French energy company Engie has sold its British shale gas interests to petrochemicals firm Ineos for an undisclosed sum, the companies said on March 9.
Engie was one of the first big energy companies to back Britain's nascent shale gas industry when it bought parts of Dart Energy's licenses, a company since then taken over by IGas, in 2013.
March 9's deal builds on Ineos' position as Britain's largest shale gas company as it now has access to a shale gas area of more than 1.2 million acres. The company, which recently moved its headquarters from Switzerland back to Britain, wants to invest 1 billion British pounds into shale gas, which it bets on as a feedstock for its petrochemicals business.
Engie, on the other hand, said its retreat from British shale gas was in line with its strategy to focus more on energy infrastructure, like gas pipelines and services.
"The decision was made following Engie Group's strategic review, notably in response to commodity price declines," said a spokeswoman. Global oil prices have halved since hitting a peak in mid-2014 and have also weighed on gas prices.
As part of the deal, Ineos is taking over Engie's entire U.K. onshore exploration license portfolio that consists of interests in 15 licenses including seven in which Ineos had a previous participation.
"We are always going to be interested in acquiring additional acreage," Gary Haywood, CEO of Ineos shale, told Reuters on the sidelines of an industry event. He ruled out a large deal, however, saying the company's interests were already substantial.
Large amounts of shale gas are estimated to be trapped in underground rocks, and the British government says it wants to exploit them to help offset declining North Sea oil and gas output, create about 64,000 jobs and help economic growth.
But so far, only one shale gas well has been fracked and progress has been slow over the past years due to regulatory hurdles and public protests. Environmental groups are concerned that fracking could contaminate groundwater and that it is incompatible with fighting climate change.
Shale gas fracking firms IGas and Cuadrilla confirmed the changes in license ownership in which they are also involved.
Drillers cut nine oil rigs in the week to March 22, bringing the total count down to 824, the lowest since April 2018, Baker Hughes, a GE company (NYSE: BHGE), said in its weekly report.
The independent U.S. energy producer aims to take a final investment decision on the $20 billion project in the coming months, having signed up long-term buyers for its LNG.
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