Centrica wants slice of shale gas cake

The gas giant is in talks to buy a stake in licences in the Bowland Shale rock formation in Lancashire from shale gas explorer Cuadrilla, according to a newspaper report.

Staffordshire-based Cuadrilla claims to be sitting on 200 trillion cubic feet (tcf) of gas in the area and is leading the UK’s attempts to extract the gas through a controversial process called fracking.

Centrica’s reported interest in UK shale gas comes just days after rival explorer IGas Energy significantly increased its estimates of the volume of gas it has licences over.

Shares in IGas soared this week after it said it may have up to 172.3tcf of shale gas in a 300-square mile area in Cheshire – up from its previous estimate of 9tcf.

The UK currently uses around 2.76tcf of gas a year.

The gas is found in shale formed from deposits of mud, silt, clay and organic matter.

It is extracted by drilling into the ground and then by hydraulic fracturing of the shale by pumping in high-pressure liquid and sand to release the gas.

The Government last year lifted a moratorium on shale gas exploration by fracking, which had been imposed after Cuadrilla’s drilling led to earthquakes in Blackpool.

It has proved controversial in the US, where shale gas is already being exploited on a large scale, because the drilling process involves chemicals, including cancer-causing compounds, which can pollute water supplies.

Campaigners also warn it could draw investment away from the UK’s renewable industry.

Cuadrilla is 42 per cent owned by Australian firm AJ Lucas Group, while private equity investor Riverstone Holdings has a similar stake. Management own the rest of the explorer.

The bulk of Centrica’s gas currently comes from dwindling North Sea resources.

Cuadrilla and Centrica declined to comment.