Centrica will also pay exploration and appraisal costs of up to £60m.
The Bowland licence is operated by Cuadrilla, and three exploration wells have been drilled to date. The data obtained from drilling these three wells has confirmed the shale formation thickness and the presence of natural gas.
Although initial data suggests that there could be 200 trillion cubic feet of gas in place within Cuadrilla’s Bowland Shale licence in Lancashire, further drilling will be required to establish whether the discovery is commercial.
Mark Hanafin, managing director of Centrica’s International Upstream business, said, ‘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.’
A report published on May 22, 2013 by the Institute of Directors estimates that natural gas from shale could reduce the amount of gas the UK has to import in 2030 from 76 per cent to 37 per cent. It adds that nationwide investment could reach £3.7bn a year, supporting 74,000 jobs across the industry and its supply chain.
Commenting on today’s announcement Dan Byles MP, chair of the All-Party Parliamentary Group on Unconventional Oil & Gas said, ‘Today’s announcement…represents a major vote of confidence in the fledgling UK shale gas industry, and a big step towards ‘normalising’ shale gas exploration.
‘Until now the UK shale gas story has been one of small companies, not well known by the general public. Centrica has an impressive heritage in finding and producing oil and gas safely, which will no doubt serve them well as the first large player stepping up to the plate and investing in UK shale gas.’