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A Cuadrilla rig exploring the Bowland Shale for gas near Blackpool in 2011.
A Cuadrilla rig exploring the Bowland Shale for gas near Blackpool in 2011. Photograph: Christopher Furlong/Getty Images
A Cuadrilla rig exploring the Bowland Shale for gas near Blackpool in 2011. Photograph: Christopher Furlong/Getty Images

Fracking: who’s who in the race to strike it rich in the UK

This article is more than 8 years old
Situation is similiar to early days of the US shale boom, says industry expert

In The Frackers, a book about the fracking industry in the US, Gregory Zuckerman tells the story of “new billionaire wildcatters” who made fortunes and went on to use their wealth to shake up Hollywood, education, politics and sport. In the UK, a similar book would present a very different narrative, as local anger and government delays slow the expansion of the industry.

But now, with the award of licences for fracking in 27 locations in England, some of those who have doggedly supported the controversial method of extracting gas from deep beneath the ground are hopeful they are about to embark on the first chapter of a new, more profitable, journey.

So who could be the UK equivalent of the US wildcatters – the equivalent of Harold Hamm, for example? Hamm came from a poor background as the youngest of 13 children in rural Oklahoma to become one of the richest men on the planet through pioneering the development of fracking on the vast Bakken Shale. Two obvious candidates might be Jim Ratcliffe from Ineos and Francis Egan of Cuadrilla: but the truth is, it is too soon to predict who will make their fortunes from fracking in the UK – if it ever gets off the ground.

The latest licences, all located in the Midlands and the north of England – there is currently a moratorium on fracking in Scotland and Wales – went to a diverse group of companies. They include comparatively big players such as chemicals group Ineos, fracking experts Cuadrilla, IGas, an energy group listed on the Aim market, the French energy giants Total and GDF Suez, and also some less-well-known names such as Osprey and Aberdeen Drilling Management (ADM), Hutton Energy and Canadian-owned Cirque Energy. Ineos has moved into a decent position, winning three licences of its own, but the outright leader so far is IGas with seven.

Ineos’s founder, the Lancashire-born Ratcliffe is determined to push for shale production in the UK, despite fears for the environment. Fracking involves blasting dense shale rock with a mixture of sand, water and chemicals, opening up fissures in the rock to release bubbles of methane gas, which can then be gathered at the surface.

Despite the concerns, Ratcliffe insists fracking must be promoted to keep the British economy competitive and not as dependent on the services sector. His firm has pledged to invest £650m, and the single-minded entrepreneur feels shale has the potential to meet the UK’s gas requirements, making energy cheaper and the nation no longer reliant on foreign suppliers.

Over the past few years, the group, which operates the Grangemouth refinery in Scotland, has borrowed heavily from the experience of those in the US, even going so far as to hire three shale specialists who feature in The Frackers: Nick Steinsberger, Kent Bowker and Dan Steward. Ineos is a big importer of gas and has recently started buying it in huge amounts from the US, where gas is one-third cheaper.

Jim Ratcliffe, the founder of Ineos. Photograph: Ed Jones/AFP/Getty Images

Cuadrilla, the only company to have fracked so far in the UK, was allocated two licences. The group is perhaps the best known of the British shale gas pioneers but also the one responsible for one of the most scarring events in UK fracking history, when its drilling sparked two earth tremors in Blackpool in 2011. That provoked a voluntary cessation of operations, which in turn played a big part in delaying the latest round of licences. Cuadrilla is supported by Centrica, the owner of British Gas, which has a 25% stake of its Lancashire licences.

Later this year, the government intends to allocate a further 132 licences, but only after it has carried out an environmental assessment of the relevant areas first.

Also a winner in the licence awards is another company quoted on the junior stock market in London, Egdon Resources. Egdon, which has a market capitalisation of around £29m, is the main operator of two allocated exploration blocks and it is also partnering IGas and Total in five others. Another winner is Aurora Energy Resources, a private company based in Aberdeen, which has been offered a block in the vicinity of Blackburn, close to an existing licence it has in the Bowland Shale – the area widely expected to be Europe’s first commercially viable shale gas field.

Some observers are surprised there were not more bids from energy majors such as BP or Shell. “There are all those multibillion-pound firms out there with cash burning in their pockets but none of them were attracted to this licence round,” said one. “Maybe it’s the current low price of oil that’s putting them off.”

Others disagree. “It’s symptomatic of the fact that this is a fledgling industry that is waiting to get off the ground,” says Emma Wild, head of the upstream advisory practice in the UK for KPMG. “This offers an opportunity for some innovative companies to get in at ground level,” she adds.

Some think the level of support for the nascent UK industry compares with the early days in the US. “In the US life started off with small, entrepreneurial companies,” says Ken Cronin, chief executive of the UK Onshore Oil and Gas Group. “What we are seeing in the UK is the acceleration of what we saw in the US, with companies like Total, GDF, Ineos and Centrica coming in at an earlier stage.”

What seems certain is that if the safety and environmental concerns can be overcome, larger groups will follow.

“It doesn’t matter which of these companies here are successful,” says John Blaymires at IGas. “Once we have proven the concept, other companies will come into the mix.”

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