Industry

Investor backs Cuadrilla over fracking moratorium

pnr 190723 Ros Wills

Preparations for fracking at Cuadrilla’s Preston New Road shale gas site near Blackpool, 23 July 2019. Photo: Ros Wills

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.

191104 A J Lucas statement

Extract from A J Lucas statement issued in Australia on 4 November 2019

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.

10 replies »

  1. Over the weekend the share price of AJ Lucas (Cuadrilla’s owners) was 11.0 (Australian) cents. Now, mid afternoon in Sydney on Monday 4 November, it’s 8.2 cents – a drop of 25%. Back in the (boreal) summer, on 22 August, the price peaked briefly at 25 cents. Doesn’t sound to me as if the market shares Lucas’s faith.

    The OGA commissioned one of its reports from Outer Limits Geophysics. This company is a consultancy run on the side by Dr James Verdon and Prof J-M Kendall of Bristol University. I estimate from Companies House reports that Dr Verdon has earned around £30,000 a year in extra cash over the last 4-5 years for fracking consultancy, on top of his lecturer’s salary.

    Notwithstanding some serious errors in the Outer Limits report, on which I shall be commenting in due course (and on a separate related Bristol academic paper co-authored with Cuadrilla, published in the summer), the OGA seems to have arrived at a fairly sensible conclusion, based in large part on the Bristol / Outer Limits study. Perhaps TS Eliot is apposite here, on the Bristol frackademics:

    “The last temptation is the greatest treason: to do the right deed for the wrong reason.”

    • For a scientist David, you have a habit of making false statements on a regular basis!

      AJL are NOT “Cuadrilla’s owners”. If you want to change what DoD has clearly stated, perhaps it might be wiser to recognise that even if some will not bother with much research, they can still read!

      Sorry, but if that is the level of your commenting, I shall have some skepticism about accuracy regarding reviews of others work.

      • For a reader and writer, Collyer, you have a habit of making grammatical mistakes.

        “Others” requires an apostrophe.

        Sorry, but if that is your level of commenting, I shall have some scepticism about your ability to raise your posts above the level of petty nitpicking and character attack.

        Of course, even Homer nods, as my Latin master used to say, so maybe on this occasion I should forgive you for your punctuation.

        • So, T, I often think that posting on social media does often include some short cuts within grammar. I have yet to embrace Emojis but might if they add anything, rather than replace anything.

          I shall stick with that.

          However, a scientist having problems with the facts, and then posting how he will review others work is somewhat different to correct grammar.

          But good try. No-one will have noticed the difference! LOL (sorry can’t be bothered with more than the abbreviation, but gave you an apostrophe.)

          Interesting to have confirmation that your view regarding sticking to facts, falls within “nit-picking”. (Please note the correction of your punctuation.) Always a danger, when reviewing others work!

          That was fun, but just a little serious comment to add:

          Maybe the “owners” of the other 53% of Cuadrilla will have some say in what happens??

          • Martin. You say “Maybe the “owners” of the other 53% of Cuadrilla will have some say in what happens.”
            If you are referring to private equity firm, Riverstone Holdings LLC and Kerogen Capital, they engaged The Royal Bank of Canada several months ago to study ways to cash out of their investment. They say no final decision has yet been made.
            This indicates they lost faith in Cuadrilla a while ago. I imagine they will have trouble finding a buyer now.

            • Do you know that is what it indicates Pauline??? Don’t think so. You may be speculating that, and in that case have less chance than Mystic Meg of being correct.

              There are all sorts of reasons why equity firms look to adjust their investments.

              Whilst they remain investors, or someone else takes their place, then my statement remains correct. Indeed, under the reality of the circumstances today, it probably means they would even want a more active say.

              Your last sentence has been seen many times on DoD concerning many businesses. It has been shown on most occasions I can recall to be inaccurate.

              • Let’s see who snaps it up then, Martin. They’ve had months to do so but no one’s been killed in the rush so far.

  2. Cuadrilla will most certainly be in need of continued financial support as stated!

    TO RESTORE THE ABANDONED FRACKING SITE AT PNR BEFORE THEY LEAVE!

  3. I’m wondering whether Cuadrilla have laid off their online propaganda team?

    They’ve posted very little in recent days for some reason.

    😗😗😗😗😗😗😗😗😗😗😗😗😗😗😗😗😗😗😗😗😗😗😗😣😗😗😗😗

  4. Perhaps they are busy measuring gas being produced, Peter and/or dealing with claims of damage to property-real or imagined?

    Or, more likely, they were tied up with watching the Rugby?

    Can’t really see much happening for them to comment on until 2020-unless the flow testing stops rapidly.

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