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A northern rebuff for the frackers

A planning decision by Lancashire County Council has raised a question mark over the future of the unconventional oil and gas industry in the UK
July 1, 2015

It's been a good week for UK opponents of hydraulic fracturing - or 'fracking'. Lancashire County Council - contrary to the recommendations of its own planners - has rejected a development application submitted by shale gas explorer Cuadrilla for the Little Plumpton site located between Preston and Blackpool. Approval at the local level would have cleared the way for the first significant project in the UK to employ the controversial extraction method. The council, which had rejected an earlier application for the nearby Roseacre Wood site, cited concerns over noise levels and the impact that the development would have on the local landscape.

The news from Lancashire certainly wouldn't have played well with Centrica (CNA), which holds a 25 per cent stake in Cuadrilla. Nor would it have been welcomed by Aim-traded Igas Energy (IGAS), which holds a large land bank across the North West and the Midlands. The announcement came shortly after Igas revealed that full-year revenue from its existing onshore production sites in the UK fell by just under a quarter to £58m as oil prices clicked into reverse, while related impairments fed through into a loss at the operating level.

Nonetheless, the market's primary focus is on the company's plans to develop a sizeable shale gas portfolio in the UK. To this end, Igas has established partnerships with industry heavyweights such as French energy major Total SA and Swiss chemicals group INEOS. In a bid to expand the unconventional energy sector in the UK, Igas is preparing to submit planning applications for a number of well sites across its acreage, which management rightfully views as a "a key element to achieving early commercialisation". And with around $285m in secured funding commitments and another £46m or so in the bank (following a recent farm-out deal with INEOS), Igas certainly remains in a strong financial position to press ahead with further seismic work and related planning applications for exploration wells.