Regulation

Licensing system criticised after two UKOG PEDLs extended

UKOG investor presentation on Arreton

UKOG investor presentation in November 2018

UK Oil & Gas confirmed today it had more time to drill in two southern England exploration licences, where no work has yet been carried out.

In a statement to shareholders, the company said the regulator, the Oil & Gas Authority, had extended the initial, or exploration, terms of licences in Surrey and the Isle of Wight.

The company’s chief executive, Stephen Sanderson, said:

“These extensions, on key appraisal and exploration assets, will permit UKOG to carry out its stated multi-well drilling campaign within the initial term of both licences.”

Opponents of UKOG’s operations in the licences criticised the Oil & Gas Authority (OGA) for the extensions, saying it had breached its own rules for the benefit of oil and gas companies.

Under the regulations, initial terms are currently set to last five years. Companies that do not comply with work commitments to explore for oil or gas could lose the licence. But usually, the OGA extends the duration of the initial term.

Surrey: seventh extension

pedl143-licence-area

PEDL143 and neighbouring licences. Source: UK Geophysical Library

The initial term of UKOG’s Surrey licence, PEDL143, near Dorking, appears to have been extended for a seventh time. But no exploratory drilling or testing has been carried since the licence was granted in 2004.

The initial term was originally set to expire in 2010. There have since been extensions in 2010 (two years), 2012 (one year), 2013 (two years), 2015 (one year), 2016 (two years) and 2018.

The extension in 2018 put the end date of the initial term at 30 September 2020. It now stands at 30 September 2022.

UKOG took over operation of PEDL143 from Europa in March 2019. This followed the cancellation of the lease of a drilling site in the licence near Leith Hill, by the then environment secretary, Michael Gove.

The licence was known as Holmwood in the industry, after this part of the Surrey Hills Area of Outstanding Natural Beauty (AONB).

Since then, UKOG has changed the licence name to A24 (after the local road).

It said today it was evaluating “multiple potential new drilling sites” outside the AONB. Drilling was scheduled to follow directly after what UKOG called its nine-well drilling programme.

UKOG has planning consent for two wells at its Horse Hill site in Surrey (HH1z and HH2). But other proposed wells at Horse Hill (HH3, HH4, HH5 and HH6), along with those at Dunsfold and on the Isle of Wight do not have planning permission.

“Ridiculous licensing system”

The local campaign group, A Voice for Leith Hill, accused the licensing system of contributing to the “blight” of local communities.

Dorking resident, Lucy Barford, from the group, said:

“This licence extension shows how ridiculous the licensing system is for onshore oil and gas. Oil companies seem to be able to continue to blight local communities by threatening to drill for oil and gas even when they’ve failed over a long period to get public support for their schemes.

“If UKOG proceed with their plans it’s likely to involve unconventional, horizontal or slanted drilling, meaning environmental impacts that are very worrying.

“Over 100,000 people were concerned enough about the original plans at Leith Hill to sign a petition about the threat to drinking water.

“This licence should be put on the scrap heap so that this beautiful area and the clean air and water on which we depend are no longer put at risk by money grabbing oil prospectors”.

Isle of Wight: initial term still has two years to run

pedl331

UKOG licence PEDL331. Source: UK Onshore Geophysical Library

UKOG’s Isle of Wight licence, PEDL331, was one of 93 issued under the most recent 14th round in 2016. No drilling work has been carried out so far on the licence but the initial term was not due to expire for almost two more years. It has now been extended to 20 July 2023, UKOG said.

UKOG describes PEDL331 as a “premier appraisal stage asset”. It has estimated that the licence, known by the company as Arreton, contains 14.9 million barrels of recoverable prospective resources for the company.

The licence has focused on three sites: Arreton Main, South and North. But UKOG has also said there is a further undrilled anticlinal, structure, the Arreton East Prospect, which is “many times larger”.

UKOG said today its proposed Arreton-3/3z appraisal well and extended well test were now scheduled to start in Autumn 2020. The company said it would then “proceed directly to drill Arreton South, followed by Arreton East in winter 202/2021.

UKOG previously said it would apply for planning permission in the first quarter of 2019 for drilling Arreton-3, followed by an application for Arreton South. At the time of writing, UKOG has not submitted any planning applications for drilling to Isle of Wight Council.

“Breach of rules”

Frack Free Isle of Wight said today

“We are concerned that the Oil & Gas Authority, which manages the licensing, is breaching its own rules.

“According to legislation a licence for an initial term for exploratory drilling is supposed to last for five years, then fall away if no well is drilled.

“This licence, PEDL331, was due to expire on 20 July 2021 and no planning permission preparation has yet been submitted for initial analysis. This extension has obviously been demanded by UKOG to give them further time to raise appropriate funding and prepare their plans so that they will not over run the expiration date.

“It would seem that the Oil & Gas Authority now have the right to overrule legislation to suit the licensee.”

Frack Free Isle of Wight said this afternoon that more than 1300 people had signed a petition against UKOG’s plans at Arreton and concerns about a threat from drilling to drinking water”

A spokesperson for the group added:

“To the east of Arreton is the region of Newchurch, with homes, farmland and the Garlic Farm under which they will presumably plan to drill multiple horizontal wells into the underlying geology.

“A plan to drill in the Arreton South Prospect could see wellsites close to Godshill and Rookley and horizontal wells drilled under the Area of Outstanding Natural Beauty, in order to achieve, in the words of Stephen Sanderson, a similar plan to Horse Hill with ‘back to back wellsites’ to maximise economic production.”

  • UKOG shares closed unchanged on the day at 1.09p.

11 replies »

  1. Newdigate is in the PEDL143 area, that’s where we have had earthquakes. Surely nothing is planned in that area? Oh just over the border is the Horsehill multi well site! Getting busy in that area methinks. Where will they be getting water from to use and abuse, the southeast is facing extreme water shortages by 2025, so where will they be getting their supply?

    • Paula C

      They do not plan to use much, so it could be saved on site, or tankered in from the North.

      Plus….

      Page 97 of the Southern Water WRMP shows a pie chart of non household usage. Primarily offices, with manufacturing, energy, quarrying taking 7% of non household water.

      The report gives average demand 550Million L day. Households 350. Non Household 200.

      So manufacturing et al use 14 Million L of the 550 used per day.

      https://www.southernwater.co.uk/media/default/pdfs/WRMP-technical-report.pdf

      Water usage has been dropping since 1989/90 due to water saving by households and non households.

      However they expect an increase due to there being

      1. More houses
      2. More people
      3. More single occupancy houses
      4. More variable rainfall
      5. Warmer weather
      6. EU abstraction restrictions

      Hence the plans to cope revolve around households saving water and similar activities for non households which are primarily offices. Plus connecting to neighbouring water companies to share supply.

      https://www.southernwater.co.uk/Media/Default/PDFs/H07_Demand-management-options.pdf

      Industry is not a big worry at present.

  2. Probably the same wells that the 4X4 owners get their water to wash their fossil fuel guzzlers, Paula C, before they set off to Gatwick to board their increasing range of flights to far distant destinations. However, better that consumption is managed locally-just as the UN recommends.

  3. Very presumptive Martin , I take it that you know all these people? Such a shame that your comments have taken such a flippant turn , but I guess that’s all you have left.

  4. Oh dear Jono!

    You can look up the levels of Gatwick passenger traffic and expansion plans. No presumption, just reality.
    (And, I have a suspicion that Gatwick will see accelerated expansion against Heathrow going forward as it reduces the need for over flying London.)

    I used to live in Surrey, as did my wife, so although we have moved away we still have friends and family who live in the area and know the situation is just as we experienced when we lived there. No presumption, just reality.

    You may feel there is an audience for comfort blanketing, which is your decision, but please do not expect me to join in.

    But, if you want some more factual reality, the UN is correct. Prevent additional impacts upon the environment by using local production rather than shipping from thousands of miles away. And, even Greta (not the poster child for Surfers Against Sewage) is correct about those countries who operate a system of carbon accounting that simply export their responsibility-usually to countries with far worse controls upon production/environmental issues.

    There you go, Jono. Some nice little bits of reality for you. Shame you find no need to offer any yourself.

  5. Listening to all the NIMBY’s here maybe the OGA should take the planning decisions out of local authority hands.

    Then there would not be the delays there are that you are complaining about.

    The planning permissions & regulatory licence should be granted with the licence grant.

    This would speed up the process working in line with government policy, making business sense & efficency with public benifits for the many not the few.

  6. People need to face reality, we need oil and gas. Those against it are only against it because it affects property prices where they live. Unfortunately we all have to make sacrifices. I live in Preston and have Cuadrilla on my doorstep but i understand that we need this energy. An alternative could possibly be being held to ransom by a foreign power in the future should we have to rely on their gas and oil.

  7. james-it is worse than that. They FEAR it might affect property prices but if you look at Wytch Farm-the largest on shore oil field in Europe and UK-then you can see that property prices around Wytch Farm are just about the highest for any area outside London. Equally, the environment around Wytch Farm is some of the best habitat for wildlife in the UK. One colleague living in a high value property (£1m+) in the countryside had a well placed at the bottom of his large garden. Little bit of light and noise during construction, which he likened to a lower level of inconvenience than the local farmers grain drier working in the autumn, after which he forgot it was even there as set within a wood. Absolutely no reduction in his property value.

    So, oil and gas can be pretty good neighbours. Indeed, another ex colleague used to use Wytch Farm as the ideal example of industry alongside countryside when lecturing at University to Business students. But, her job was to educate not to scaremonger.

    Interestingly, some of the worst neighbours in respect of property values are stables!

    Maybe Frack Free IOW could learn the lesson-and start with an accurate title? Don’t suspect so.

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