Industry

Centrica pulls out of Cuadrilla’s Lancashire shale gas licence

pnr 200427 Maxine Gill 16

Cuadrilla’s Preston New Road fracking site near Blackpool, 27 April 2020. Photo: Maxine Gill

Centrica is giving up its stake in Cuadrilla’s shale gas licence in the Fylde near Blackpool.

The energy multinational bought a 25% interest in the Bowland licence, PEDL165, in 2013. At the time, it was seen as an endorsement of UK shale gas.

News of the withdrawal came in a statement today from Cuadrilla’s Australian owners, the mining group AJ Lucas.

The statement said the stake, now held by Centrica’s subsidiary Spirit Energy, would be transferred back to AJ Lucas for a “nominal sum”.

In the original deal, Centrica paid £40m up front and committed to contribute £60m to exploration costs.

The agreement allowed Centrica to return the 25% interest when it had invested up to an agreed level.

AJ Lucas, which owns 93% of Cuadrilla, said today this “originally agreed level has in fact been surpassed by some margin”.

The statement said the withdrawal was subject to approval from regulators and was not expected to be completed until the final quarter of 2020.

It said Spirit remained liable for its 25% share of the future decommissioning costs of the wells drilled in the licence.

The chairman of AJ Lucas, Phil Arnall, said the move was part of “a broader series of actions” by Centrica, including the sale of Spirit energy:

“Centrica and its subsidiary Spirit have been excellent partners as we explored and proved up a huge, high quality, natural gas resource in the UK Bowland shale.

“Whilst we are naturally disappointed to see them withdraw, we understand that this is part of a broader re-alignment of Centrica as it focuses on its downstream UK gas supply business and exits upstream oil and gas.”

“We remain confident that domestic shale gas can and will be a valuable source of energy for the UK. Coupled with other initiatives it will, we believe, prove an essential element of the lowest cost transition to UK “Net-Zero” carbon by 2050 goal.”

Last week, AJ Lucas predicted that the government moratorium on fracking in England, imposed in November 2019, would be lifted but not before 2021.

Earlier this year, the New York private equity firm, Riverstone, sold its stake in Cuadrilla to AJ Lucas.

8 replies »

  1. AJ Lucas- when you are in a hole, perhaps you should consider not digging ?
    Please kindly take this opportunity and leave Lancashire in peace now.

  2. Yes Kat, to use the recent words of the FBI in another case, Cuadrilla should now just ”slither away”.
    And as the IMF’s chief economist has just advised the UK Government, they now have an opportunity to “do public investment that also addresses the need for a greener planet, and at the same time as a jobs-rich recovery”.

  3. I am sure Mr Collyer will try an put some kind of positive spin on this, or perhaps even he can see the writing on the wall through his pro fracking glasses.

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