A new deal between British Gas parent company Centrica and the exploration company Cuadrilla will result in more of the UK’s shale gas reserves being tapped, which the companies claim will eventually lead to lower energy bills for consumers.
Centrica has so far paid £40 million in cash for a 25% stake in the Bowland shale licence in Lancashire, which contains up to 200 trillion cubic feet of gas – something Cuadrilla claims would be enough to meet the country’s gas needs for 70 years, should it all be extracted.
In total, Centrica is set to invest £160 million in the project, with a further £60 million investment coming through exploration and appraisal costs, and a final £60 million payment if development and shale gas extraction goes ahead.
Mark Hanafin, managing director of Centrica’s international upstream business, said the process will ultimately benefit consumers, whose gas will not have to be imported – something that drives up energy bills.
“With North Sea gas reserves declining and the UK becoming more dependent on imported gas supplies, it is important that we look for opportunities to develop domestic gas resources, to provide affordable sources of gas to our customers, and to deliver broader economic benefits to the UK,” he explained.
Francis Egan, Cuadrilla chief executive, said that the development of less than one square mile of land could enable the companies to extract around 10% of the reserves located below the surface – enough to supply the country with gas for seven years.
Concerns have previously been raised about the potential impact of the shale gas extraction process – known as fracking – on the local landscape, but Cuadrilla has taken steps to persuade objectors that the move will ultimately benefit everyone.
A new Deloitte report, commissioned by Cuadrilla, shows that the shale gas reserves at the Bowland site could generate up to £580 million in tax revenue for the country each year and lower gas import requirements by around 14% by the end of the decade, in addition to creating more than 20,000 new jobs.
It supports another recent report from the Institute of Directors, which suggested that the exploitation of the country’s shale gas reserves could more than halve the proportion of gas that the country has to import by the year 2030, with nationwide investment peaking at £3.7 billion a year.
“Natural gas from UK shale can create thousands of jobs, generate significant tax revenues, reduce our ever-increasing reliance on imported coal and gas and make a positive contribution to the country’s balance of payments,” Mr Egan concluded.
Campaigners have argued that the project will be of great detriment to the land, with Friends of the Earth claiming that Centrica’s investment in Cuadrilla will lead to a drop in popularity, but the fact that the investment has been made suggests that the scheme will now go ahead regardless.