Two years after the UK’s strongest fracking-induced earthquake, there’s no agreement on how to manage shale gas risks, an exploration company said today.
Regulators suspended fracking at Cuadrilla’s Preston New Road site on 26 August 2019 after a 2.9ML earthquake induced by operations.
It was felt across the Fylde region of Lancashire and experts received nearly 200 reports of damage.
The government later imposed a moratorium on fracking across the whole of England.
This remains in place and ministers have said it would be lifted only when “compelling new scientific evidence is provided which address the concerns about the prediction and management of induced seismicity”.
The industry and regulators have been negotiating on what research would address government concerns.
But Francis Egan, Cuadrilla’s chief executive, said today:
“Agreement has not yet been reached on the extent of the work required”.
Mr Egan was writing in annual accounts of Cuadrilla’s parent company, AJ Lucas, published today. He said:
“Cuadrilla has continued to engage with the Regulator and with other industry players on the definition of appropriate technical work-scopes concerning the prediction and management of seismicity induced by hydraulic fracturing.
“Efforts continue to define an agreed path forward.”
Mr Egan said the 2.9ML earthquake was caused by a fault that could not have been detected on existing 3D seismic survey data.
He said well integrity at Preston New Road had not been compromised.
He also described as “de-minimis” the modelled property damage.
There were 197 reports of damage to the British Geological Survey (BGS). Cuadrilla has not revealed how many complaints it received, nor the value of any damage or compensation paid.
The BGS said it also received several thousand reports from people who felt the earthquake. It recorded the seismicity at intensity level 6, or “slightly damaging”. The highest intensity level is 12 (completely devastating) and the lowest is 1 (not felt)
In today’s accounts, Mr Egan said the BGS level 6 was “difficult to justify”.
Operations and tax refund
DrillOrDrop reported earlier this year that Cuadrilla had received research and development tax credits. Today’s accounts said the company had been paid A$4.3m by the UK tax authorities in the year to June 2021.
This contributed to the A$19.6m in cash flow from AJ Lucas operations in the year to June 2021, compared with A$2.0m in 2020.
Mr Egan said there had been “little or no operational activity” at Cuadrilla’s sites.
Despite the moratorium, Cuadrilla was permitted to continue testing wells at Preston New Road. But in response to a freedom of information request by DrillOrDrop, the Oil & Gas Authority confirmed there was no current consent in place for an extended well test at the site and no application was under consideration.
Mr Egan also said there were “significant cost reductions”. Total UK net costs for were A$1.1m, up slightly on the A$1.0m in 2020. The company had met all its UK licence commitments and obligations, he said.
According to the accounts, AJ Lucas paid Mr Egan A$53,348 (about £28,195) in the year to June 2021. He was appointed to the AJ Lucas board in May 2020. He holds more than 330,000 shares in Cuadrilla. He is also a director of the trade body, UK Onshore Oil & Gas.
Shale gas and climate change
Mr Egan said the ongoing growth of imports of liquified natural gas was “incompatible with the need to address the UK’s contribution to climate change”. He said:
“Failure to develop UK onshore natural gas could add an extra 145 million tonnes CO2e to the UK’s carbon footprint, simply due to provenance of LNG imports to the UK from the Middle East, US, North Africa or Russia.”
Mr Egan said the carbon intensity of onshore gas production had been forecast at 13.8gCO2/kWh. He said this was less than a quarter of the average carbon footprint of liquified natural gas (LNG) imported from Qatar, calculated at 60.7 gCO2/kwh by University College London.
He added that Cuadrilla had assessed the geothermal potential of its UK wells. It would “utilise this as part of a broader assessment of potential alternative uses both for existing sites and wells”, he said.
Ruth Hayhurst will be reporting for DrillOrDrop from the COP26 climate conference in Glasgow in November