Centrica to invest in fracking
It was reported last week that Centrica has promised to spend up to £160m on a key fracking licence near Blackpool.
The Guardian newspaper stated that, through its investment, Centrica would gain a 25% stake in the Bowland basin along side smaller fracking pioneers Cuadrilla Resources and AJ Lucas.
The energy minister Michael Fallon said that Centrica's expertise in the energy sector as an operator and developer was a big step forward for shale in Britain, adding its investment was a vote of confidence in the significant efforts the government had made to create the right environment to accelerate the development of shale in a responsible way.
Centrica added that it made sense to get involved with shale gas exploration given that the North Sea gas reserves were declining and the UK was becoming more dependent on imported gas. However equity analysts have expressed surprise at Centrica's commitment considering there is no shale gas flowing at the moment and only a few wells drilled.
Meanwhile environmentalists warned that Centrica was taking a really 'big risk' by throwing itself into a controversial fossil fuel sector that they believe will only make climate change worse.
Jenny Banks, climate and energy specialist at WWF-UK, told the Guardian: "Centrica has already singled itself out as a target for Greenpeace and others for not taking climate change seriously in the investments it makes. But this also has economic risks around getting gas out of the ground and environmental risks around accidents."
Fracking or hydraulic fracturing involves propagating a fracture in a rock layer, by means of a pressurised fluid, in order to release the substance, in this case gas. The practice of hydraulic fracturing has come under scrutiny internationally due to concerns about environmental and health safety, and has been suspended or banned in some countries.
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Our special report on the energy sector is due to be released 24 June 2013. It will reveal how Centrica compares to other gas and green electricity providers.
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