UK's Cuadrilla calls for 'urgent' action on shale gas well closures

UK shale gas pioneer Cuadrilla Resources has urged the UK authorities to clarify whether it must still proceed with the plugging and abandonment of two shale gas wells in northwest England.

Cuadrilla said in February it planned to permanently seal the two shale gas wells it drilled at the Preston New Road site after the Oil and Gas Authority ordered them to be plugged and abandoned.

However, UK business secretary Kwasi Kwarteng said March 9 that "it did not necessarily make sense" to concrete over the wells at the site.

"I urgently request the Business Department and the OGA to formally withdraw its instruction to plug the wells," Cuadrilla CEO Francis Egan said late-March 10.

The OGA -- which declined to comment March 11 -- set Cuadrilla a deadline of June 30 to fill its shale gas wells with concrete.

"Plugging and abandoning these two wells takes 2-3 months, which is why work's starting next week. That means we have a rig contracted, waiting to travel to our site in Lancashire," Egan said.

The UK government put in place a moratorium on fracking in England in November 2019 after an analysis of the environmental impact of work at Cuadrilla's site at Preston New Road.

Cuadrilla was forced to suspend work at the site after a magnitude 2.9 tremor occurred in August 2019.

However, with gas prices having hit record highs, there are growing calls for the UK to reconsider its position on shale gas.

The NBP front-month price hit a record high of 503 p/th (Eur206.54/MWh, $65.85/MMBtu) on March 8, according to Platts price assessments by S&P Global Commodity Insights.

That is more than 1,125% higher than the assessment a year ago of just 41.4 p/th.

The price was assessed March 10 lower at 303.8 p/th.

'Still useful'

Egan also called on the authorities to put sensible protections in place to ensure that companies like Cuadrilla "aren't forced to suffer the risk and financial uncertainty of operating in a position where a government can keep changing its mind and require wells to be cemented while they are still useful."

The UK government said March 8 it would look at "all options" to tackle high gas prices following renewed calls for the government to drop its moratorium on shale gas developments in England.

It is estimated that the northern Bowland Shale gas formation alone holds as much as 37.6 Tcm of shale gas. Just 10% of that volume could meet UK gas needs for 50 years, Cuadrilla said last month.

However, several academic studies have suggested that the true resource is much lower.

In 2019, research from Nottingham University said resources within the Bowland Shale formation could be up to five times lower than previous estimates suggested.

The research, supported by the British Geological Survey, said economically recoverable reserves of Bowland shale gas could be less than 10 years of current UK gas consumption -- implying a ceiling of around 800 Bcm.

Loxley appeal

Separately, another onshore gas developer, UK Oil & Gas, on March 11 stressed the importance of domestic gas production as it gave an update on its conventional Loxley gas project in southern England.

Loxley could potentially be the UK's second-largest onshore conventional gas field -- after the soon-to-resume Saltfleetby field in eastern England -- and UKOG had planned to drill a Loxley appraisal well last year.

However, local authorities in December refused planning consent for the appraisal project.

UKOG has appealed against the decision. "The Planning Inspectorate has now confirmed that the inspector has submitted his report to the Secretary of State to assist in his determination," UKOG said.

"The Planning Inspectorate has also advised that they expect the Secretary of State to issue his decision on or before June 7," it said.

UKOG CEO Stephen Sanderson said new UK domestic gas, from sites such as Loxley, could help increase security of supply and help mitigate against price volatility.

"In these respects, moving Loxley forward would also be entirely consistent with the Prime Minister's recent statement regarding a new energy strategy that includes using more domestic hydrocarbons to reduce Russian imports," Sanderson said.

UKOG has estimated recoverable gas resources at the Loxley discovery lying within its 100%-owned PEDL234 license at up to 54 Bcf.

Including parts of the Loxley accumulation located outside of the license area, recoverable gas resources are estimated at up to 70 Bcf in a high-case scenario.

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