feet (tcf) according to some estimates, which a recent Institute of Directors' report said would require investment of up to 3.7 billion pounds ($5.69 billion) a year.

But funding for exploration has been very limited, not least because it is not yet known whether the estimated resources will produce gas that can be produced commercially. Cuadrilla has drilled only one well so far to explore for UK shale gas.   Continued...