Insider Media Limited

An East Midlands-focussed hydrocarbon exploration company has said that huge reserves of a controversial natural resource could be located in one of its fields.

Europa Oil & Gas's chief executive Hugh Mackay told Insider it was adopting a "watching brief" to assess the government's appetite for shale gas and how best to exploit the company's licence for a giant Humber Basin field.

It also operates producing fields at Crosby Warren and West Firsby in Lincolnshire, which could be another potential source of shale gas.

The company has noted that the Humber basin share the same geology as the Cuadrilla reserve in Lancashire where the presence of up to 200 trillion cubic feet of shale gas has been identified.

Drilling for the Cuadrilla reserve has been linked to the creation of more than 1,500 jobs and a £6bn economic boom.

"At the moment, it's fair to say, we're just watching what Cuadrilla Resources are doing in Blackpool," said Mackay.

"We're aware it's quite controversial and we are going to watch and see how things develop."

He added that the practice "is not something we're pushing at the moment".

"Our primary efforts in that area will be looking at conventional oil production in the East Midlands and looking at ways by which we can augment in the existing production," said Mackay.

That controversy relates to the "fracking" extraction process which the British Geological Survey (BGS) recently concluded caused earthquake tremors in Lancashire when used by Cuadrilla.

"It's something for the British government and people to decide if they are interested in obtaining gas from shale gas then the licence in the Humber area is potentially well located for it," said Mackay.

"The techniques for developing shale gas are quite specific," he added.

"We may want to develop them ourselves, we might wish to consider bringing in a joint venture partner or we might wish to consider selling. At this moment we'd want to keep all options open."

Mackay said the company was aware how "emotive" the extraction of shale gas could be, highlighting that a presidential decree had outlawed the practice in France.

However, he also highlighted the impact shale gas has had on the energy market in the US where use of the resource has risen from 1 per cent of domestic supply to 20 per cent and, he claimed, been credited with both lower natural gas prices and declining dependence on imported natural gas.