Ineos to acquire 80% interest in onshore oil and gas in Scotland from Reach Coal Seam Gas

14-Oct-14

UK petrochemicals group Ineos is to acquire an 80% interest in an onshore oil and gas license in the Midland Valley of Scotland from Aberdeen-based Reach Coal Seam Gas, as Ineos continues to step up its interest in shale gas exploration, as per Platts. Onshore license PEDL 162 covers 400 sq km. Ineos will become operator of the license and has agreed in the deal to fund initial appraisal activity, including two vertical wells and 100 sq km of 3D seismic studies. The deal brings Ineos's funding and expertise to work on the license in support of its smaller partner. Ineos already owns 51% of the shale layer in the neighboring 329 sq km PEDL 133 license, after concluding a deal with Dart Energy in August. Ineos has established an exploration division, Ineos Upstream. In June the British Geological Survey said the Midland Valley of Scotland, the central belt containing Edinburgh and Glasgow, could hold 80.3 Tcf (2.3 trillion cubic meters) of shale gas and 6 billion barrels of shale oil, in its central case estimate, though it did not say how much was recoverable. Despite great interest in UK shale, there has been only limited exploration drilling to date, and only one company, Cuadrilla Resources, has carried out fracking tests. Those tests, in 2011, were followed by a moratorium on fracking over earthquake concerns. The moratorium was lifted at the end of 2012, but tests have not yet resumed. The UK government is currently accepting applications for new onshore exploration licenses in its 14th landward licensing round, with an October 28 deadline, and awards are expected next year.