French oil and gas company Total is to invest in the UK’s shale gas industry, it is to be announced on Monday.
Total will be the first of the so-called “oil majors” to invest in shale gas in the UK, the BBC has confirmed.
The British Geological Survey estimates there may be 1,300 trillion cubic feet of shale gas present in the north of England.
But the process to extract shale gas – called “fracking” – has proved controversial.
Fracking – short for “hydraulic fracturing” – involves drilling deep underground and releasing a high-pressure mix of water, sand and chemicals to crack rocks and release gas stored inside.
Total is to spend tens of millions of pounds buying substantial stakes in firms with drilling licences in the north of England, where other large energy firms such as Centrica and Gaz de France have already invested.
In December, a report commissioned by the Department of Energy and Climate Change (DECC), said more than half of the UK could be suitable for fracking.
The process has attracted anti-fracking protests in the UK, with environmentalists fearing the technique could cause small earth tremors, water contamination and environmental damage.
But the BBC’s Joe Lynam said the announcement will be welcomed by the government which has championed shale gas as a major source of the UK’s future energy needs.
Our correspondent said Total’s entry into the UK’s shale gas market is not insignificant and the other four major oil and gas companies could follow.
If Britain can extract 10% of its estimated gas reserves, it could supply the entire country for 50 years, our correspondent said.
In August, Prime Minister David Cameron said the whole country should support fracking, insisting it is safe if properly regulated and could create thousands of jobs and reduce energy bills.
Shale gas has helped boost the domestic energy industry in the US in recent years, where oil production has risen and gas prices have plummeted.
Major oil companies waited for more than five years before investing in shale gas production in the US, but the UK will receive this major oil and gas company backing while the industry is still in its infancy.
Senior government sources told the BBC that the Total investment was a strong vote of confidence in the sector.
The UK currently consumes only three trillion cubic feet of gas annually.
The government has unveiled a package of reforms to encourage development in the industry.
They include new planning guidelines to make the process of approving new drilling sites more streamlined, and a consultation on tax incentives to encourage exploration.
Communities affected by shale gas drilling are also expected to receive £100,000 in “community benefits” and 1% of production revenues, should sites start producing gas.
Total has 97,000 employees operating in more than 130 countries.
According to its website, it is the world’s fifth largest publicly traded oil company.