Lancashire County Council's decision today to block private operator Cuadrilla's prospective shale gas development at its Preston New Road site is a significant blow for the industry.
Quoted shale operators like IGas (IGAS:AIM) and Egdon Resources (EDR:AIM) are being sold off on the news - IGas falling 14.7% to 26.2p and Egdon 4.2% to 15.57p. The bigger decline at IGas reflects Egdon's more diversified portfolio, which includes a number of conventional assets. IGas' fortunes are far more tied to shale.
On Friday (26 Jun) Cuadrilla was refused permission for a fracking project at Roseacre Wood but this was largely expected as planning officers recommended refusal. Today councilors have gone against their officers' own advice hinting at how toxic an issue fracking has become.
If Cuadrilla appeals the decision it would likely go to central government and would be a key test of David Cameron's pledge in January 2014 to go 'all out for shale gas'.
In the mean time it is hard to see IGas shares performing - broker Westhouse noting that 'the share price is contingent on progress being made with shale gas development and this is looking quite distant at this point'.