Industry

E Midlands fracks could supply 3m homes in a year and be less prone to earthquakes- IGas

The shale gas company, IGas, said today it could drill 80 wells by this time next year, with the “right government support”.

IGas site at Misson Springs, Nottinghamshire, 4 February 2019. Photo: Eric Walton

IGas also said fracking in its core shale gas area in the East Midlands had “a significantly lower chance” of causing earthquakes than Lancashire.

In interim accounts, the company said it had the potential to establish five production well pads, each with up to 16 wells, within 12-18 months.

Initial production from the sites could supply three million homes, the company said.

IGas currently has no shale gas sites with planning permission for drilling, testing or fracking. It suggested it needed changes to the current planning system to deliver its predictions:

“We look forward to working constructively with the new administration to achieve a streamlined regulatory process that can deliver accelerated development of this strategic natural resource.”

The current regulations on controlling fracking-induced earthquakes have also been a barrier in the past few years to shale gas companies. The traffic light system requires fracking to pause if it induces seismic activity of 0.5 or above on the local magnitude (ML) scale.

Cuadrilla’s three attempts at high volume hydraulic fracturing all caused small earthquakes above the 0.5ML level

But IGas today said the geology of its main shale gas area, the Gainsborough Trough in Lincolnshire and Nottinghamshire, was “less complex” than other parts of the UK. It said:

“we firmly believe that the geo-mechanics of the Gainsborough Trough present a significantly reduced risk of induced seismicity of the type experienced elsewhere in the UK”.

IGas also said there was a new method of assessing the likelihood of induced seismicity. This looks at the geo-mechanical history and setting of the area and analyses 11 key factors, the company said.

“Together with existing techniques, these give us a good idea of how likely we are to experience induced seismicity in a wider area and on a site-by-site basis.

“Using this method to supplement already existing techniques, the Gainsborough Trough, on a qualitative basis, can be demonstrated to have a significantly lower chance of induced seismicity when compared with the Bowland Basin in Lancashire.”

Further hydraulic fracturing in multiple wells was needed to test and calibrate the models, IGas added.

It said research on the new assessment method had been submitted to the British Geological Survey for its review of the science of fracking commissioned by the government. The review was submitted to ministers in early July but has not yet been published.

Revenue boost

IGas said the recent increase in oil prices and a weaker pound against the dollar had been “a welcome boost to revenue and cash generation”.

Despite a fall in production because of equipment failure, IGas saw revenues rise to £30.5m for the six months for the end of June 2022. This was up on £16.6m for the same time in 2021.

Profit was £19.4m, compared with a loss for the first half of 2021 of £12.2m. The company said it had reduced its debt by £4.6m.

Operating costs rose because of higher commodity prices, as well as increased costs for staff, materials and equipment.

Ellesmere Port write-off

The company said it had written off £6.4m exploration and evaluation assets for the Ellesmere Port licence area, PEDL184 in Cheshire.

This followed the refusal of planning permission in June 2022 for testing the Ellesmere Port-1 well.

IGas said:

“This licence, whilst prospective, is outside our core shale exploration area and, as the Group have no plans for further activity on the licence in the short term, the full capitalised amount has been written off.”

The company said it had also impaired £1.5m of previous costs in the Lybster licence, in Caithness. These were not expected to be recovered in any future development of the site, it said.

Plans

Oil

Corringham, Lincolnshire: IGas said an infill drilling project could add about 100 barrels/day in 2023. The proposal had planning permission and the company said it had applied for environmental permits.

Glentworth, Lincolnshire: DrillOrDrop has reported on plans for a new oil site. IGas said it proposed to drill an appraisal well and up to seven horizontal development wells. A planning application was expected in the final quarter of 2022, it said. If successful, this new site could target an additional 200 barrels/day, with potential to add another 500 barrels/day, the company said.

Geothermal

IGas described geothermal as a “truly competitive solution in a landscape of increased gas prices”. It said:

“We firmly believe that deep geothermal is the only utility scale source of renewable heat suitable for deployment in urban areas.”

The company said it had applied for a capital grant for its Stoke-on-Trent geothermal project from the Green Heat Network Fund. A decision was expected in the last quarter of the year.

It also planned to apply for grant funding from the Public Sector Decarbonisation Scheme to support six geothermal schemes supplying renewable heat to NHS trusts.

IGas said it was in discussions with 15 parties who want to buy geothermal energy, amounting to 100MW installed heat generation from 15 separate sites.

Key figures for six months to 30 June 2022

Revenue: £30.5m (same period 2021 £16.6m)

Oil sales in value: £27,343,000 (same period 2021 £15,284,000)

Oil sales in volume: 316,171 barrels (same period 2021 330,984)

Gas sales in value: £1,719,000 (same period 2021 £740,000)

Gas sales in volume: 938,203 therms (same period 2021 1,247,946 therms)

Earnings before interest, taxes, depreciation, and amortization: £10.7m (same period 2021 £2.7m)

Profit: £19.4m  (same period 2021 loss of £12.2m)

Operating cash flow: £16.4m (same period 2021 £6.4m)

Net debt: £9.7m (same period 2021 £13.2m)

Cash and cash equivalents: £2.7m (same period 2021 £2.8m)

Estimated energy profits levy: £0.2m

Net production: 1,865 barrels of oil equivalent per day (boepd) (same period 2021 2,005 boepd)

Estimated underlying cash operating costs per barrel of oil: $40.4/boe

Tax credit: £13.2m (same period 2021 £1.9m)

Investment in assets: £10.6m(same period 2021 £3.7m)

Debt repayment: £4.6m (same period 2021 £1.4m)

Total assets: £186,895,000 (same period 2021 £161,819,000)

Total liabilities: £98,373,000 (same period 2021 £61,905,000

42 replies »

  1. https://theconversation.com/fracking-if-liz-truss-wants-a-major-shale-gas-industry-she-is-280-million-years-late-190421?

    “The idea that the UK has a similar huge potential shale gas resource assumed its shales had not already generated gas – that the potential is still to come. However, laboratory results show that gas has already been generated in these rocks in the geological past. Over millions of years, Britain’s landmass has been buried, lifted back up, buried again and eroded. This complex geological history has provided many opportunities for gas to leak away through the country’s many faults and cracks so that only the dregs remain. If the UK wants to develop a major US-style fracking industry, it is 280 million years too late.”

  2. Point well made, Paul., though quantities of gas available are not a valid argument against the myriad objections on other grounds to shale development. The same article makes the general point that estimates of quantities of frackable gas available are invariably on the side of a figure most attractive to investment, which is to say possibly vastly over-inflated.

  3. Paul Tresto- your quote ““The idea that the UK has a similar huge potential shale gas resource assumed its shales had not already generated gas – that the potential is still to come. However, laboratory results show that gas has already been generated in these rocks in the geological past. Over millions of years, Britain’s landmass has been buried, lifted back up, buried again and eroded. This complex geological history has provided many opportunities for gas to leak away through the country’s many faults and cracks so that only the dregs remain. If the UK wants to develop a major US-style fracking industry, it is 280 million years too late.”, serves only display that the people who wrote it have no understanding of unconventional gas resources.

    • Dr Nick – the article was written by Stuart Haszeldine, my point was to open up debate about this issue. My background is engineering, not geology. I did supervise a well in Lancashire for Amoco in 1987 (I think) called Roddlesworth-1 which was an oil play – the target was found to be like glass with zero porosity and so hard we had to back ream the core barrel off the core until we hit a fracture so we could get the BHA out of the hole. Luckily we recovered some core to satisfy the well commitment. I recall we had a lot of shale with a lot of gas getting to the target which caused issues with drilling fluids and hole stability. So perhaps Stuart is wrong? Of course at the time the gas was seen as a problem. Perhaps now it would be seen as a shale play?

      • Paul, I worked on Roddlesworth. it was an exploration well looking for a conventional play. I think Stuart is wrong. Shales are an unconventional hydrocarbon play. In conventional hydrocarbon plays the focus is on finding hydrocarbons that have migrated out of the source rock and subsequently been trapped in a porous reservoir that is capped by a seal . In shale gas exploration the target is the gases that are tightly held in the source rock & failed to migrate- hence the need to fracture the shales to release the gas. The best quality methane comes from source rocks that have been matured into the dry gas phase. Stuart has been consistently against shale gas, underground radwaste storage, & yet is for storing CO2 underground. There appears to be inconsistencies in his approach to geological containment.

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