Total S.A. Enters U.K. Shale Business with Two Licenses in East Midlands

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Researched by Industrial Info Resources (Sugar Land, Texas)--Oil producer Total S.A. (NYSE:TOT) (Paris, France) has acquired a 40% interest in two shale-gas exploration licenses in the United Kingdom from Dart Energy Limited (AUS:DTE) (Sydney, New South Wales). According to a company filing, Total will pay $1.6 million to get licenses in the Gainsborough Trough area of the East Midlands, and commit to fund a $45 million exploration programme in the two license areas, which cover 250 square kilometers.

British company IGas (LSE:IGAS) (London, England), which holds 14.5% of the permits, will remain operator of the initial exploration programme. Total will assume operatorship if the project moves toward development.

"This opportunity is an important milestone for Total E&P U.K. and opens a new chapter for the subsidiary in a promising onshore play," said Patrice de Vivies, Total's senior vice president for northern Europe.

The company also is involved in shale-gas projects in the U.S., Argentina, China, Australia, Poland and Denmark. Total E&P U.K. will become the largest oil and gas producer in the country by 2015, with investments of about $2 billion per year.

On Monday, during a visit to a site close to Gainsborough in Lincolnshire, British Prime Minister David Cameron announced that councils would be allowed to keep 100% of business rates from fracking operations, rather than 50% as in the past, on top of other local incentives already announced. That is on top of $150,000 per well and 1% of turnover from fracking sites. Cameron also predicted the process could support 74,000 jobs and reduce customer bills.

The government previously unveiled a package of reforms to encourage development in the industry. According to a British Geological Survey report, there may be 1.3 quadrillion cubic feet of shale gas present in the north of England. The U.K. currently consumes only 3 trillion cubic feet of gas annually.

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