Industry

Funding in fracking firm Cuadrilla to be slashed – forecast

Cuadrilla’s Preston New Road fracking site. Photo: Cuadrilla Resources

A major cut in investment in the shale gas company, Cuadrilla, is likely in the coming months, its owner has predicted.

The Australian mining group, AJ Lucas, forecast investment in Cuadrilla would be reduced by 90% in the financial year to June 2021, compared with the previous 12 months.

The AJ Lucas annual report, published on 28 August 2020, blamed the UK government moratorium on fracking in England, imposed 10 months ago.

As a result of the moratorium, the report said Cuadrilla had “scaled back” its shale exploration operations in the UK”. Operating costs and overheads had been “very significantly reduced”, it said.

“Cuadrilla’s funding requirement has been significantly reduced, largely as a result of reduced staffing and operations. Cuadrilla will engage in limited analysis of prospective areas of its licences, in preparation for activity when the moratorium is lifted.

“A small team currently operates in the UK, maintaining Cuadrilla’s UK licences and statutory obligations.”

Fracking at Cuadrilla’s Preston New Road site in Lancashire was suspended by regulators a year ago, on August bank holiday Monday 2019. The company’s operations caused the UK’s strongest fracking-induced earthquake, measuring 2.9ML.

By then, Cuadrilla had fracked just seven of the more than 40 planned stages of the PNR2 well, the second of four planned horizontal boreholes at the site.

Writing in the annual report, Francis Egan, Cuadrilla’s chief executive and AJ Lucas board member, said “the limited number of stages fractured … meant that a meaningful sustained flow rate of gas from the full length of the lateral could not be measured”.

“Gas recovery potential therefore remains to be determined.”

Fracking on the site’s first well, PNR1z, in 2018 was also interrupted by seismic events. The two final wells have not been drilled. The company said the “ultimate recoverability” of shale gas at Preston New Road requires further hydraulic fracturing and flow testing.

Cuadrilla has said it has been working with other UK shale gas companies to address the government’s concerns about fracking, which led to the moratorium.

Mr Egan said the work included potential techniques to improve the predictability of seismic events caused by fracking.

He said:

“Progress with respect to engaging with the Government to lift the moratorium is slow and it is therefore difficult for the Company to predict relief and resumption of activity.

“The challenge before the industry is to obtain support from the Government to provide a realistic environment to allow meaningful operations to proceed.”

But he added:

“[AJ Lucas] maintains an oversight of and access to fit for purpose technical and management capability in the UK.

“This allows it to fulfil its UK oil and gas licence and other regulatory commitments and preserve the inherent value in the significant shale gas resource and conventional oil and gas exploration prospects underlying those licences.”

6 replies »

  1. With the AJL share price down at 2.9c they probably haven’t got much funding to blow on tilting at shale wells in Lancashire.

    Interesting to see the admission that “the limited number of stages fractured … meant that a meaningful sustained flow rate of gas from the full length of the lateral could not be measured”

    This is not what Mr Egan was claiming back in November last year though is it? https://cuadrillaresources.uk/update-on-flow-testing-of-second-shale-well-at-preston-new-road/

    “Commenting on the flow test results Cuadrilla CEO Francis Egan said: “Once again Cuadrilla has demonstrated that the UK Bowland Shale contains the highest quality natural gas and that this gas will flow to surface”.

    …Or maybe it is an object lesson in interpreting the PR candyfloss they put out because the Bowland Shale may well contain the highest quality natural gas and it may well flow to the surface. Just not for Cuadrilla and not in the measurable quantities they need commercially without them provoking unacceptable seismic activity.

  2. “Mr Egan said the work included potential techniques to improve the predictability of seismic events caused by fracking“ I would have thought the predictability was already apparent? Plenty predicted it before it happened.

  3. “Cuadrilla has said it has been working with other UK shale gas companies to address the government’s concerns about fracking, which led to the moratorium.” Not a few of us, I venture to suggest, might like to wish it was the government’s concerns about climate breakdown which led to “the government’s concerns about fracking, which led to the moratorium.”
    I agree, Jono, that seismic events were already predictable. Egan’s comments are rather like suggesting improving the predictability of fall-out following a nuclear explosion.

  4. Francis Egan is the Gareth Southgate of penalty kicks.

    In 2012, he stepped up to the mark and took a shot at goal. The resulting earthquake was the equivalent of missing.

    After seven years of practice, rehearsal and with the help of numerous “Scientists”, he took another shot ant goal – and missed again.

    Cuadrilla’s response was to say that the goal simply wasn’t wide enough and it would help considerably if the goal keeper was told to stand aside. Under those conditions, the gas would flow.

    Poor old Egan needs returning to the subs’ bench and eke out a living from his salary as a Director of A J Lucas.

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