Oil and Gas Investment Company Comments on Involvement in UK Shale Gas Industry by Oil Major

Following Total's announcement this morning regarding plans to invest a minumum of $21m (£12.7m) in the UK shale gas industry, Glynn Williams, partner at Epi-V (UK), the oil and gas services investor, commented:

“It will take billions to fund the development of the UK shale industry and Total’s announcement today is a further significant step in making it a reality. The entry of a major such as Total into the UK shale arena will give a significant boost to the nascent shale gas supply chain and help to give operators and service suppliers the confidence to commit the substantial levels of investment in personnel and equipment required.

UK shale gas will not be commercially viable unless the necessary expertise and plant is available at a reasonable cost and the Government should consider how to help accelerate the growth of the shale gas industry by organising some soft funding schemes, a kind of funding for lending, but focused on shale. This will help ensure the industry is well financed to take advantage of the latest technologies, be as environmentally conscious as possible and that sufficient skilled technicians are trained and retained.

Although it will not be easy to develop the necessary expertise until there is continuous drilling activity, as there will be a danger of losing skilled staff overseas during periods of rig downtime as existing onshore UK drilling contractors have found, we are optimistic about shale gas and believe that many thousands of new jobs will be created because the supply chain  will largely not just rely on North Sea expertise but will need to be embedded in the areas where the activity will take place in order to achieve public acceptance of shale exploitation as well as an affordable cost base.

Given that the UK Treasury and DECC are firmly promoting shale gas exploration in the UK, the bans on fracking in countries such as France and Germany and the slower pace of development elsewhere in Europe, we expect further international energy companies to follow the lead taken by Total, and GDF Suez through its deal with Dart Energy announced last year, and ramp up their plans for signing ‘farm-in’ agreements with UK firms that already have licences to explore UK shale reserves.”