Surrey County Council voting in favour of 20 years of oil production at the Horse Hill oil site near Gatwick, 11 September 2019. Photo: DrillOrDrop

Plans for 20 years of oil production at the Horse Hill site near Gatwick Airport got the go-ahead from Surrey County Council’s planning committee this lunchtime.

Members voted by 7 to 2 to grant planning permission for production, four additional oil wells, a water reinjection well, oil storage and tanker loading areas.

The permission will allow the site operator, now controlled by UK Oil & Gas, to produce up to 3,500 barrels of oil a day from a total of six wells. Live updates from the decision.

“Vow to fight on”

Campaigners gathering outside Surrey County Council in advance of decision meeting on oil production at Horse Hill, 11 September 2019. Photo: DrillOrDrop

The scheme was opposed by local parish councils and campaign groups.

After the meeting, the Weald Action Group said it would seek legal advice to challenge the decision. In a statement, the group said:

“We were deeply concerned and disappointed when Councillors on the Surrey County Council Planning and Regulatory Committee voted today to give the go-ahead to massive expansion of oil drilling at Horse Hill, near Horley.

“Horse Hill Developments Ltd now has the green light to drill five new wells (one for water reinjection, which is implicated in causing earthquakes elsewhere) and commercial oil production for 25 years.”

James Knapp, of Weald Action Group said,

“Approving more drilling at Horse Hill was the wrong decision. The Weald Action Group and others had sent detailed submissions to the planning department, which were not properly represented to the Committee members.

“The Officer’s Report failed to take account of the changes in government policy on climate change, and didn’t address the risks of drilling in an active earthquake zone. We will seek legal advice on how to challenge this decision.”

“Most significant event at Horse Hill since oil discovery”

Share movements in UKOG, the Horse Hill owner, on 11 September 2019

Stephen Sanderson, chief executive of UK Oil & Gas plc, said in a statement to investors:

“This landmark milestone, perhaps the most significant event at Horse Hill since the HH-1 oil discovery, paves the way for the Company to realise the full value of future long-term production from the Horse Hill oil field, our flagship asset. It is also a key enabler that will help us achieve our goal of long-term oil production and related cash flow by year end.”

Earlier today, the company confirmed that it had acquired an extra 35% in Horse Hill for Tellurian. Mr Sanderson said:

“It fully justifies the price paid to boost our share of oil sales revenues, net Reserves and recoverable resources by over 69%.

“Now that we are firmly in control of the forward Horse Hill drilling programme and development schedule, the Company is well placed to deliver its stated goals. We look forward to maintaining the considerable forward momentum of the past weeks during the forthcoming simultaneous drilling and production testing campaign.

UKOG said oil production at the site would no longer be limited to the planning consent for extended well tests on previously permitted wells.

The company added:

“The ability to produce over the field’s economic lifespan also enables the transfer of current and future assigned recoverable resource volumes into the category of Reserves, which, by definition, conveys with more certainty that a known volume of petroleum can be produced commercially over a given time.”

This gives the company commercial certainty and is a “critical step” to use debt-based funding for field development and other capital work.

The permission also allows the company to finalise its field development plan for the licences. An environmental permit application for the extra four wells is currently under review by the Environment Agency, the company said.

Drilling on a previously permitted well, known by UKOG as HH-2/2z (see DrillOrDrop report on consent concerns) would begin drilling by the end of the month.

A further Portland production well and the water reinjection well were planned for early 2020, the company said.

At the time of writing, shares in UKOG were up 1.49% at 1.29p.

“Uncertain future of UKOG”

Jim Blackmore, of Salfords and Sidlow Parish Council, said

“We are very disappointed that the committee did not pick up those points we made about the uncertain future of UKOG.

We asked for the decision to be deferred until there was a better understanding of the financial position of the company.

“Short and limited debate”

County councillor Jonathan Essex, who watched but did not speak at the committee, said:

“It was a very short and limited debate and it did not appear that all the points raised by the submissions and the officers were addressed.”

He said the committee should have required UKOG to carry out 3D seismic surveying before any work began on site.

He also said:

“The meeting did not explore the role of climate change and it felt that most of the members of the committee were under the illusion of believing tha because we have set a target of net zero emissions for 2050 we can carry on as normal. That is not the way to deal with climate change.”

Reporting at this meeting was made possible by donations from individual DrillOrDrop readers