The shale gas firm was stifled by a moratorium on fracking in late 2019 and it now plans to use its core competencies in the delivery of a ‘zero carbon’ energy project near Stoke-on-Trent.
() shares strengthened in Wednesday morning’s deals after it announced a deal to acquire GT Energy, a developer of British deep geothermal heat projects.
The deal comprises an initial payment of £500,000, in IGas shares, and the value of transaction can rise tied to future milestone events up to a maximum of £12mln – and share-based payments will be capped so that GT’s sellers won’t take more than a 29.9% stake in IGAS.
The acquisition is part of a strategy to diversify IGas into the wider energy market whilst leveraging the core competencies it holds as an onshore oil and gas operator.
In the era of ESG, where the likes of BP plan to invest billions of dollars into clean energy businesses, this deal marks an intriguing evolution of an AIM-quoted company which previously had a stated strategy to unlock shale gas resources in Cheshire and Nottingham by fracking.
Wednesday’s statement from IGAS highlighted that geothermal energy, which uses technology to utilise the earth’s latent ground heat, is increasingly being used by communities, towns and cities to provide heat and electricity.
Deployments have included uses in large municipal buildings, warehouses and district heating systems.
European installed capacity over the past five year has increased by over 1 gigawatt hours of thermal/heat energy (GWhth), the company noted. Some 327 plants now provide aggregate capacity of around 5.5 GWhth on the continent. In Paris and surrounds, for example, there are now 57 geothermal plants while there are 37 plants in the vicinity of Munich.
IGas said it sees potential for 50 to 100 geothermal installations in Britain, at an average size of 10 megawatts hours of heat energy.
GT Energy’s main project presently is a 14MW deep geothermal project in the Etruria Valley, Stoke-on-Trent.
The ‘zero carbon’ operation aims to provide heat under long term contract, on a take-or-pay basis, to Stoke-on-Trent City Council which will own and operate a district heating network that’s currently undergoing installation.
Current timelines for the project anticipate drilling and testing taking place through mid-2021 (with work in the second and third quarters), allowing geothermal operations to start in March 2022.
AIM-quoted company noted that the combination with GT Energy brings significant synergies, using its expertise in well engineering, drilling and onshore operations.
The plan is to prove efficient execution of the Stoke-on-Trent project and build a significant pipeline of projects.