* Shale gas can support 64,000 jobs, economic growth -
* UK minded to approve second Cuadrilla permit after more
* Economics of shale gas in UK unclear - UK Energy Research
* Commerical operation could start in 2018 - Cuadrilla
(Updates with comments from Cuadrilla Chief Executive, updates
IGas share price)
By Karolin Schaps and Susanna Twidale
LONDON, Oct 6 Britain's government approved its
second-ever shale gas fracking permit on Thursday, overruling a
local authority decision and boosting the country's position as
Europe's most promising shale gas exploration ground.
Britain's Secretary of State for Communities and Local
Government Sajid Javid gave the go-ahead for shale gas company
Cuadrilla to carry out hydraulic fracturing, or fracking, at a
site in northwest England.
The approval is only Britain's second since a moratorium on
fracking was lifted in 2012 after Third Energy received the
green light for a project in northern England in May.
Cuadrilla Chief Executive Francis Egan said further detailed
plans have to be agreed with the local council, but that
construction could begin at the site by the end of the year,
with drilling and first fracking taking place in 2017.
"Gas from the site could start flowing into the grid in
early 2018," he told Reuters.
Britain is estimated to have substantial amounts of shale
gas trapped in underground rocks and the government wants to
exploit it to help offset declining North Sea oil and gas
output. It said the shale gas industry could create 64,000 jobs
and help economic growth.
Britain, which will start procedures next year to leave the
European Union, currently imports about half of its gas needs
and that could rise to as much as 93 percent by 2040 without
shale gas, according to some calculations, as offshore
Despite government support, progress has been slow due to
regulatory hurdles and public protests.
Environmental groups are concerned shale gas fracking could
contaminate groundwater and that extracting fossil fuels is
incompatible with the country's commitment to fight climate
Javid also said he was minded to approve a second Cuadrilla
permit but has asked for further evidence on road safety.
Australia's AJ Lucas holds a 46 percent stake in
Cuadrilla. Shares in London-listed shale gas company IGas
, the only other company currently waiting for permit
approval, were up 12.5 percent at 1512 GMT.
The government's use of new powers to overturn a Lancashire
County Council rejection of the permits shows its readiness to
rule in favour of future fracking applications. The council
rejected the permits in 2015 due to concerns about noise and
However, the market price for gas in Britain has dropped
around 30 percent since Cuadrilla first lodged its application
"The economics of shale extraction in the UK are still
highly uncertain. The costs of UK shale will not be clearer
until a significant amount of exploratory drilling takes place,"
said Jim Watson, director of the UK Energy Research Centre.
Egan said he is confident the fracked gas will be
competative with the cost of imported gas, such as liquified
natural gas (LNG) imported in tankers most commonly from Qatar.
BRITAIN LEADS WAY IN EUROPE
Shale gas development has transformed the energy landscape
in the United States and put it on the path to energy
But exploration has been slow in Europe, where planning and
environmental regulations are much stricter and space is
Britain's progress on shale gas exploration means it is
Europe's most promising shale gas nation after projects in
Poland were unsuccessful.
"We hope that this decision will set a good precedent for
the shale debate in other countries," said a spokesman for the
Brussels-based International Association of Oil and Gas
Network operator National Grid said Britain could be forced
to rely on other countries for 93 percent of its gas supplies by
2040 if it did not support domestic gas extraction, including
(Additional reporting by Kate Holton; editing by Susan Thomas
and Alexandra Hudson)