Industry

Operators face losing drilling acreage in UK licences this month

PNR4

Cuadrilla’s Preston New Road site in PEDL165

Oil and gas companies operating more than 40 onshore oil and gas licences face losing at least part of their acreage at the end of this month.

A group of licences issued in 2008 come to the end of their first term on 30 June 2016.

Under a requirement of the Petroleum Exploration and Development Licence (PEDL) operators must complete their work programme and give up half their licence area if they want to continue to a second term. Details

Where operators have not completed their work programme the Oil and Gas Authority (OGA), which oversees licences, may refuse a second term and the licence is given up.

Regions

According to data from the OGA, 45 licences are coming to the end of their first term this month. They are in the East Midlands, North West England, South Wales, Yorkshire, central Scotland and the Weald basin.

They include key licences, such as PEDL165. This is held by Cuadrilla in the Fylde, where the company wants to frack for shale gas at Roseacre Wood and Preston New Road.

PEDL regions

Main companies

The licences affected are held by 21 operators.

More than a third (17 out of 45) are held by IGas or its subsidiaries (Dart Energy and GP Energy).

Companies run by Gerwyn Williams in south Wales hold six of the affected licences.

companies pedls

Wells drilled

The work programme of a licence usually includes a commitment to drill at least one well in order to go to the next term.

Celtique Energie faces losing its licences in the West Sussex Weald (PEDLs 231, 234 and 243) because it has not yet drilled a well.

A total of 30 wells were drilled in the affected areas since the licences were issued in 2008. But all the wells were in 19 licences and no wells were drilled in the remaining 26.

The number of wells includes sidetracks or deviated wells. For example, the wells in the Weald were Balcombe 2 and the sidetrack 2z.

wells drilled by region

Extended first term and notice period

All the licences initially had a first term of six years. But the government extended the term for a further two years under a Deed of variation. Example here:  PEDL189 executed Deed of Variation to increase the Initial Term for 2 years (1) The second terms were shorted by two years and are still due to expire in 2019.

Operators which want to move to a second term must give the OGA one month’s notice of the end date. That notice period ended this week on 31 May 2016.

We asked Cuadrilla whether it had given notice to the OGA of its intention to proceed to a second term, and which area of PEDL165 was it proposing to surrender.

A spokesperson said:

“Cuadrilla can confirm that it has written to the Oil and Gas Authority regarding the second term of its PEDL 165 licence”.

But the spokesperson would give no further details. We have also put questions to the OGA on this issue but received no response. We’ll update this post when we do.

Demand for answers

Campaigners against fracking in Lancashire have written to the OGA and the Fylde MP, Mark Menzies, asking whether Cuadrilla had fulfilled its obligations under the licence and can go forward to a new term.

John Powney, speaking for Frack Free Lancashire, said there must be no negotiation. If Cuadrilla have not met its obligations, it should lose its licence.

“If they have given due notice, the legal agreement requires them to give up half their licence area. The people of Fylde need to know whether their homes are within that relinquished part.”

He added:

“We would oppose strongly any attempt to relicense that area.”

Full list of affected PEDLs and operators

2016 pedls and operators

Sources

DrillOrDrop compiled this post using the following sources:

OGA licence data

OGA licence guidance

UK Onshore Geophysical library


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10 replies »

  1. I gas, Quadrilla, etc dont realise they are being hoodwinked! All part of having a good looking shop front for TTIP. The masses in England have said NO! and mean NO!

  2. Maybe part of the reason the licences haven’t been exploited so far is that the companies have had to spend so much time and resources protecting their lawful business from protests.

    • The licences have not been worked within their allocated time-scale. Extensions have been given reducing second term time allowances. Companies with interest in shale gas developments will be looking closely at the reasons for these money haemorrhaging delays. Mr Egan recently stated

      “Investors have patience but it’s not limitless”

      On 20/11/2013 PEDL 165 initial term was extended. That means a total spent exploration time of 8 years. In 2010 applications to drill were passed without the need for Committee approval. 0.99 hectare sites were chosen avoiding the need to conduct Environmental Impact Assessments, compulsory at 1 hectare. Fracking was not mentioned in the early applications. Did the Industry really think local people would not start questioning what was going on next to where they live? The 2011 earthquakes were their own doing. So was the subsequent time delay when DECC demanded reports and recommendations. Consultations and selective meetings again raised concerns and extended time.

      All applications sent to committee have been processed in the correct manner and within the correct time scale
      .
      Protests have raised public awareness.

      The Industry is responsible for the delays

    • Maybe they should have spent more time in community engagement exercises rather than racing along without due care.
      Their arrogant approach due in part from Camerons shortsighted dash for gas and lack of transparency has meant that people are quite rightly extremely concerned. Now more than at any other time regular folk can do their own research and that simply means if business want a ‘social licence’ then they will need to change their approach.

  3. I think the OGA will probably understaand that in a time when oil and gas price have fallen by at least 75%, not a single company outside the KSA have been able to advance exploration plans in the way most companies envisaged even 4 years ago. Many small O&G companies such as IGAS are concentrating on cost cutting and reducing debt. Igas is mostly involved in exploration for shale on the back of complete outside financing from oil majors such as Total. The reduction in exploration worldwide will probably have the effect of reducing oil supply in the next few years as existing resources deplete, leading to higher petrol prices, which you may see in a positive or negative light depending on your wider view of the UK’s energy future. I say probably because actually it is possible that US shale production, currently ravaged by the low price of oil, may be able to come back on stream relatively quickly because of the speed of onshore drilling. Because fracking is such a new technology which is rapidly improving in efficiency, nobody really knows what the break-even price is for US shale oil across the board.

  4. Yes, let the anti-frack mafia go back to sleep. I’m sure that these companies will let valuable licenses expire worthless, and I’m also sure that they’ll never produce any oil or gas because they’ll never make any money. Rest easy anti-frackers!

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