U.K. energy giant Centrica considering gas acquisitions in North America due to growing supplies from shale formations, has set aside £2B for investments in U.S. by 2015; decision could come in October, sources say

Bdebbie Garcia

LOS ANGELES , August 29, 2011 (Industry Intelligence) – Centrica PLC is evaluating possible gas acquisitions in North America due to rising supplies from shale formations, and has set aside £2 billion (US$3.25 billion) for investing in the U.S. by 2015, said sources close to the process, reported Bloomberg News on Aug. 26.

A decision on whether or not to proceed and how to do so might come in October, said the sources, who requested anonymity.

The Windsor, England-based utility is well placed to fund acquisitions. It ratio of debt to earnings before interest, tax, depreciation and amortization is 1.36 versus an average 4.13 for utilities in the U.K.’s benchmark FTSE 350 index.

Companies that have purchased U.S. shale gas assets in the past year include BHP Billiton Ltd. of Melbourne, Norway-based Statoil SA and Reliance Industries Ltd. of Mumbai, Bloomberg reported.

If Centrica invests, it will come from its Direct Energy unit, which operates in 46 U.S. states, Washington, D.C., and ten Canadian provinces.

Centrica CEO Chris Weston said last May that the Direct Energy might spend as much as £2 billion to acquire power and natural-gas assets in North America by 2015.

In April, the division acquired Royal Dutch Shell PLC’s natural gas assets in Alberta for C$47 million. A month earlier, it agreed to buy New York-based Gateway Energy Services Corp. for US$90 million, reported Bloomberg.

Centrica also plans to spend 1.3 billion this year, mostly on upstream gas and oil production and its 275-megawatt Lincs offshore wind farm, which the company indicates on its website is off the coast of Skegness, England, next to Centrica’s existing wind farm developments at Lynn and Inner Dowsing.

By 2035, shale gas drilled from rock using the hydraulic fracturing process might account for nearly 50% of total U.S. natural gas production, more than three times the volume in 2009, based on government data.

In the Pennsylvania part of the Marcellus Shale, which stretches from New York to West Virginia, 2,864 well have been drilled since 2008.

By the end of this year, New York might start issuing permits to drill for natural gas using hydraulic fracturing, known as fracking, according to the state’s Dept. of Environmental Conservation, Bloomberg reported.

The primary source of this article is Bloomberg News, New York, New York, on Aug. 26, 2011.

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