Shares in Union Jack Oil (LSE:UJO) shot up today after the UK government announced a host of measures aimed at supporting the development of Britain’s shale gas industry. Shares were up 8.3pc, or 0.01p, to 0.12p as investors hoped the change in the government’s tone would have a positive impact on the development of Union Jack’s significant exposure to shale potential.
Proposals included the introduction of measures to streamline and improve the regulatory process for shale gas planning applications, to allow quicker decision making. The government will also launch a £1.6m shale support fund over the next two years to expand capacity and expertise in local authorities dealing with shale planning applications. It will also set up a shale environmental regulator and, crucially, will open a consultation on whether to allow the drilling of exploration wells without the need for a planning application.
The measures come in response to developers’ complaints that commercial production of shale gas in Britain, not expected for two years, has been slowed by protests and regulatory processes. In a written statement to parliament, secretary of state for business, energy, and industrial strategy Greg Clark said recent decisions on shale exploration remain disappointingly slow.
Union Jack, which increased its stake in two shale projects earlier this week, welcomed the government’s proposals. In a statement, the firm’s executive chairman David Bramhill said:
‘We are delighted by the joint statement released today by Greg Clark and James Brokenshire that wholeheartedly supports the safe and sustainable exploration and development of the UK’s onshore shale gas resources. The statement not only highlights the importance of securing stable domestic gas supplies while minimising harmful environmental impacts but also the substantial economic benefits that the development of onshore gas production can bring to local communities and the UK as a whole. Union Jack and its peers welcome this progressive change in attitude by key ministers. Being at the forefront of the UK onshore hydrocarbon industry, Union Jack is well positioned to benefit from this revised strategy and look forward to the exciting opportunities that await all of our stakeholders. The future remains very bright.’
Union Jack owns a stake in onshore UK licence PEDL201, which holds a shale area determined to contain approximately 5.4Bbbl/oil and over 2.7Tcf/gas. Earlier this week, the business and its commercial partner Humber Oil & Gas each announced an investment to increase their interest in PEDL201 to 16.25pc. The two firms also purchased a 12.5pc interest in PEDL181, which is located in the Humber Basin and is considered to contain a prospective shale reserve.