Total Said to Be Eyeing UK Shale Gas

French Energy Giant Awaiting Shale Gas Bidding Rounds

Total Said to Be Eyeing UK Shale Gas

iNVEZZ.com, Thursday, June 27th: French energy giant Total SA (EPA:FP, NYSE:TOT) would like to explore for UK shale gas but is not currently in talks for acquiring stakes in exploration blocks, Reuters has reported. The news comes at a time when the UK government is trying to encourage exploration of Britain's shale resources and ahead of an update to domestic shale gas estimates. Total’s share price was marginally down in morning trading in Paris today.

Total Considering UK Shale Gas Exploration

Reuters quoted a Total spokesman as saying on Wednesdaythat the company was interested in shale gas in the UK but was “in a phase where we're are thinking about it, we are not in talks, we are awaiting the bidding rounds”. The spokesman added that there were several interesting areas for shale gas development and the company continued “to study carefully the potential of each to allow ourselves to be well prepared, in particular in the context of the upcoming onshore round”.

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Britain’s nascent shale gas industry recently received a boost when British Gas owner Centrica Plc bought a stake in Cuadrilla Resources Ltd’s Bowland shale exploration licence area in Lancashire.

On Tuesday, The Telegraph reported that Total was understood to have held talks with Cuadrilla over buying into its licence but was now focusing on other opportunities. According to Simon Green, geosciences adviser for Totals UK’s new business division, the company wanted to know further details of when ministers would hold the 14th onshore licensing round in which rights to drill new areas would be divided up.

Last month, energy minister Michael Fallon said that the new round of licensing for oil and gas explorers would take place next year. It would be the UK’s 14th onshore licensing round and the first one since 2008.

“Frustrating” Lack of Information

The Telegraph quoted Total’s Green as saying at a shale gas conference in Manchester that it was “a bit frustrating if you have a technical team in preparation, commercial discussions and budgets to put together, and not knowing exactly when that might occur”.

Minister started preparing for the licensing round in 2010 but the process was put on hold in 2011 after fracking by Cuadrilla triggered two small earth tremors near Blackpool which prompted the government to temporarily suspend the use of the controversial technique for shale gas extraction. The ban was lifted last December when the government concluded that the seismic risks associated with fracking could be effectively managed.

The Telegraph also reported that Total, which took little interest in the 2008 licensing round, now had a Paris-based team assessing shale gas options across Europe and was understood to be considering all options in the UK. The French company is reported to have already signed shale gas exploration deals with countries Poland, Australia, China, Argentina and the US.

In addition to providing clarity on the upcoming licensing round, the UK government is also expected to publish a British Geological Survey which could show that UK shale reserves are at least twice the levels previously thought. Despite the optimistic prospects experts have warned that only exploration drilling could determine what percentage of the quantity could be recovered for commercial use.

Total’s share price was 0.18 percent lower at €36.53 in Paris as of 09:33 CEST on 27 June 2013. In New York, Total’s share price closed 0.61 percent higher at $47.70 on June 26.

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