UPDATE 2 - Total Enters UK Shale Search
(rewrites, adds note released by Dart Energy)
France's Total SA confirmed it acquired a 40% interest in two shale gas exploration licences in the UK, strengthening the cooperation between London and Paris in the energy sector and boosting expectations on the nascent British shale gas industry.
The French group acquired interests in Petroleum Exploration & Development licences 139 and 140 in the East Midlands region, covering an area of 240 km2.
“This opportunity is an important milestone for Total E&P UK and opens a new chapter for the subsidiary in a promising onshore play. The Group is already involved in shale gas projects in the US, Argentina, China, Australia and in Europe in Poland and in Denmark, and will leverage its expertise in this new venture in the UK,” Patrice de Viviès, Total’s Senior Vice President for Northern Europe, commented in a note released on Monday.
Total’s partners in the project will be a subsidiary of Dart Energy called GP Energy (17.5% working interest), Egdon Resources UK (14.5%), IGas Energy (14.5%) and eCORP International's subsidiary focused on UK. (13.5%).
Total didn't announce the amount it plans to pour into the shale gas industry, but several British newspapers reported a 30-50 million pounds investment.
'Under the terms of the Agreement, Total will pay $1.6 million in back costs to the partners and fund a fully carried work programme of up to $46.5 million, with a minimum commitment of $19.5 million,' reads a note released by IGas.
'The agreed work programme to be funded by Total UK will include the acquisition of 3D seismic; the drilling and testing of a vertical shale well and associated well pad construction; and, conditional on the success of the testing of the exploration well, the drilling and testing of a horizontal appraisal well. As noted, this represents an expenditure of up to US$46.5m. Total UK has the ability to exit after an initial period of the work programme (corresponding to a spend of $19.5m) although in this eventuality Total would forfeit all interest in the Licences,' reads a note released by Dart Energy.
Total will take over operatorship from IGas after the exploratory phase, as the project will move towards development.
FRENCH ENERGY COMPANIES IN THE UK
According to the French group, the UK-focused subsidiary will become the largest oil and gas producer in the country by 2015.
‘Current developments include the West Franklin Phase II project (operator, 40,000 boe/d capacity), and the Laggan-Tormore project (operator, 90,000 boe/d capacity) in the West of Shetland area, both of which are scheduled to start up in 2014,’ reads the note.
Total is the the second French company to enter into the UK shale sector. In October 2013, GDF Suez signed a £24m exploration deal with Dart Energy.
In June, Centrica Plc. entered into an arrangement with UK shale leader Cuadrilla Resources in a deal worth up to £160. Cuadrilla Chair John Browne said in November that the industry needed to drill 10 to 12 wells to determine whether British shale gas was viable.