U.K. Offers New Onshore Blocks for Shale Development

LONDON—The U.K. government said Tuesday that it was offering new onshore blocks to explore for shale gas to a range of companies that include oil giant Total SA and utility GDF Suez SA as Britain steps up efforts to kick-start a shale industry and unlock potential reserves.

The U.K., which is believed to hold significant shale gas reserves, is one of the few countries in Europe to allow fracking, but progress has been slow and the industry is still at a very early stage.

Just last week, the government said it would fast-track planning applications to explore for shale gas. Conservative Prime Minister David Cameron is eager to replicate the U.S. fracking boom that has unleashed a surge in oil and gas production there.

Mr. Cameron's government has said a domestic shale gas industry will help to offset declining production in the North Sea and reduce natural gas imports.

But while hydraulic fracturing in the U.S. has developed quickly, outside North America, the controversial technique of blasting underground rock with a mixture of water, sand and chemicals has faced opposition from some environmental groups and local residents.

In the U.K., efforts by small companies to explore for shale gas have been stymied by local opposition and long local government reviews. So far only one well has been fracked.

The government said Tuesday that it will award the licenses for 27 oil and gas blocks to the companies later this year.

Along with Total and GDF Suez, tiny shale explorers IGas Energy PLC, Egdon Resources and Celtique Energie Petroleum Ltd were among the winners as was Swiss chemicals giant Ineos and Cuadrilla Resources, which has been spearheading the U.K.'s fracking drive.

A second group of 132 onshore oil and gas blocks will be subject to further consultation to see if they are suitable under conservation of habitat and species regulations.

The licenses for all offered blocks will be awarded later this year.

The U.S. Energy Information Administration has estimated Britain could have 26 trillion cubic feet of shale gas deposits, or about eight times the country's current annual gas consumption.

Melissa Stark, global managing director for new energy at consultancy Accenture said that even in the most favorable circumstances, large scale development is at least five to 10 years away.

Write to Selina Williams at [e-mail]

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August 18, 2015 12:05 ET (16:05 GMT)

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