Redundant oil and gas wells could be used for geothermal energy, the would-be fracking company, IGas, said in an announcement this morning.

In a statement to investors, IGas said it had acquired GT Energy UK Limited, a geothermal business with plans for a deep renewable heat scheme in Stoke-on-Trent in Staffordshire.

IGas said the deal was part of its strategy of diversifying in the UK energy market. It would combine IGas’s expertise in well engineering, drilling and onshore operations with GT Energy’s knowledge of deep geothermal projects, the statement said.

“This will allow both the efficient execution of the Stoke-on-Trent project and the building of a significant pipeline of projects, some of which could utilise IGas’s existing well stock and longstanding relationships in its current operational areas.”

Under the terms of the deal, IGas will make an initial payment of £500,000 in its shares and a maximum consideration of £12m. Share-based payments would be limited to 29.9% of IGas.

IGas said it was “well positioned to become a leading operator of a variety of energy sources in the UK”. It estimated there was potential for 50-100 geothermal home heating projects across the UK, with an average size of 10 megawatts thermal (MWth).

Its chief executive, Stephen Bowler, said:

“Whilst there is a clear need for oil and gas in a 2050 net zero environment, it is our intention to also play an important role in the UK’s energy transition.

“The acquisition of GT Energy provides us with an exciting entry point into this highly attractive, growth market, one that has seen material progress in Europe over the past five years.

“The decarbonisation of electricity generation has already made significant steps forwards with renewables and gas replacing coal, and the next significant area that must be addressed, to achieve the UK’s net zero ambitions, is the decarbonisation of heat. 

“We anticipate that this will dramatically increase the development of deep geothermal heating plants in the UK and across Europe.”

IGas has interests in 50 onshore oil and gas licences in Britain. They are mainly in the Weald Basin in southern England, the Gainsborough Trough in the east midlands and the Bowland Bain in north west England.

IGas’s shale gas plans at Springs Road, Misson, in north Nottinghamshire have been delayed by the moratorium on fracking in England, imposed in late 2019 and still in force.

GT Energy UK Limited, set up in 2013 by Padraig Hanley, has a single project listed on its website – the £18m scheme in the Etruria Valley in Stoke-on-Trent.

This is designed to provide heat and hot water through a district heating network, operated by Stoke City council.

It proposes two wells drilled to about 3,800m. The first well would be used to abstract geothermal water which would be passed through a heat exchanger before being returned back into the ground through the second well. The

IGas said necessary permits were in place but planning permission had lapsed and had to be renewed. It anticipated that drilling and testing could begin in the second and third quarters of 2021 and the scheme could be operating in March 2022.

Mr Hanley said:

“IGas, as a long established and trusted onshore operator, is the perfect partner to realise the GT Energy vision to deliver affordable, renewable heat from deep geothermal energy.

“The SoTCC [Stoke-on-Trent City Council] District Heat Network will use our deep geothermal heat energy to produce up to 45 GWh a year, save 10,000 tonnes of CO₂ a year and lower energy costs by up to 10%. It’s the UK’s first ever low-carbon heat network system on this scale, and will help heat thousands of homes and businesses in the city.”

IGas said it had released 377,586 new shares as part of the deal. At the time of writing, IGas shares were unchanged at 12.15p.