Regulation

Third Energy commits to frack one well a year in Ryedale to 2022

171216 KM Eddie Thornton

Third Energy’s fracking site at Kirby Misperson in North Yorkshire, 16 December 2017. Photo: Eddie Thornton

Third Energy has committed to drill three wells and frack four in the Ryedale area of North Yorkshire in the next four years.

Under the revised terms of its exploration licences, the company is required to frack its gas well near the village of Kirby Misperton by the end of 2019. Within the next 18 months, it must also drill a 1,000m lateral well and carry out another frack.

After that, Third Energy has committed to drill and frack a 3,000m well by 30 September 2021 and drill and frack another well into the Bowland formation by 31 December 2022.

A further new well must be drilled in the area by the end of 2023 and one more by 2024, taking the total new wells to six.

171010 KM8 Leigh Coghill 1

Delivery of workover rig to Kirby Misperton, 10 October 2017. Photo: Leigh Coghill

Opponents of Third Energy’s activities in Ryedale said today they were surprised to see the work commitments, given the company’s financial position.

In November 2017, Third Energy told residents it was ready to frack the KM8 well at Kirby Misperton.

But two months later, the energy secretary delayed granting hydraulic fracturing consent until there had been a review of the company’s financial resilience.

Since then, the fracking equipment has been cleared from Kirby Misperton and no outcome of the review has been published. The company’s most recent accounts revealed liabilities of £63.9m and an annual loss of £3.5m.

Work commitments for Third Energy North Yorkshire licences

Extract of OGA document on licence work commitments

The new work commitments (extract above) are the first formal indication that Third Energy expects to be back to frack at Kirby Misperton.

News of the commitments emerged in an updated document published by the Oil & Gas Authority (OGA), the government-owned company which regulates onshore licensing. The document was referred to yesterday in a parliamentary answer by the energy minister, Claire Perry.

Third Energy NY licences

Area of Third Energy licences (outlined in red) in the updated work commitments document. Map: OGA

The Third Energy commitments were added to the latest version of the document, updated in December 2018. They cover a collection of six licences (AL006, DL005, PL079, PL080, PL081 and PEDL177) east of the Howardian Hills, between Malton and Pickering

The licences include Third Energy’s existing gas fields, at Kirby Misperton, Pickering, Malton and Marishes, which supply the company’s Knapton power station.

The commitments must be met if Third Energy is to retain its licences – although the company and the OGA can agree to changes, including extended deadlines and a reduced work programme.

To drill, frack and test, the company must also secure planning permission, environmental permits and hydraulic fracturing consent.

It has planning permission to frack the KM8 well at Kirby Misperton – though a condition of that consent, granted on 27 May 2016, requires the development to be implemented within three years of the decision.

At other sites in Ryedale, Third Energy has outstanding applications to North Yorkshire County Council for 17-year extensions of planning permission. The Knapton Generating Station and piped connection to the grid is part of these application and is likely to be decided by the Department of Business, Energy and Industrial Strategy.

“Complete industrialisation”

Paul Andrews, the Mayor of Malton and a Ryedale District councillor, said:

“It is clear from the terms of the licence that the intention is that, once fracking begins, it will be a continuous process.

“In other words, this is not a case of a couple of drill pads drilling a new hole once every twenty years: it’s a case of one bore after another in quick succession all over the Vale of Pickering, repeated over and over again.

“This is important because the greatest difficulty I have is in persuading people that the fracking process goes far beyond the boring of the few conventional wells we have at the moment, which – let’s be honest – are not a problem for residents.

“The terms of the licence prove that the government knows exactly what the consequences of their policy will achieve – the complete industrialisation and devastation of our beautiful county.”

Third Energy’s Ryedale commitments timeline

31 December 2019

  • Complete KM8 well (including hydraulic fracturing) and flow test

30 September 2020

  • Drill a 1000m lateral well, complete (including hydraulic fracturing) and conduct a flow test

30 September 2021

  • Drill a 3000m well to the Hodder formation, complete (including hydraulic fracturing) and conduct a flow test

31 December 2022

  • Drill another well into the Bowland formation, complete (including hydraulic fracturing) and conduct a flow test
  • Acquire a new 3D seismic survey over the eastern part of PL081, covering the Fordon prospect and deeper Bowland formation targets

31 December 2023

  • Drill a well in eastern part of PL081
  • Drill a Hodder formation well in PL079
  • Submit a field development plan or addendum FDP for the Greater Kirby Misperton Structure

31 December 2024

  • Drill an off structure well into the Bowland formation from a new wellsite on PL081

Other work

Third Energy NY licences2

Third Energy licence area PL77 (outlined in red). Map: OGA

In another North Yorkshire licence area, PL077, the new work commitments require Third Energy to submit a Field Development Plan for the Ebberston South gas field by 30 June 2019 and begin production by 30 June 2021.

Another change concerns PEDL145 in Warrington held by Ineos. The updated document extends the time in which Ineos must acquire new seismic data, from June 2018 to December 2020. The company also has more time to submit a planning application for drilling (from 31 December 2019 to 31 December 2022) and to test the well (from 30 June 2021 to 30 June 2024).

In PEDL188 in Cheshire, IGas has a new commitment to acquire 3D seismic data by 30 June 2020 and drill a well by 30 June 2021.

Exploration, appraisal or production?

Some of the licences in the updated document are now in their third (or production) phases.  But the work commitments, such as seismic surveying, drilling and fracking, would normally be done in the exploration or appraisal phases. Opponents of the industry have raised questions about whether the licences should have been moved into the production phases.

40 replies »

  1. How can they possibly hope to achieve this when they have such huge debts and weren’t allowed to frack in 2018 because their finances are in such a terrible state? This seems like a pie-in-the-sky wish list designed to attract some much-needed financing. And of course, don’t forget that 99.2% of the people who responded to the KM8 planning application opposed the plans, so this company has no social licence whatsoever.

    • Hi Ellie Gold,

      It may seem like pie-in-the-sky, but it is standard practice in wildcatting for oil, gas, copper, gold, tin, zinc… Companies with little cash obtain exploration licenses – PEDL for interest – in return for a work committment. If the gas price rises and if investment sentiment rises, than the PEDL can be diluted to cash-flush third parties who are latecomers to the shale “boom” and want to buy-in. If everything works, then everyone gains, including more revenues for the government. However even if fracking is uneconomic due to dry holes, or too much sour gas (i.e. with too much H2S), or too much nitrogen, or lots of other unexpected negative factors, then – incredible as it may seem – the original company may become cash flush (and the late-comers get stung financially). So long as the PEDL are regarded as cash-starved assets by newbies, then the newbies pump in more cash. And every time a newbie puts a heap of cash on the table, then the oldies put a bit of cash on the table long after they have doubts and so the process goes on. Only when the company has no funds does the table collapse due to failure of the life-support system (aka funds to keep going).

      Taking gold fever as an example, according to Mark Twain a gold mine has an optimist digging at the bottom of a shaft and a liar standing at the top.

      Robin Grayson MSc, Liberal Democrat Geologist

      • Perhaps Mark forgot to mention gold is still the most secure investment within any time of turbulence, and most times when it isn’t.

        Just goes to prove the engineers and the geologists fail to see the bigger picture whilst gazing up a shaft, and the mug punters see the bigger picture whilst they avoid being shafted.

        (By the way, mug punter is a term largely driven by Fund Managers who claim they will do a better job for vast fees. However, recent research would tends to indicate the mugs are a lot better at it than thought.)

        • Hi Martin,

          “Perhaps Mark forgot to mention gold is still the most secure investment within any time of turbulence, and most times when it isn’t.”
          I agree that bullion gold is the most secure commodity. Bullion gold has been a lousy investment over the last few years, except of course for skilled punters riding short-term fluctuations and those with inside knowledge of how the gold price is agreed between the central banks and major traders. In effect, bullion gold is just an informal currency. In the mining world, shares in gold mines roller coaster like any other mining shares, and often become bubbles that pop when investors fail to see profits. Likewise investors may be stung, and stung badly if and when the fracking boom peters out. It is important to know if the fracking boom is driven by the influx of investors’ cash or by cash generated by profits from gas sales. In the USA it seems to be that investors are failing to get the profits they had expected, not because there is no gas (there is gas a-plenty in-the-ground) but there seems to be oversupply. Any fool can excite the market and media by producing vast amounts of gas, but then find they can only sell the darned stuff if they sell it for no profit. Repeated price-cutting has left the USA gas price too low for decent profits, and the knock-on effect is that fracking gas is probably not very profitable in the UK. The only hope for the UK frackers is to hang on and wait for the US gas price to begin to rise. Already the nascent fracking industry has accepted PEDLs with planning permission from Mineral Planning Authorities for boreholes to test for Coal Bed Methane CBM are simply no longer economic in this era of low UK gas prices. So the Government-owned Oil and Gas Authority is allowing them – without first bothering to go back to the Mineral Planning Authorities to obtain amendments – are drilling much deeper than the coal-bearing strata to examine the Bowland Shale. But the deeper they drill, much more it costs per metre to do so. The seismic gets trickier to interpret, and the risk of encountering problematic anomalies of H2S, arsenic, selenium, thallium and cadmium increase

          Robin Grayson MSc Liberal Democrat Geologist

          • That is the most muddled economic nonsense around gold, oil and gas I have ever heard Robin.

            In terms of gold, it is a commodity that is the world’s prime example of a hedge against other commodities volatility. It still requires buying at the right price and selling at the right price. Investors know that. Some will get it correct, others will not. But the certainty with gold is that if you invest for long enough it will provide a steady return. Shown to all students as a pretty defined supply, demand equals price equation.

            Oil and gas is controlled by a cartel, world wide. Of course that cartel will try and prevent new players thriving (especially within their biggest market) and will moderate output to manipulate price to try and do so. They have tried that against US fracking and failed dismally. US fracking industry showed that against predictions they modified and were able to reduce costs and see off such attempts. During the process, some were less able and have gone, to be replaced by those who could. Some of the larger companies who were believers in the OPEC mantra and kept out of the US shale area have had to play expensive catch up. However, if you look at BP results, for example, you might just notice how even a late entry has helped rejuvenate their fortunes.

            World prices will fluctuate still for oil and gas related to world demand and supply. Currently, demand is being limited due to slow down in China (mainly) but that is a temporary situation and all sensible forecasts show oil and gas demand world wide will grow dramatically over the next few decades. IEA suggest +45% increase in gas demand by 2040-and that includes all sensible efficiency expectations and growth in alternatives. Perhaps you might try and persuade the Indians, for example, of their errors in this regard, but I suspect it will make no difference.

            I have no idea what the output and costs will be for UK shale, and neither has anyone else. What I do know is that UK shale gas, if produced, will contribute tax income to the UK, but imported gas from US will not. What I do know is the largest importer of US shale gas is willing to invest £500m, or so, to determine if UK shale gas will be competitive. No disrespect Robin, but I suspect he has a whole gang of geologists involved across the world who are giving him a different view to yours. They will also be giving a different view to John who was bold enough to specify that cheap oil and gas was available around the world, and within weeks there was a shortage and price hikes.

            But, of course, the real proof of the fake news is this.

            If UK shale gas production would prove to be so uneconomic, why are so many antis trying to prevent that being demonstrated??

            If you believe no one has not noticed that contradiction I fear for your chances of being elected. The public see through mixed messages very quickly.

            • Intersting quote Martin: ‘Currently, demand is being limited due to slow down in China (mainly) but that is a temporary situation and all sensible forecasts show oil and gas demand world wide will grow dramatically over the next few decades.’
              Sensible forecasts? I was under the impression from genuine climate experts (the sort who know what they’re talking about) that hydrocarbon use needs to decline dramatically in the coming decade, never mind the next few. What evidence do you have to the contrary? Demand for energy supplies is a different matter.
              Also: ‘If UK shale gas production would prove to be so uneconomic, why are so many antis trying to prevent that being demonstrated??’ I suspect many antis both hope and believe – rightly or wrongly – that fracking is uneconomic, given that the hefty investments in the likes of the USA seem to bear a remarkable similarity to sub prime mortgages and how they caused subsequent world economic collapse. They clearly want to prevent that being demonstrated to avoid any consequences before they happen (economic or environmental) rather than having to clear up the mess yet again. I believe it’s called forethought.

            • Climate change “experts” are not global energy experts, Mike.

              You could start with IEA and go from there. I gave the reference.

              Yes, there will be large increases in alternative energy, but that will not prevent the worlds middle classes demanding stuff and the global population moving towards 10 billion. Both will significantly drive increases in global fossil fuel use, especially as coal is phased out.

              If you take, as a very small example, the anti activities in the Weald. That oil goes to Fawley Refinery. There is a £500m project to increase diesel production from that refinery due to demand. Same refinery has pipelines for aviation fuel to be pumped to most of the airports in the southern half of the UK. Every one of those airports has large expansion plans in the pipeline- no pun intended. There will be some who do not want several overseas holidays a year and two cars on their drive (or one 3 litre diesel in reactions case) but the majority will still drive their demand.

              The worlds middle classes have now overtaken the worlds poor. Great, in terms of their lives, but their demands for stuff make a huge difference.

              If you want to persist with the strange anti economics of shale production, you will. But first take a look in todays Times regarding Texas. Now producing more oil than ever in its history and having an economic boom. That is the reality for them, may not have any connection to what would be possible in the UK, but don’t tell us it isn’t happening there because it is.

            • ‘Climate change “experts” are not global energy experts’ eh Martin? How wonderfully perceptive. Couldn’t agree more – one lot are climate experts and the other are global energy experts. It’s worth noting though that energy is pretty much 100% produced from either hydrocarbons or renewables, so any global energy expert ignoring the findings of climate change experts (all of them, not just the couple of percent funded by fossil fuel companies) can hardly call themselves experts can they? As the IPCC give us 1.1 decades until 2030 to massively reduce atmospheric carbon in order to keep global warming to only 1.5 deg C, how can ‘oil and gas demand world wide grow dramatically over the next few decades’ without destroying the climate necessary to support most current life on Earth? Which ‘global energy expert’ actually said that – other than Martin Collyer? Or do you prefer not to listen to the experts?

    • Ellie, thank you for pointing out and reminding everyone that it was 99.2% of the ones who responded by writing to the council, some from as far as the USA, Australia and New Zealand, that objected to Third Energy’s fracking of the KM8 well. Not 99.2% of the population of Ryedale or North Yorkshire.

      • Lorraine’s letter in the Times (13/2/2019) seems particularly appropriate-and almost uncannily able to predict the future.

        [date corrected at poster’s request]

      • John, you seem very knowledgable about the percentages of who responded and from where. Perhaps you could furnish us with the percentage of objections that came from locally (specifically those from Ryedale and those from North Yorkshire). Maybe you also know the percentage of letters of support from the same locale too. It would also be helpful to know how close to the application site someone has to be to qualify as a NIMBY and how far away from the site to qualify as ‘too far away to be relevant’. Is there an optimal distance, or minimum/maximum distances to qualify as a legitimate objector?

        • Mike Potter,

          There were 3,907 objections but only 1,048 clearly against the specific application at the KM-A well site near Kirby Misperton.
          Most were against fracking either in Ryedale, or the rest of the country.

          A significant proportion (approximately 64%) of the letters/e-mails received in objection made use of templates prepared by either Frack Free Ryedale, 38 Degrees, Greenpeace or Friends of the Earth.

          If we consider all 3,907 objections as coming from Ryedale, (which we know is incorrect looking at the evidence in appendix N of the North Yorkshire County Council, Planning and Regulatory Functions Committee meeting minutes, held on 20th May 2016, as it shows the distribution of objections from across the UK) That equates to
          7.2% of the population.

          If we consider that all the objections came from within North Yorkshire, then the percentage of the population that said “no” is just 0.65%.

          Do you want me to carry on with what percentage of the UK population said “no”, if like you suggest we do not set a minimum/ maximum distance for legitimate objectors.

          • Thanks for the comprehensive reply John. Just a pity that you’ve answered your own set of questions rather than mine. Always more convenient that way when you want to make a particular point – as I’m sure any politician would agree. Not surprisingly, most people don’t understand (and probably don’t even want to understand) the intricacies of planning law and procedure. I suspect many people just want to avoid the known harms from fracking, as seen in places where the industry has developed, before their health, air quality, environment etc are affected. Therefore not surprisingly, they want to stop it before it happens. Just because some folk lack the in depth knowledge of planning and decide to respond via a template doesn’t mean their concerns aren’t valid. It just means in reality that their concerns are highly likely to be disregarded by the authorities.

            • Well, Mike, many people in Texas are pretty happy with fracking. Wonder if they bothered to write letters regarding KM.

              If they did, it would be to say-

              “Don’t do it, we would rather send you our oil from our fracking and the same with our gas. Then, we can take the tax generated and spend it on all sorts of nice projects. You can continue with your austerity.”

            • So Martin, ‘many people in Texas are pretty happy with fracking’ are they? In that case, I wonder why the people of Denton, Texas, democratically voted to prohibit fracking within the city in 2014? In an overwhelmingly Republican area, in a state well accustomed to the O&G industry, 59% voted to ban fracking when they discovered first hand the health, environmental, social etc impacts of the industry right in their back yards after hundreds of wells had been drilled and fracked. Possibly the most literal case of NIMBYism ever. It would be interesting to know how much the industry spent on campaigning during the referendum.
              Not surprisingly, that democratic decision was soon overturned by state Republican politicians. Talking of expenditure, one can but wonder how much political purchasing power that involved too.
              No doubt some Texans are currently making a tidy buck, but I wonder for how long, how sustainably and at what social cost in the near future? Other Texas folk are rather more concerned about their own plight than with writing letters about a fracking application in a place the vast majority have never heard of.

  2. Excellent news – I always thought it was a little premature to think Third Energy we’re done and dusted. I wish them every success

    • No better place to test frack the shale than in an existing gas well. Should be quite quick. If they don’t have any money the service companies won’t mobilise the equipment. But I expect it is going ahead.

    • Hi Judith, As you may recall, there are now 40 active H2S springs in the Bowland Basin and sour gas was an issue with the Milton Green-1 well. As you may also recall, releasing 1 kg of CH4 into the atmosphere is about equivalent to releasing 25 kg of CO2.
      Robin Grayson MSc, Liberal Democrat Geologist

  3. Perhaps the planning system is about to change and the process will be accelerated? Third Energy may have inside knowledge?

    Social licence? Not relevant in planning terms…..or in National terms.

    Planning application comments are not a measure of social licence and are generally not legitimate planning objections.

    • Hi Paul
      “Social license? Not relevant in planning terms…or in National terms.”
      It would be helpful if you could mention any fracking company or planning officer that agrees with your statement.
      Robin Grayson MSc Liberal Democrat Geologist.

        • Yes of course JUDITH it’s your day job …….

          Last week I was on the international space station with the Tinman and the Scarecrow from the Wizzard Of Oz…….

          For all we know, your day job could be nothing more than a shoe shine girl on Oxford Street .

          LET’S SEE PROOF OF YOUR JOB .

          Oh by the way JUDITH, regarding your above post. I would like to return the favour and pull you up about YOUR poor use of the ENGLISH language. ( 4/10 for effort )

          • [Edited by moderator]

            Third Energy. This is the company that is currently up for sale. What do you do with your house when it is up for sale? Oh, you tart it up and get it in shape to achieve the maximum price. Shock/horror-perhaps TE are doing the same?

      • All the oil companies and “fracking” companies and Planning Officers will agree with me as that is the way the planning law is written. If “social licence” was reqired nothing would be built – housing, wind farms, oil and gas onshore etc etc. Please give me an example where a planning application has been refused (after appeal) due to lack of “social licence”?

        The oil companies (and wind / housing and everything else) go through a process of community consultation which I assume is something to do with social licence. The results of this are used to tick a box then filed in file 13 and irrelevant to the planning process going forward.

        Right or wrong, this is what happens.

        But still probably a lot fairer than some of your overseas mining projects?

        Have you found any Lib Dems yet?

          • Social Licence not required Paul, box ticking exercise. As it it is for any development which will have local Nimby opposition – I know as I was very active opposing onshore wind in / near national parks / AONBs and more recently have followed the consultation process for several greenfield housing developments – locals all against – housing all being built.

            • Hi Paul, sad to hear of your string of cases in which Social License being not required. I have contrary experiences in which locals all against defeated three proposed opencast coal sites, four housing compulsory purchase orders (i.e. for demolition of a total of over a thousand terraced homes); spot listing to prevent demolition of an important listed building; SSSI declaration of a derelict limestone quarry on grounds of its fossils and this is now a statutory Local Nature Reserve. Social License is important in many countries, for instance in Mongolia where a Russian gold mining company attempted to brutally move a village to opencast the fortune of gold underneath it. Outrage of local people led to the Russian company being instructed by the President to desist or be deported. All these are examples of developers FAILING to win an social license and the developers lost out. Of course gaining a social license is often impossible if fracking companies don’t make genuine strenuous efforts to win social license, or too often try to run roughshod over local communities as indeed IGAS, INEOS and CUADRILLIA seem to do.
              Robin Grayson MSc Liberal Democrat Geologist

  4. Nero fiddles (if he can raise the cash to buy one) while Rome burns. The planet should be well on the way to a 2 deg C rise by the time TE go into production, to supply their generator that currently runs at about 24% efficiency (excluding line losses, leakages etc) – or rather it would if there was any gas to run it.

  5. Sadly not surprising, given the number of blinkered cabinet ministers & MPs with shares in oil & gas, who don’t seem intelligent enough to grasp that ££ in the bank will be worthless to their children & grandchildren etc if they don’t have a habitable planet to live in.

  6. Hi Judith – no need to worry; I have regular technical conversations with other geologists: English, Scottish, Irish, Kazakh, Mongolian, Afghan, German, American… . Cheers, Robin Grayson MSc Liberal Democrat Geologist

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