The decision on plans for two oil and gas wells near the Surrey village of Dunsfold have been postponed for the fourth time.
The delay came as the developer, a subsidiary of UK Oil & Gas plc, posted a recent loss for 2018 of nearly £7m and a debt of £14m.
Local opponents of the scheme have said they are concerned that the company would not be able to afford to restore any future well site. They are considering a possible court challenge to any planning permission granted without financial security checks.
The drilling proposal, by UKOG (234) Ltd, was submitted to Surrey County Council in April 2019 to explore for gas in the Portland sandstone and oil in the deeper oil in the Kimmeridge limestones.
A decision had originally been expected by August 2019. But the date was delayed first to September, then October and November. The application is currently scheduled to go before the council’s planning committee on 18 December 2019.
A second application, submitted in June 2019 for an alternative access track, is also now due to be decided in December.
DrillOrDrop asked Surrey County Council for the reason for the latest delays and UKOG for reaction. This post will be updated with any responses.
We reported in the summer that Dunsfold residents described the alternative application as “confused and muddled” and had called for all the proposals to be withdrawn.
We now understand that local groups are considering raising money for a legal challenge in case Surrey County Council grants planning permission without what they regard as adequate financial security.
A spokesperson for the campaign group, Protect Dunsfold, said the grounds for a judicial review would be that the company did not have the credible financing for restoration.
“It is quite clear that UKOG (234) Ltd will be massively overstretched by the time they have drilled an exploration well and will be unable to restore if they find nothing commercial.
“If they do find commercial hydrocarbons then Surrey will be held as a hostage to grant production permission at the site even if the full environmental impact assessment concluded that production from the site is inappropriate.”
UKOG (234) Ltd’s annual accounts for the year ending December 2018 show it owed UKOG plc more than £14m.
The loss for the year was £6,980,276, compared with £2,766, 236 in 2017. The company also wrote-off exploration assets of £6,629,384, up from £2,622,487 in the previous year.
The company said it was reliant on the continued financial support of UKOG plc for working capital. The accounts said UKOG has undertaken to make available necessary funds for the next 12 months and would not seek repayment of amounts already provided.
UKOG plc accounts showed it had a loss for the year to 30 September 2018 of £16,747,000, compared with a loss for the year before of £2,268,000.
Yesterday, a campaigner in North Yorkshire began a legal challenge over clean-up costs for Third Energy’s gas wells in Ryedale. The case centres on whether the Oil & Gas Authority sufficiently scrutinised the finances of York Energy (UK) Holdings in its purchase of Third Energy.
Also yesterday, the National Audit Office reported that the government was unable to say who would pay for decommissioning if a site operator went out of business.
- UKOG (234) Ltd accounts said the company expected to spud the Dunsfold wells in 2020, if it received planning permission. It also indicated that it would re-enter the Broadford Bridge well in West Sussex, in the same licence area, before March 2020.
Key financial facts for UKOG (234) Ltd
Loss for the year after tax: £6,980,276 (2017: £2,766, 236)
Administrative expenses: £350,893 (2017: £143,748)
Exploration write off: £6,629,384); (2017: £2,622,487)
Exploration and evaluation assets: £7,756,966; (2017: 11,399,089)
Total net assets: -£5,951,727; (2017: £1,028,549)
Amounts payable to ultimate parent company: £14,001,263; (2017: £9,991,365)
Main Dunsfold application: SCC Ref 2019/0072
Second application with alternative access: SCC Ref 2019/0108
DrillOrDrop Dunsfold page with key facts and timeline
28/10/19 Date of UKOG’s latest accounts corrected to 30 September 2018