Updated: Cuadrilla says government rule change means it will keep most of Lancashire exploration licence

PEDL 165 Surrender Area Map

Relinquished area for PEDL 165 marked in red. Map: Cuadrilla Resources

Cuadrilla has confirmed that it will not be returning 50% of the area of its exploration licence in Lancashire as had been expected when the first term expires at the end of this month.

In a statement, the company said the government had changed the requirements of the licence. As a result, it would be handing back only a small section of the licensed area.

Opponents of Cuadrilla’s plans said the new rules were to the detriment of residents and would deepen distrust and anger towards the government.

The area of Petroleum Exploration and Development Licence (PEDL) 165 covers the Fylde area around Blackpool. It includes Cuadrilla’s proposed fracking sites at Preston New Road and Roseacre Wood. Planning applications for these are being considered by a planning inspector and will be decided by the Secretary of State for Communities and Local Government.

PEDL 165 was issued in 2008 and the first term of the licence ends on 30 June 2016. Local anti-fracking campaigners had expected the company to be required to return 50% of the area under the original licence rules before continuing to a second term.

But Cuadrilla said it would be keeping all but 63 km2 in the north east of the licence. PEDL 165 is more than 1,000 km2 so the relinquished section amounts to about 6%. The relinquished area includes the Forest of Bowland Area of Outstanding Natural Beauty.

In a statement, the company said:

“Cuadrilla confirms that it wrote to the Oil and Gas Authority (OGA) on the 25th May 2016, to continue the term of its Lancashire shale gas exploration licence agreement PEDL 165.

“The original licence was granted under the Government’s 13th round licence terms, and the OGA has now varied the licence to update it to its new model licensing terms.

“Cuadrilla will continue exploring in the licence for a second term.

“Under the new OGA terms, Cuadrilla is not required to surrender 50% of its licence acreage and instead was required to nominate the areas it plans to retain and surrender the remaining part.”

The company said it has surrendered what it describes as “a relatively small part of the licence” and:

“An area that Cuadrilla has determined to not be geologically prospective  for shale gas exploration.”

The statement continued:

“The OGA has confirmed receipt of Cuadrilla’s proposed second term licence plan and are processing the surrender area.”

DrillOrDrop understands that local campaigners in Lancashire had previously been told that Cuadrilla would have to surrender 50% of PEDL 165.

Responding to Cuadrilla’s announcement, John Powney, of Frack Free Lancashire, said:

“It is concerning that once again, the goalposts have shifted with regards to fracking and Cuadrilla’s license acreage. These ‘new’ OGA terms appear to have been renegotiated behind closed doors, to the benefit of the industry and the detriment of many residents who are still under the threat of this unwanted industry.

“DECC confirmed that a 50% of surrender of acreage was a condition for a progression to a Second Term. That should still be the legal case and altering licenses out of public view will only serve to further cultivate a deeper distrust and anger over the government’s blind dash for gas.”

Other licences

Another 44 PEDLs issued under the 13th round are coming to the end of their first term this month. Like PEDL 165, they have already had a two-year extension of their first term.

One of the licences involved is PEDL 234 in West Sussex, which UK Oil and Gas Investments announced earlier this month it was buying from Celtique Energie and Magellan Petroleum UK Ltd.

Under the original rules, to continue to a second term, the licence operators must have completed the commitments in the work programme. This often includes drilling at least one well and carrying out seismic surveying.

No wells have been drilled in PEDL 234 so under the rules the licence should be relinquished. UKOG has said its deal depended on the OGA agreeing an extension of the first term for at least another year.

In north west England, no wells have been drilled in at least four licences where the first term is due to expire this month.

In a written answer on 4 May to the City of Chester MP, Chris Matheson, the Energy Minister, Andrea Leadsom, said the operator, Dart Energy (West England) Ltd, has requested an extension to allow additional time to drill at well in PEDL 189.

Questions to the OGA

DrillOrDrop put a series of questions to the OGA about the licence rules and the expiry of the first terms.

  • Has the OGA updated the terms of all the existing 13th round PEDL licences which reach the end of their first term on 30 June 2016?
  • Which PEDLs does this involve?
  • Please confirm whether the new terms no longer require the licence operator to hand back 50% of the licence area at the end of the first term but instead identify acreage that the operator no longer requires.
  • Please give the reasons for this change in the licence term.
  • Please give details of any other changes to the licences.
  • Which PEDLs that reach the end of their first term on 30 June 2016 will be relinquished because the operators have not met the commitments in the work programme?

The OGA replied on 27 June 2016 with this statement:

“Several licensees proposed amendments to their Licences, either to extend the Initial or Second Term of their licences, or to adopt the latest Model Clauses (set out at Schedule 2 of the Petroleum Licensing (Exploration and Production) (Landward Areas) Regulations 2014 (see Licensees adduced a range of grounds for their proposals.

“In those cases where OGA agreed the proposals, it has drafted and sent Deeds of Variation to the licensees for their signature. When the process is complete, OGA will place a list of the variations, and of the licences that will end on 30 June, on its website.

“The 2014 Model Clauses implemented certain changes from previous Model Clauses: principally that the retention of acreage is made subject to the agreement of Retention and Development Areas (clauses 16, 19 and 43), and there is a reduced confidentiality period for certain information about hydraulic fracturing (clause 32). While no Retention Areas or Development Areas have yet been agreed, Clause 5(3)(b) can modify the condition relating to a surrender of 50% of the initial Licensed Area where Retention Areas or Development Areas exist.”

Updated 27/6/2016 with reply by the OGA


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22 replies »

  1. Good news comrades.
    Ruth I dare say you, John Powney and other’s are just as pleased as I am with the Cuadrilla decision.
    Not too late for you to change your side Ruth

    • The altering of conditions as you go is a serious issue. Other companies who may have wanted to explore are being denied the opportunity. Allowing only 1 company rights in an area this size does not maximise any potential.That is why the original 50% surrender condition was placed. Changing rules to accommodate individual private companies is not the way forward whatever the Industry.

      From an anti fracking perspective these condition alterations mean thousands more people are under threat from the Industry. More groups will form, more money will be available, and searches from house conveyancing solicitors will show up property within a licenced area requiring prospective buyers to notify money lenders.

      A big price for a big Portfolio with only 1 unsuccessful fracking operation.

  2. This is absolutely outrageous! Is it not about time that the government stopped playing weak corporate rubber stampers and changed the regulations in favour of protecting the British public for a change and not keep letting the fracking operators off the legal hook?? We need this government to stand up for the British public, not play roll over and play dead games every time it seems like the fracking operators may lose some of their financial props? They are private companies, they have no more right to roller-coaster over the rights of the British public than anyone else does. Why are they given free ‘get out of prison’ escape clauses and roll over and play dead government rubber stamping when no-one else gets this partial treatment?
    Its time to get this government out and replace them with someone who has real teeth and a regard for the rights of the British public, not just empty smiles and assurances of, ‘its all safe, don’t worry your pretty little heads about it, we have everything under control!’ oh yeah? pull the other one it has alarm bells on it.
    Why doesn’t David Cameron allow fracking under his own constituency? Because he knows it dangerous and his constituents will oust him at the earliest opportunity if he does allow it. David Cameron is the most successful anti-fracking campaigner of them all!

    • In any democratic country the people elect the government, and expect that government to make decisions for the whole of the country not just a renogade minority who because they weren’t consulted spit the dummy.

      Get over it Philip Crocker.

      • When the majority of the population say no, the local parish Council say no, the district Council say no, and the County Council say no then it is a No. The Government give powers to the Councils who listen to both sides and make decisions.That is how it works. Councils have listened to the argument of cheap gas and lights going out and concluded that there is no over riding public need for a shale gas Industry and that the dis benefits outweigh the benefits.

        The original surrender of 50% is a long standing licence condition put in place to maximise the purpose of the licence. You lease a lot, see what bits are best and then return the rest. This means you can concentrate on areas you can manage and give the rest back to be put up again for others to licence. You presumably think Cuadrilla are capable of maximising the full potential of huge acreage and no one else should be able to have access to it. If so then the evidence and science tells you that for the last 8 years you have been pinning your hopes on a company who to date have accomplished this

        Click to access 5055-preese-hall-shale-gas-fracturing-review-and-recomm.pdf

      • I see the frackers pet rotweiler got out of the wrong side of its cage again. One day you will shock us all and actually answer a question.

        • Mr.Moderator it would appear to me that the above post by Philip Crocker contravenes your policy on what is acceptable when posting comments.

          Even though Philip has carefully avoided using a poster’s name he is suggesting the poster is a dog. He is even suggesting that the dog is skilled beyond belief in that he can answer questions.

          Are you going to allow this un-acceptable pist to remain?

            • ☺ fair enough Paul, thank you for your courtesy of reply. My apologies Philip Crocker if you’ve taken offence by my earlier post, i accept the last sentence was not warranted.

              • Apology accepted Michael, i know we all feel anxious over this subject, no matter what side we are on, my unreserved apologies too for my remarks, i hope we can maintain a good discussion in future, Have a good day.
                My apologies to you too Paul, for losing my usual ‘cool’.

    • It would appear that the delays have not been because of Cuadrillas slackness, but of a rather bizarre rejection of a perfectly legal and approved operation. The poor quality of the Councils decision is being appealed, and to allow these licences to lapse because of ridiculous delays would be perverse, in moral terms, but also, in legal terms.

      • I did love the councillor who said he would support Cuadrilla’s application if there was a legal limit to put the limit on the fracture length so that it was in the middle of the aquifer formation. Not only will the aquifers get no-where near this, but it shows that the councillor has no idea about the local geology, or about the safety of fracking. If you wanted to put a limit on any fractures then you’d put it at the base of the regional seal formation – to ask for a limit that allows the fractures to penetrate right through the regional seal and half way up through the aquifer is insane. In the end he was told that the application could not be changed at that time and he had to vote based on what was in front of him, so he voted against. Any geologist can see the insanity of the reason he voted against it. The anti crowd would just be happy he did of course, but for anyone interested in the intellectual quality of the reasons individual councillors were voting against it showed that even after claiming 18 months of analysing the application in apparently ‘minute detail’ some of the councillors didn’t understand what to any geologist would be considered the very basics.

  3. The reason why Witney was not available as a PEDL is simply that there is potentially very little gas there as in Carboniferous times Witney was mostly dry land and so organic rich shales were not laid down. Those who know a little geology will know it is due to the ancient landmass called the Brabant High. I enjoyed explaining that to David Smythe who was not aware of it.

    • So Witney does not have the same geology as the Bowland Basin, which we know from evidence from the British Geological Survey is heavily faulted. Here are just a few paragraphs from the official report

      Click to access 5055-preese-hall-shale-gas-fracturing-review-and-recomm.pdf

      The reason for such high leak-off is correctly indicated as probably due to extensive natural fractures, or conductive bedding planes,

      we are not convinced by the projected low probability of other earthquakes during future treatments.

      The analyses failed to identify a causative fault, and detailed knowledge of faulting in the basin is poor. In the present state of knowledge it is entirely possible that there are critically stressed faults elsewhere in the basin.

      the fault intersected the well-bore and fluid was directly injected into the fault during the treatment;

      there is only a limited understanding of the fault systems in the basin. Although some large scale structures have been mapped, earthquakes in the magnitude range 2 to 3 ML require only relatively small rupture areas, and so can occur on small faults. The strength of an earthquake is related to the area of the rupture and the amount of slip on the rupture. A magnitude 2.3 ML earthquake might require slip of up to 1 cm on a minimum rupture area of 10,000 m2 . There might be other comparable faults at reservoir depths throughout the basin,

      Am up to page 8 of 26

      I do not know much about geology. Please confirm whether you agree with the findings of the British Geological Survey who clearly point out that fracking in the Bowland shale causes fluid migration and Earthquakes.

      • The report is old now, but contains some very nice conclusions and recommendations. Of particular note is that the larger seismic activity was preceded by many smaller seismic events that could be used to predict the larger events. Because of this the report recommended the use of a traffic light system set to 0.5. This was because the size of the injected volume and the pressure held on the fracture network afterwards correlated with the smaller seismic activity, which in turn then correlated with the larger activity 10 or so hours later. Therefore, setting a cut off at 0.5 and pressure release of the fracture network would stop the larger activity from being felt at the surface. This, following the report you quote, has now been made law. Note that the report also reports on the correlation between injection volume and seismicity, meaning that it is fairly simple for companies to adapt hydraulic fracturing to the local geological environment.

        The report also makes note of the maximum predicted size of any events based on those in the coal mining industry, which is fair enough, even though those were obviously different geology. Its an interesting way to try and calculate an upper estimate. But there is better work available now that looks at the rock mechanics and concludes a figure of around the same, with 3.0 around the upper limit. This accords well with realworld data from fracking jobs around the world where the larger scale events are confined within around 2.0 – 3.0, as opposed to injection well activity which has been recorded at above 4.5.

        The report you quote also suggests that 3D seismics be conducted to better understand the regional geology. This has been done hasn’t it? It doesn’t talk about measurement of the local rock stresses, but this has also been conducted since from borehole imaging logs allowing geologists to better understand the principle stress environment and so better predict issues related to seismicity.

        Either way, the report is good, and makes for an interesting read, but is out of date now. If we are willing to use the BGS as a reputable source it seems illogical to ignore the fact that the say the risk of any seismic activity is low and that the currently accepted upper bound for seismic activity from hydraulic fracturing poses no structural risk to the surface; though there is obviously a risk that if you finely balance a plate on the edge of a table and wait that a low energy tremor might know it off. However, the traffic light system is there to stop injection at 0.5, which at Preese Hall was 10 hours prior to larger seismic activity, and depressure the fracture network, which at least according to the data you are quoting in this report should mean that no larger seismic activity occurs.

        • The DECC report is the official review of the official report on the events at the only fracked shale gas well in the UK. Please post any more current report of UK shale gas fracking for me to compare against the scientific evidence we have from the Preese Hall Well.
          You mention the 0.5 magnitude threshold but have not mentioned what Cuadrilla asked for regarding future seismic events. The report clearly states that after producing a 2.3M event Cuadrilla ask for future events to carry a 1.7M threshold. The BGS point out that this would carry a 0.9M post event rise meaning Cuadrilla are asking for a 2.6M threshold. Could it be that this figure is what is required for commercial extraction to work? The BGS have tried to appease the public by suggesting a temporary threshold of 0.5M but know that is not the needed threshold so say that 0.5M is “for the next few operations” and “can be adjusted over time”
          Bearing in mind a 2.6M is felt 3 times stronger than a 2.3M do you think that it would be sensible to frack hundreds of wells with a threshold that high?

  4. Once again proof,that you can’t trust or believe a single word that the government or the dirty fracking companies say

  5. What nonsense are you spouting Ken W this time? What delays are you wittering on about? Have you lost the ability to read a page of information and keep on track? Who has ever said anything about licences lapsing? You are a fine one to talk about moral stance when you want to frack us in the Fylde from your cosy South-West of England home.

  6. It seems that under this government, laws, rules, agreements, contracts and any forms of honourable behaviour are just an irrelevance to be ignored when it suits them and their corporate friends.

  7. You may be better off with Cuadrilla holding onto the areas. I keep reading they are incompetent, won’t get planning permission, are going bust etc. If they had relinquished any decent prospective areas you may have found a larger company might have come in which may have got planning permission quickly and started fracking.

    You should all be happy that the relinquished area does include the FOB AONB – but of course this is probably not too prospective as this is where the shale outcrops.

    Honourable behaviour? The Government have been very fair to Cuadrilla due to the prolonged planning mess Lancashire County Councillors have made.

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