Regulation

UKOG drops oil production bid for Markwells Wood but promises new application in weeks

markwells-wood

The Markwells Wood well site, South Downs National Park.

The company behind oil production at Markwells Wood in the South Downs has scaled back its plans following concerns about pollution to drinking water.

UK Oil and Gas Investments PLC has told planners it will submit an application for the site near Rowlands Castle by the end of 2017. But it said it no longer intended to apply for 20 years of production, three new oil wells or a water injection well.

Opponents of drilling at Markwells Wood have said the company’s latest move could be a “staging post” to bigger plans in the future or an attempt to avoid restoring the site.

UKOG withdrew a planning application for oil production in April 2017 after objections from the Environment Agency, Portsmouth Water, local parish councils and hundreds of members of the public. (DrillOrDrop report)

At the time, the local campaign group, Markwells Wood Watch, said the site was unsuitable. It called for UKOG’s exploration licence for the area to be revoked.

“Scope of application greatly reduced”

UKOG’s latest proposals were explained in a letter, seen by DrillOrDrop, to the planning officer at the South Downs National Park Authority.

In it, the company said:

“It remains our intention to re-submit our application before the end of this year.

“However, we now intend to reduce the work and phases in our application so that we only drill an appraisal sidetrack from the existing Markwells Wood-1 well, carry out flow testing of this sidetrack well and restore or retain the site.

“By no longer applying to drill four further wells and to put the Markwells Wood oil discovery into production for up to 20 years at this stage, the scope of our planning application will be greatly reduced.”

The letter, dated 16 October 2017, said:

“UKOG also believes this re-application will present no risk to groundwater as it will only involve drilling out of the existing fully cased and cemented well, thousands of feet below any viable groundwater.”

UKOG added that it had been “in discussions with statutory consultees and other regulators” about objections to its earlier proposals to “resolve” the objections before the planning application was submitted.

Planning permission at Markwells Wood has now expired and the site, which should have been restored more than a year ago, remains a wellpad.

“Staging post?”

markwells-wood-protest-at-portsmouth-15-nov-2016

Protest against plans to produce oil from Markwells Wood, Portsmouth City Council, 15 November 2016. Photo: Markwells Wood Watch

Markwells Wood Watch has questioned the intention of the new proposal. It told DrillOrDrop:

“In their letter UKOG says this new application will be to drill a sidetrack well from the existing well, carry out flow testing, and restore or retain the site. This seems to represent Phase 1 of the previous application. Could it be that they hope to use this as a staging post to apply for the additional wells in their long-term plans at a later date?”

Ann Stewart, from the group, said the expired planning permission required UKOG to restore the site by the end of September 2016.

“The South Downs National Park Authority assured us that they take the issue of site restoration seriously, but that they need show that they have been fair with the applicants.

“This confirms our concerns that the public cannot have any confidence that planning conditions provide any kind of safeguard.

“In practice, they have a level of flexibility that is not apparent when the conditions in the planning permissions are issued.

“Companies, like UKOG, are able to manipulate this flexibility to their advantage.”

Ms Stewart said the group had checked with the Environment Agency to find out whether UKOG had consulted with its staff.

“We were told that UKOG had not been in touch with them. Their [UKOG’s] statements are, at the best, misleading.”

“Site considered uneconomic”

markwells-wood-3-edited

Markwells Wood well site

The existing well at Markwells Wood was drilled in 2010 by Northern Petroleum (GB) Ltd, the former name of a UKOG subsidiary. It was capped in 2011 because the site was considered uneconomic.

In 2012 Egdon Resources, a former partner in the site, said the well test had performed below expectations (link to pdf document). In 2014, another former partner, Magellan, referred to a report by Schlumberger, which it said concluded: “The area is probably immature for oil or gas generation and therefore unlikely to have unconventional shale oil or gas potential.”

Ms Stewart said:

“They already have the findings from that time. Why carry out further testing on a site that was uneconomic only a few years ago?

“We consider this could either be a delaying tactic to avoid restoration of the site, or that they are hoping to create a precedent by getting permission to drill in the National Park.”

Markwells Wood Watch commissioned its own hydrogeology report on the features of the local chalk aquifer.

Ms Stewart said:

“We know that our unique aquifer is very vulnerable to contamination, and any level of risk is unacceptable.”

She said the group would comment when the planning application was published.

“May 2017 statement remains valid”

DrillOrDrop asked UKOG for more details about its plans for Markwells Wood. A spokesperson for the company replied:

“See our RNS of May 2nd 2017. This remains valid.”

This statement to investors said the company was withdrawing the previous application to acquire new hydrogeological data around the Markwells Wood drilling pad. The application would be resubmitted later in 2017 and the target date for drilling, April-June 2019, was unlikely to be affected.

Last year, UKOG submitted a revised work programme for PEDL126, the exploration area containing Markwells Wood. The company agreed to submit a planning application by 31 December 2016 for appraisal and subsequent phased development of the Markwells Wood site. It also agreed to drill a horizontal well at the site by 30 June 2020 and submit a field development plan by 30 June 2021.

2 replies »

    • Maybe the conversation behind closed doors went something like this……

      So, after 7 years of shale exploration what have we got?
      Well, nothing actually.
      And the latest report for energy security?
      Says we don’t need shale.
      Hummm, okay well what about the future?
      Who knows, but we have spent a fortune on this so far.
      Okay. Well I suppose we need to know at least what’s in the ground?
      Why?
      Just in case.
      In case of what?
      Well, you know, when the lights go out.
      But they aren’t
      Oh
      Well hang on, what about our money?
      And we can’t be made to look foolish by doing another U turn?
      Oh
      (Thinks)
      I’ve got it.
      Ok. You frack a well and tell us it’s got lot’s of oil or gas 😉 . We’ll say, ‘oh that’s great, we can keep this for the future in case the lights go out’. We will then give you a payment to hold production until it’s needed…..
      Is that per site then, whether there is gas or not?
      I suppose so.
      Great, see you in the bar later……

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