Egdon Resources said today it was “likely” to appeal against the refusal of planning permission for drilling and production at Biscathorpe in the Lincolnshire Wolds.
Earlier this week, the county council’s planning committee voted by seven to four against the proposal, despite a recommendation by officials to approve.
The company’s announcement came in a webcast by the managing director, Mark Abbott, to coincide with preliminary annual results.
Mr Abbott said:
“We’ve identified a possible material and commercially-viable hydrocarbon resource [at Biscathorpe]. Unfortunately, the planning committee on the first of November, the first day of COP26, went against the planning officer’s recommendation and we’re likely to appeal this, subject to final advice.”
He said securing planning consent for Biscathorpe, “probably through a planning appeal”, would be one of the company’s key activities in the coming year.
Oil from Biscathorpe had a “very low carbon intensity rating”, Mr Abbott said.
“It’s important to recognise that indigenous UK oil, whether it’s from the North Sea or onshore, has a very much lower carbon intensity than many of the places that we import oil from and will continue to do so out to 2050 and beyond.”
Egdon is also preparing a planning application for another Lincolnshire site at North Kelsey.
This site was first granted planning permission in 2014 but no work has been carried out, apart from the site entrance. It received extensions of consent in 2018 and 2020.The current permission expires at the end of 2021.
North Kelsey had gross mean prospective resources of around 6.5m barrels of oil, Mr Abbott said. It was an analogue for the oil site at Wressle, in North Lincolnshire. He said:
“We are just finalising a planning application to submit during November to look to ext4nd that planning further.”
Oil flows from the Wressle site, near Scunthorpe, had “significantly exceeded expectations”, Mr Abbott said.
It is undergoing test production, with reported rates of 884 barrels of oil per day in an instantaneous test. This was well above the expected rate of 500.
Mr Abbott said Wressle would be a “significant contributor” to the company’s predicted production for 2021-2022 of 240 barrels per day. He said:
“We’re now looking at a highly positive impact on our revenues. It should transform the business in terms of revenues and cash flows and we expect to be generating free cash from this project.”
He added that the company also planned to generate electricity from gas produced at Wressle and export it to the grid. Gas flows in an instantaneous test were 480,000 cubic feet. The gas is currently flared.
Also in Lincolnshire, Egdon said it was looking at drilling a sidetrack well at its Keddington site in 2022, to access the remaining reserves of 567,000 barrels.
Mr Abbott said:
“There are also near field exploration opportunities at Keddington South and Louth, which would add further life to this field which we’ve had for a number of years.”
In Dorset, Egdon said it was looking to redevelop the Waddock Cross site, where it estimated there were 57m barrels of oil in place.
Mr Abbott said a new horizontal well had been modelled to produce up to a million barrels, with 500-800 barrels a day. The final investment decision would be made towards the end of 2021, with possible drilling in 2022.
Egdon said its strategy on shale gas was to “maintain a significant asset position while we work to lift the moratorium [on fracking].”
This was imposed in November 2019 following a 2.9ML earthquake caused by fracking at Cuadrilla’s shale gas site at Preston New Road in Lancashire.
Mr Abbott said Egdon held 150,000 acres of shale gas licences across northern England, with an estimated 37.6 trillion cubic feet of gas.
It was, he said, “a very material resources, which if developed could reduce the UK’s import dependency at time when we’re seeing world-wide high demand and high prices for gas”.
Egdon has a 14.5% stake in the shale gas well drilled by IGas at Springs Road, Misson, in Nottinghamshire. An extension of planning permission for the site was refused earlier this year.
Mr Abbott said shale gas would provide security of supply, local jobs and tax revenues. He said it could also be a feedstock for blue hydrogen projects.
“If we can lift that moratorium and demonstrate this can be done safely and efficiently this has transformational value for the company.”
Mr Abbott said Egdon was also looking to repurpose some of its wells for geothermal energy.
It was planning projects at the Dukes Wood-1 and Kirklington-3z wells in Nottinghamshire, he said.
There was also potential to use some wells for carbon capture, utilisation and storage, he said.
“If we can repurpose those wells, it reduces the cost of those developments and extends the economic life of those wells.”
The Dukes Wood-1 well project could go ahead early in 2022 if it got regulatory approval, he said.
In the year to 31 July 2021, Egdon benefitted from higher oil prices, Mr Abbott said.
Gross oil revenues were up by 13.4% to £1.09m (2020: £0.96m).
The company lost £1.68m, after write downs, pre-licence costs and impairments of £0.48m This compared with £4.75m in 2020-2021, which saw an impairment of £3.03m.
Cash at the bank was £1.96m (2020: £0.85m) and net assets were £27.42m (2020 £26.67m).