IGas has been granted extra time for exploration work in six oil and gas licences awarded three years ago.
The company announced in its interim accounts that the Oil & Gas Authority had allowed extensions of three years to each of the licence initial terms.
The licences are in West and South Yorkshire, Lincolnshire, Surrey and West Sussex. They were awarded in the most recent licence allocation, the 14th round, in 2016. They are:
- PEDL257 – Lingfield, Surrey
- PEDL273 – south of Wakefield
- PEDL278 – near Doncaster
- PEDL305 – Rotherham
- PEDL316 – south east of Gainsborough
- PEDL326 – north of Bognor Regis in West Sussex
The extensions are controversial because the five-year initial terms of 14th round licences were not due to expire for nearly two more years, in July 2021.
But the accounts show that the initial terms of the PEDLs on the IGas list have been extended for another three years, until July 2024.
IGas has drilled no wells in any of these licences.
PEDL189 and PEDL235
The IGas interim accounts also referred to two other licences, PEDL189 in Cheshire, and PEDL 235 on the West Sussex/Surrey border. These were also described as 14th round licences but they were awarded in the 13th round in 2008.
IGas said the initial terms of both these licences had also been extended for three years.
DrillOrDrop reported in 2018 that PEDL189 had its initial term extended for four years until 2022, following two other extensions.
The OGA’s online database continues to put the expiry date of the initial term at July 2022.
PEDL189 was the subject of an unsuccessful legal challenge by the environmental campaigner, Ben Dean.
He argued that the second extension of the initial term, in 2016 to 2018, was unlawful.
The court ruled that the licences were private contracts that could be varied if the two parties agreed.
PEDL235 is the licence area where IGas announced in the summer that it wanted to drill two wells to explore for oil and gas.
An IGas drop-in information session, planned for 1 August 2019 in the village of Dunsfold, was cancelled.
The IGas accounts said:
“Work on this project continues with a view to submitting a planning application in the future. As part of the planning process, IGas will undertake community consultation to take account of feedback from local residents before submitting the full planning application.”
The expiry date of the initial term of PEDL235 was also originally 2014. DrillOrDrop reported in 2018 that the initial term had been extended to June 2021. The OGA database continues to record this as the expiry date.
Other IGas developments
Springs Road, north Nottinghamshire
IGas said the gas exploration well, known as SR-01, encountered 429m of hydrocarbon-bearing Bowland Shale. The company said it had acquired 147m of core, the first from this basin. It described the results as “a world-class resource” with early indications of “significant gas flow”. There was no reference to any possible future planning application to frack the SR-01.
Tinker Lane, north Nottinghamshire
IGas said the site, where drilling failed to encounter the Bowland shale, had been restored and handed back to the landowner ahead of schedule.
IGas said the gas-to-wire and gas-to-grid facility had “a strong electrical export performance during the first six months of 2019. “Initial reliability issues post commissioning have been resolved in time to meet the expected higher winter demand”, the accounts said.
IGas said it had submitted a planning application to install up to 6MW of electrical generation from gas produced by the Bletchingley 2 well.
Scampton North, Lincolnshire
Plans to install water reinjection facilities have moved into the construction phase, IGas said. The work was expected to double output from the field.
Ellesmere Port, Cheshire
As DrillOrDrop has reported, IGas said the planning inspector’s recommendation on IGas testing plans at Ellesmere Port is due to be submitted on 23 January 2020. The local government secretary will then decide on the planning application.
From IGas interim accounts for the first six months of 2019
Revenue: 21.2m; (H1 2018: £21.1m)
Production: 2,360 boepd; (H1 2018: 2,292)
Cost of sales: £14.2m; (H1 2018: 13.6m)
Gross profit: £7.0m; (H1 2018: £7.5m)
Operating costs: £9.7m; (H1 2018: £10.3m)
Operating costs per barrel of oil equivalent: £20.5; (H1 2018: £22.7)
Administrative expenses: £2.5m; (H1 2018: £2.8m)
Earnings before tax, depreciation and amorisation: £7.7m; (H1 2018: £6.0m)
Finance costs: £1.7m; (H1 2018: £1.9m)
Net cash generated: £8.7m; (H1 2018: £5.5m)
Total liabilities: £84.2m; (H1 2018: £76.3m)
Net assets: £162.9m at June 2019; (31 December 2018: £161.7m)