LONDON (Alliance News) - The Oil and Gas Authority Tuesday offered companies 27 onshore blocks from the 14th Onshore Oil and Gas Licensing Round, which may be the first step to giving the green light to fracking in the UK.
The award of the initial 27 blocks comes after the UK government's decision last week to fast-track fracking applications to prevent lengthy delays.
A second group of 132 further blocks has been subjected to a further, more detailed assessment under the Conservation of Habitats and Species Regulations 2010. Those blocks will be issued sometime later in 2015.
The first listed companies to emerge successful were IGas Energy PLC and Egdon Resources PLC. IGas said it has been awarded six licences, covering seven blocks located in the Gainsborough Trough area in the East Midlands and including exploration prospects for both shale gas and conventional oil and gas, close to where the company has existing operations.
The blocks offered are SE41e, SK49, SK89e, SK88b and SK87c and are part of the joint venture between IGas, Egdon and French oil and gas major Total. IGas holds a 35% stake whilst Egdon holds a 15% stake in the venture.
IGas has also been offered blocks SK99a and TF18b, which it will operate and own alone whilst Egdon confirmed it has also been issued the SK53 and SK52a licences, in which it will hold an 18.75% stake in a joint venture with Hutton Energy. Egdon also said it has applied for a "number of additional blocks in other areas" in the second tranche of licences.
Egdon shares were down 1.5% to 13.30 pence per share on Tuesday afternoon whilst IGas shares were up 0.5% to 27.88 pence.
INEOS' subsidiary, INEOS Upstream has been offered three licences for shale gas exploration covering 250 kilometres in the East Midlands whilst frontrunner Cuadrilla Resources, the last company to frack in the UK back in 2011, has been offered two licences.
The other companies awarded licences, according to the Oil and Gas Authority, are GDF Suez, Cirque Energy, Blackland Park Exploration, Aurora Energy, Osprey Petroleum and Warwick.
"With almost 100 applications received, the 14th Onshore Round has attracted significant interest and high-quality proposed work programmes from a range oil and gas companies. Today?s announcement regarding the offer of 27 blocks gives those successful companies assurance about the blocks that they will be formally offered later in the year," said Oil and Gas Authority Chief Executive Andy Samuel.
The government is desperate to get fracking going in the UK to try and reverse the dwindling homegrown energy production in the country as companies in the North Sea struggle to counter weaker oil prices.
Since the Conservatives won the General Election in May with an outright majority, the government has made it clear that it is in support of fracking. Most notably, it has said that fracking would be allowed to happen underneath National Parks and Areas of Outstanding Natural Beauty.
That means companies could drill into the ground on the borders of National Parks for example, before drilling vertically underneath to extract gas.
At the moment, two companies are in the spotlight and leading the charge over fracking in the UK. Cuadrilla Resources has launched an appeal after two applications to frack in Lancashire were rejected by local authorities, which it is likely to win, and Third Energy have an application to frack in Yorkshire, where it has already drilled one well.
Listed companies thought to have also potentially made applications under the larger second tranche are Infrastrata PLC, Enegi Oil PLC, Alkane Energy PLC and Celtique Energy which is not listed but works with numerous companies including Egdon, Europa Oil and Gas (Holdings) PLC and Union Jack Oil PLC on the Wressle-1 discovery.
The licensing round was launched on July 28, 2014 and closed on October 28, 2014. A total of 95 applications were received from 47 companies covering 295 blocks.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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