British shale gas gets boost from court ruling on permit

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* Third Energy shale permit first since ban lifted in 2012

* Friends of the Earth say to continue to oppose fracking

* Third Energy says welcomes verdict

By Karolin Schaps

LONDON, Dec (Shanghai: 600875.SS - news) 20 (Reuters) - Britain's High Court ruled on Tuesday that a fracking permit awarded by a local council to developer Third Energy was legal, after it was challenged by environmental campaigners, opening the way to shale gas extraction in the UK.

Substantial amounts of shale gas are estimated to be trapped in underground rocks and the British government wants to exploit it to help offset declining North Sea oil and gas output, create some 64,000 jobs and help economic growth.

The contested permit in Yorkshire, in the north of England, was the first approval for shale gas fracking since a moratorium was lifted in 2012.

"The substantive claim for judicial review is dismissed," Justice Lang said in her written verdict on the case, ruling that the permit remains valid.

Despite government support, progress has been slow due to regulatory hurdles and public protests, with environmental groups concerned fracking could contaminate groundwater and that it is incompatible with fighting climate change.

"We will continue to campaign on behalf of local communities for the sake of our children and their children's health and well-being," said Jackie Cray, a co-claimant in the case.

Third Energy, which is owned by former employees of the Barclays Natural Resource Investments private equity business, had been expected to produce Britain's first shale gas this year before its permit award was appealed.

The company said it was pleased with the ruling.

Since Third Energy was granted its permit, shale gas developer Cuadrilla has gained approval for a second permit in northwest England after the government intervened and overruled a local authority decision.

Other British shale gas developers include IGas, Egdon Resources (LSE: EDR.L - news) and INEOS. (Editing by Louise Heavens and Alexander Smith)