British Gas owner Centrica’s fracking boost

British Gas owner Centrica threw its weight firmly behind the UK’s fledgling shale gas industry today as it signed a deal worth up to £160 million with Britain’s sole active fracking company, Cuadrilla.

In its first foray into UK shale, Centrica has taken a 25% stake in the giant Cuadrilla-controlled Bowland exploration licence, which stretches across 450 square miles of Lancashire between Blackpool and Preston.

“With North Sea gas reserves declining and the UK becoming more dependent on imported gas supplies, it is important that we look for opportunities to develop domestic gas resources, to provide affordable sources of gas to our customers, and to deliver broader economic benefits to the UK,” said Centrica upstream director Mark Hanafin. The deal comprises £40 million cash upfront, a £60 million contribution to exploration costs and up to £60 million more contingent on hitting “operational milestones”.

Cuadrilla, chaired by former BP chief executive Lord Browne, claims the licence area could contain as much as 200 trillion cubic feet of gas.