French oil giant Total joins shale rush in Britain

The company has taken a 40 per cent share in two gas exploration licences for drilling in the Gainsborough Trough, in an area between Doncaster and Lincoln.

Total, which is already involved in shale gas projects in the US, China, Australia, Argentina, Poland and Denmark, described the move as an important milestone for the company in the UK.

Announcing the move into the shale industry in the UK, Patrice de Vivies, Total’s senior vice president for Northern Europe, said: “This opportunity is an important milestone for Total E&P UK and opens a new chapter for the subsidiary in a promising onshore play.”

The announcement came as Prime Minister David Cameron said councils which give the green-light to fracking projects will be allowed to keep millions of pounds more in tax revenue.

The prime minister said local authorities in England would receive 100 per cent of the business rates collected from shale gas schemes – rather than the usual 50 per cent.

The move is part of an “all out” drive to exploit the controversial technique which uses high-pressure liquid to fracture rock and extract the gas in it.

But environmentalists accused ministers of trying to “bribe” local authorities into accepting fracking, a process that has raised concerns over inappropriate development and disturbance in rural areas, minor earthquakes and water pollution.

The initial exploration will be conducted by partner IGas, and Total will take over operations as the project develops.

The project is part of £1.2bn annual investments in oil and gas production by Total E&P, which is set to make it the largest oil and gas producer in this country by 2015.

‘Going all out for shale’

The government claims that exploitation of shale will mean more jobs and opportunities for people, and economic security for the UK.

Mr Cameron said: “A key part of our long-term economic plan to secure Britain’s future is to back businesses with better infrastructure.

“That’s why we’re going all out for shale. It will mean more jobs and opportunities for people, and economic security for our country”.

The commitment on business rates would mean councils hanging on to up to £1.7m extra a year from each fracking site, officials said.

The industry has already pledged to give local communities £100,000 for each test drilling – and a further 1 per cent of the revenues if shale gas is discovered.

And today it was announced that the industry would further consult on how to deliver the money to communities, with options including direct cash payments to people living near the site or setting up of local funds directly managed by local communities.

But green groups warned that the latest moves show how much opposition there is to fracking.

[Fracking] will mean more jobs and opportunities for people, and economic security for our country – David Cameron

Friends of the Earth Jane Thomas: “This latest government move highlights the depth of local opposition to fracking and the desperate lengths ministers are prepared to go to overcome it.

“People are right to be concerned about the impact of shale gas extraction on their communities – especially as experts say it won’t lead to cheaper fuel bills.

“This move raises potentially serious concerns about conflicts of interest, if councils that benefit from this money are also the ones who decide on planning applications from fracking firms in the first place.

“The government should be encouraging the development of Britain’s huge renewable power potential, instead of coming up with new incentives that keep the nation hooked on climate-changing fossil fuels.”

‘Step in the right direction’

A Local Government Association spokesman said: “Councils have been clear that the people and communities whose areas host fracking sites must feel the benefit.

“Today’s announcement from the prime minister is a step in the right direction, which will mean that business rates paid by shale gas firms will help councils to maintain and improve local services for residents.

“While it is encouraging that government is listening, local areas will be keen to hear more details on how the community benefits package will be strengthened to fairly renumerate those who will be most affected.”

Shadow energy minister Tom Greatrex said: “Gas will remain an important part of our energy mix in the future, and if shale gas can replace our rapidly depleting North Sea reserves it could help improve our energy security.

“It is right that any communities that host nationally significant energy infrastructure are able to share in its rewards.

“But the government must get its priorities right. Only by fully addressing legitimate environmental and safety concerns about fracking with robust regulation and comprehensive monitoring, will people have confidence that the exploration and possible extraction of shale gas is a safe and reliable source that can contribute to the UK’s energy mix.”