Cuadrilla’s Australian investor has said it continues to give the shale gas company its “full support” in the face of a moratorium on fracking announced two days ago.
In a statement, A J Lucas, which holds 47% of Cuadrilla, described the moratorium as “disappointing”. A J Lucas statement on fracking moratorium 4 November 2019
It acknowledged that there would be “unavoidable delays” in operations and reduced activity at the Preston New Road shale gas site near Blackpool in 2020. But it said funding – though reduced – would still be needed.
The government issued an immediate moratorium early on 2 November 2019. It said current technology could not predict accurately whether fracking would cause earth tremors and how big they would be.
The decision was based on reports released by the regulator, the Oil & Gas Authority (OGA) on tremors caused by fracking the first well at Preston New Road, PNR1z, during the autumn of 2018.
Fracking on the site’s second well, PNR2, in August 2019, induced more than 130 tremors. These included the UK’s largest fracking-induced tremor, measuring 2.9ML. An investigation by the OGA into these tremors, is still underway.
The A J Lucas statement said Cuadrilla would review the OGA reports and continue to provide data, including information from PNR2, to address concerns about seismicity and lift the moratorium.
The A J Lucas chairman, Phil Amall, said:
“The UK Government’ moratorium is disappointing, however we appreciate that the Regulator requires increased certainty in forecasting and mitigating any seismicity induced during hydraulic fracture operations.
“Cuadrilla will continue to work with the OGA to provide the Government with the confidence to lift the moratorium so the significant high quality natural gas resources in the Bowland Basin can be commercialised.
“The size of the prize is clear, both in terms of benefits to the economy and the environment, given domestically produced shale gas has a far lower carbon footprint compared to imported gas. It is therefore of paramount importance for all parties that the UK shale industry be developed in a safe and responsible manner.”
The OGA suspended fracking at Preston New Road after the 2.9ML tremor on 26 August 2019. Cuadrilla is now carrying out tests on the flow of gas from the six stages of PNR2 that were fully fracked.
Mr Amall said:
“While recognising that the moratorium will mean a reduction of activity at PNR in 2020, we look forward to further news from Cuadrilla in respect of the ongoing flow testing of the six stages that have been hydraulically fractured at PNR-2 and any review of further prospective sites in our UK licences.
“AJ Lucas will continue to provide Cuadrilla its full support, recognising that there will be unavoidable delays in operations and that continued, albeit significantly reduced, funding of Cuadrilla’s operations will be required.”
The statement repeated Cuadrilla’s assessment that the gas from the Preston New Road site had a high calorific value and could flow directly into the gas network, without needing additional treatment or processing.
At the time of writing, shares in A J Lucas were down 4%.
In September, Bloomberg reported that other investors in Cuadrilla, Riverstone Holdings LLC and Kerogen Capital, had hired the Royal Bank of Canada to study ways to cash out of their investment.