UK shale stocks are up as much as 25 percent on the local government's approval of the first fracking permit in five years, and analyst predictions that fracking could start before year's end.
IGas Energy Plc (LON:IGAS)-with interests in four shale gas projects in the UK-saw its stock rally 25 percent in Tuesday trading, following the British government's approval of a fracking permit after a five-year hiatus.
Likewise, Egdon Resources also saw its stocks jump, with an over 21-percent increase in value in Tuesday trading.
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The question now is whether the fracking rally will be short-lived. It's been five years since any fracking was allowed, largely due to massive public pressure in the aftermath of Cuadrilla's fracking in Blackpool, which had caused two minor earthquakes. When this project was subsequently suspended-fracking was put on hold indefinitely.
But the UK government's move earlier this week to allow fracking to go ahead at a Third Energy-operated site in Yorkshire de-risks the playing field significantly for all would-be frackers, barring any potential legal challenges opponents may have in store.
"This is positive for all holders of shale gas acreage," Proactive Investor quoted a VSA Capital broker as saying.
Even for Cuadrilla, there is renewed optimism and speculation that it could appeal its suspension of fracking.
IGas also has suspended fracking deals to reconsider and will await a decision on fracking at its Springs Road site potentially this summer. All told, at stake for IGas are some one million acres ripe for shale exploration.
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On Monday, councilors for North Yorkshire country approved industrial tests that will allow fracking in the UK, despite protests from local residents and environmentalists, who largely fear seismic activity, health problems and pollution.
The shale gas tests will occur in the village of Kirby Misperton by the UK-based Third Energy.
David Cameron and his ministers are set to welcome the tests, as the prime minister said in 2014 that his "government was going all out for shale."
In the meantime, Greenpeace is alleging that the UK government will lose over US$36 million in tax revenue thanks to generous tax breaks for frackers over the next four years.
By Charles Kennedy of Oilprice.com
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