French energy giant Total has become the first major oil and gas company to strike a deal to frack for shale gas in Britain.
The company, which is already involved in shale gas projects in the US, China, Australia, Argentina, Poland and Denmark, has taken a 40 per cent share in two gas exploration licences for drilling in the Gainsborough Trough, in an area between Doncaster and Lincoln.
The initial exploration will be conducted by partner IGas, and Total will take over operations as the project develops. It is part of £1.2bn annual investments in oil and gas production by Total E&P, which is set to make it the largest oil and gas producer in this country by 2015.
Announcing the move into the shale industry in the UK, Patrice de Vivies, Total's senior vice president for Northern Europe, said: "This opportunity is an important milestone for Total E&P UK and opens a new chapter for the subsidiary in a promising onshore play.”
The announcement came as David Cameron said councils which give the green-light to fracking projects would receive 100 per cent of the business rates collected from shale gas schemes – rather than the usual 50 per cent.
The Government claims that exploitation of shale will mean more jobs and opportunities for people, and economic security for the UK.
Cameron said: "A key part of our long-term economic plan to secure Britain's future is to back businesses with better infrastructure. That's why we're going all out for shale. It will mean more jobs and opportunities for people, and economic security for our country."
The commitment on business rates would mean councils hanging on to up to £1.7m extra a year from each fracking site, officials said. The industry has already pledged to give local communities £100,000 for each test drilling and a further 1 per cent of the revenues if shale gas is discovered.
And today it was announced that the industry would further consult on how to deliver the money to communities, with options including direct cash payments to people living near the site or setting up of local funds directly managed by local communities.
But environmentalists accused ministers of trying to "bribe" local authorities into accepting fracking, a process that has raised concerns over inappropriate development and disturbance in rural areas, minor earthquakes and water pollution.
Friends of the Earth Jane Thomas: "This latest Government move highlights the depth of local opposition to fracking and the desperate lengths ministers are prepared to go to overcome it.
"People are right to be concerned about the impact of shale gas extraction on their communities - especially as experts say it won't lead to cheaper fuel bills. This move raises potentially serious concerns about conflicts of interest, if councils that benefit from this money are also the ones who decide on planning applications from fracking firms in the first place.”
A spokesman for the Department of Energy and Climate Change said: "Total's investment is one of a series of major shale investments in the UK in recent months, and is a sign of industry confidence in the regulatory regime that the Government is putting in place."