LONDON: British exploration firm IGas Energy has received interest from some of the oil industry’s biggest names to look for shale gas in the UK, its chief executive said, amid growing demand to develop the country’s unconventional resources.
ExxonMobil was linked with IGas in December over a possible partnership. IGas has been running a process since June to find a partner to help it explore for shale gas at its licenses in northern England.
“The kind of names that have been talked about in the market are the kind of names that we’ve seen interest from,” said Chief Executive Andrew Austin. “It’s more majors.”
Britain’s potential to produce shale gas, a resource which has helped transform the US energy market, has come into focus since the government lifted a ban last December on the fracturing process used in extraction, signalling its support.
Big oil firms are seen as key to developing British shale gas as their financial firepower and technical support could help the nascent industry move from the exploration to the production stage.
Funding for shale exploration is currently on a small scale. Igas said earlier yesterday it raised £23m via a placing at 95 pence per share, around a 17 percent discount to its closing price on Monday, to help it look for shale gas. The company said around £15m ($24m) of the proceeds of its placing would be used to drill two wells to appraise its shale resources.
“The $25m planned spend on the UK shale is high risk but potentially high reward if the company can demonstrate substantial commercial potential,” Jefferies analysts said.
He said he expects a partnership agreement to be signed in either the fourth quarter of 2013 or early 2014, adding that “non-traditional” companies had also expressed an interest.
The future of Britain’s shale gas resources, the exploration of which are at a very early stage, received a boost when the government established a dedicated office for shale gas in December, something which Austin said came as a surprise.
“That confidence from the government and that positive support from the government has led to people’s increased appetite to have a good look at what’s going on,” he said. Reuters
