Total enters into UK shale gas licences amid new promotion measures

Total has acquired a 40% interest in two shale gas exploration licences in the United Kingdom. The interests are in Petroleum Exploration & Development Licences 139 and 140 in the Gainsborough Trough area of the East Midlands region of the UK which cover an area of 240 km². On completion of the transaction, Total’s partners in the project will be GP Energy a subsidiary of Dart Energy Europe, 17.5%), Egdon Resources (14.5%), Island Gas (IGas) (14.5%) and eCorp Oil & Gas UK (13.5%). IGas will be the operator of the initial exploration programme, with Total subsequently taking over operatorship as the project moves towards development. With investments of approximately US$2bn/year in the UK, Total E&P UK 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.

Meanwhile, the British government announced new measures to promote shale gas development, allowing local councils to keep 100% of business rates collected from shale gas sites (from the current 50%). In the Autumn Statement 2013, the Department of Energy and Climate Change introduced a competitive tax regime for shale gas (new operators in this emerging industry will now have an effective tax rate that is lower than in the US). The UK has also streamlined and simplified the regulation of exploration activity through the Environment Agency, including developing a single application form for permits. The Environment Agency aims to reduce permitting times for low-risk activity from 13 weeks to approximately 2 weeks during 2014.