Energy firm Centrica Plc, which owns British Gas, has revealed that it may not bid for more fracking rights in the UK once they are put up for sale in the next few weeks, leading to speculation that extraction of shale gas may not be viable enough.
Centrica was the first large company to enter the foray in the search for Britain’s shale deposits when it purchased 25 percent share of licences from Cuadrilla in the Bowland basin in Lancashire for up to 160 million pounds, reported the Telegraph.
Britain is expected to kick off the “14th onshore licensing round” before the end of July, giving the successful bidders drilling rights in an area covering a total of 37,000 square miles.
However, Centrica’s upstream chief Mark Hanafin said that the company “would probably not” apply for more rights hinting that the company won’t “bet” additional funds on shale before hydraulic fracturing is carried out to show whether it is possible to extract the gas.
“My main focus is not on grabbing land, it’s on the Bowland shale,” he said. “Finding out if the UK has got this amazing resource or not – it might not.”
Normally, a company is required to commit itself to spend some money on exploration in order to be awarded the drilling rights. In the Cuadrilla pact, Centrica paid 40 million pounds for the license and agreed to spend another 60 million on survey and appraisal, plus another 60 million pounds on any infrastructure development. The two firms are currently looking for permission to drill two locations in Lancashire, where they intend to start fracking in 2015.
“I’ve got a big commitment to spend in the next couple of years,” said Hanafin. “We are going to drill these wells and find out if this is going to work. We are a big company, but how far do I want to bet on that? It is an exploration play, that’s what people don’t understand. Exploration plays either come up dry or wet.” To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.
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