IGas Energy has managed to increase average gas production at its Doe Green site near Warrington in Cheshire by about 40%.

The news, coupled with an unrisked gas initially in place (GIIP) estimate for its Holywell shale, was well received by investors as shares in IGas rose 5% in early trade.

This increase has been achieved following the implementation of a range of measures designed to optimise the de-watering process at the site's DG2 well.

The contributing laterals have now been producing at an increased rate of over 60,000 standard cubic feet per day (scf/d) of high quality coalbed methane (CBM) for over six weeks.

The company aims to further raise production, having applied for planning permission for two more wells on the site.

The company was encouraged by the results, saying that the materially improved production rates were a significant step in demonstrating the commerciality of the gas held in its acreage.

In addition to that, IGas reported that an independent review of the gas potential of its Holywell shale has put the unrisked GIIP estimate at 1.95 trillion cubic feet (Tcf) net or 4.64 Tcf gross at the highest.

The low estimates stand at 31 billion cubic feet (bcf) net and 89 bcf gross, while the mid estimate stands at 412 bcf net and 1.14 Tcf gross, all with a 50% risk factor.

The GIIP calculations were based on estimates of area in which the Holywell shale may be in the gas window.

“Whilst IGas' principal objective remains delivery of commercial CBM production, the additional potential of shale gas is very exciting; as this sector has seen significant growth in North America and increased interest across continental Europe,” said chief executive of IGas Andrew Austin.

Management estimates that if the Holywell shale was subsequently found to be overpressured then the corresponding gross estimate for the GIIP could be greater than 10 Tcf.

A programme of activity including data acquisition and core analysis is to follow to help IGas better understand the shale potential contained within its acreage and complementary to its primary objective of commercial CBM delivery.

Further development of the shale potential in IGas's acreage will depend on the outcome of these studies and experience elsewhere within the UK and Europe.

Based on the contingent resource estimates prepared by independent assessors, IGas has enough gas to supply electricity to over 7% of the UK’s households for 15 years, making it the largest independent CBM producer in the UK.

IGas remains on track to establish the UK’s first CBM full production site in 2011.

In the six months ended 30th June 2010, IGas generated revenues of £0.252m (H109: £0.348m). With the scaling up of its developments IGas has increased budgets and enlarged its workforce, and the company reported an operating loss of £0.55 million compared to £0.16 millionin H1 2009.

As at June 30 2010 IGas had cash, and cash equivalents, totaling £16 million following the company’s equity fundraising in the second half of 2009.

During the period, the emerging CBM producer completed a pilot production well in Staffordshire, and received four more permissions for full scale production drill sites, taking its tally to seven in total.