Centrica teams up with Cuadrilla to develop UK shale
13 June 2013
Centrica, the parent company of British Gas, has taken a 25% stake in the Bowland shale exploration licence area from operator Cuadrilla Resources and its Australian partner AJ Lucas. Cuadrilla and AJ Lucas will each sell part of their stakes in the licence to Centrica as part of the £40 million ($63 million) deal.
Centrica will commit to drilling a series of six wells with fracking specialist Cuadrilla to test the area’s shale gas potential in a follow-on investment worth £60million.
The Bowland shale licence area covers 450 square miles of Lancashire between Blackpool and Preston and Cuadrilla has estimated that it could contain 200 trillion cubic feet (tcf) of gas. Experts say that even if only 10% could be recovered it could provide an important new source of gas for the UK, which uses about 3 tcf a year.
Cuadrilla has so far attempted to frack one shale gas well but operations were suspended in 2011 after it caused two small earth tremors, leading to an 18-month fracking ban. The companies will need to secure a series of permits before they can embark on the planned drilling.
Depending on how that round of exploration and appraisal work goes, Centrica has an option to continue to a development phase where it will invest another £60 million, bringing the group’s investment to £160 million.
Former BP chief executive Sir John Browne sits on the board of Cuadrilla and is also a partner in Riverstone Holdings, which holds a 41% stake in the company, with AJ Lucas holding the remainder.
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