The Oil & Gas Authority (OGA) has ordered Britain’s only two horizontal shale wells, operated by Cuadrilla, to be plugged and abandoned.

Cuadrilla’s parent company AJ Lucas today announced that Cuadrilla will permanently seal the two shale gas wells drilled at the Preston New Road (PNR) Lancashire shale exploration site, despite concerns about the impact this will have on energy supply.

It means the 37.6 trillion cubic metres located in the northern Bowland Shale gas formation will continue to sit unused – when just 10% of this volume could meet UK gas needs for 50 years. Instead, UK imports of Natural Gas are expected to skyrocket to over 80% by 2050.

Cuadrilla Chief Executive Officer, Francis Egan, said:

“At a time when the UK is spending billions of pounds annually importing gas from all corners of the globe, and gas prices for hard-pressed UK households are rocketing, the UK Government has chosen this moment to ask us to plug and abandon the only two viable shale gas wells in Britain.

“Cuadrilla has spent hundreds of millions of pounds establishing the viability of the Bowland Shale as a high-quality gas deposit. Shale gas from the North of England has the potential to meet the UK’s energy needs for decades to come, yet ministers have chosen now, at the height of an energy crisis, to take us to this point. Once these wells are filled with cement and abandoned it will be incredibly costly and difficult to rectify this mistake at the PNR site.

“Safe shale gas offers us a chance to combat the cost-of living crisis, create 75,000 jobs and deliver on the ‘levelling up agenda’ in Red Wall areas, in addition to reducing our reliance on imported gas so that Britain becomes more energy secure.

“What’s more ridiculous is that leaving our own shale gas in the ground will make reducing global emissions even harder. Emissions from importing gas are far higher than those from home-produced shale gas. I don’t think that this has been properly thought through.”

BACKGROUND

In November 2019, the UK Government announced a moratorium on shale gas extraction with the now Business and Energy Secretary of State, Kwasi Kwarteng saying that the “decision will not in any way impact our energy supply.”

The OGA has issued instructions to Cuadrilla that the wells, which have remained unused since late 2019, now be “plugged and abandoned”, an instruction which is being fulfilled. Spirit Energy, a Joint Venture Partner with Cuadrilla, will provide funding towards the cost of this work.

Cuadrilla expects shortly to mobilise a rig to commence the process of plugging the wells with cement and removing the associated surface pipework and valves from the site.

The two wells are the only horizontal wells drilled and hydraulically fractured into UK shale rock. The wells were drilled into the Bowland Shale to vertical depths of approximately 2.25km and onwards horizontally for a further 0.75km each through the shale.

The site at Preston New Road is just 0.01km2 in area and at all times has operated within the UK’s regulatory operating limit of halting operations if tremors no greater than 0.5 on the Richter Scale are recorded. This is despite the fact these regulatory limits far exceed limits seen in other countries with major shale gas extraction industries, such as the United States with up to a 4.0 limit. Other industries in the UK which cause tremors, such as geothermal, mining and construction face no such restrictions.

Craig Mackinlay MP, Chair of the Conservative Net Zero Scrutiny Group, said:

“Following last week’s hike in gas prices, my constituents are concerned about one thing: the cost-of-living crisis. If this government really wants to deliver on the people’s priorities, help them through the crisis and level up it should not be depriving the country of access to cheap and reliable energy sources.

“Doing this at the height of an energy crisis is utter madness. What’s more, if the Government wants to achieve Net Zero by 2050, this move will make it impossible. It will force us to import more gas instead, when UKOOG and the Climate Change Committee have already told us that the carbon footprint of imported gas is so much higher than homegrown shale gas.

“It will make us less energy secure, energy will become more expensive, Net Zero will be harder to achieve and levelling up will be impossible. It’s time for a re-think and a complete reset in this area.”

Steve Baker MP, Deputy Chair of the Conservative Net Zero Scrutiny Group, said:

“I had hoped the increased energy price cap would act as a wakeup call for ministers. It was a chance for politicians to finally discuss how we can reach Net Zero in an affordable and responsible manner. Instead, we find out today that we are about to make the situation even worse.

“By abandoning our shale gas industry, we will inflict more costs on our constituents and make Net Zero even more difficult to deliver given that importing gas is more carbon intensive than producing it at home.

“There are around 75,000 jobs out there, waiting to be created in precisely those areas that the Government wants to level up. We’re not just abandoning these wells, we’re abandoning any chance we had of levelling up, solving the cost-of-living crisis and delivering on the Government’s ambitions for Net Zero.”

Notes:

   - The current spike in gas prices reflects that the UK is dependent on global markets and imports significant amounts of Liquified Natural Gas (LNG) from Russia, which is looking to increase its global market control.
   - In January 2022, it is estimated that UK imports of LNG will have reached a record monthly high – importing 2.5 million tonnes.[1]
   - The Climate Change Committee’s own scenarios show that the UK will have a natural gas import dependency of over 80% by 2050.
   - The current crisis shows that European countries are particularly vulnerable to Russian influence as a result of their imports of Russian LNG, and this is set to continue as Russia develops its capacity (which tripled between 2016 and 2019 alone).
   - The former Chief of NATO has previously warned that Russia is deliberately undermining attempts for Western countries to develop shale gas capacities in order to maintain influence.[2]
   - By 2029 UK gas import dependency is expected to be 64%.[3]
   - 50 years of UK produced gas. The Bowland Shale formation is estimated by the British Geological Survey to contain 37. 6 trillion cubic metres of gas[4] and just 10% of this is enough to provide the UK with 50 years of gas – according to Barack Obama’s Energy Secretary Ernest Moniz. [5]
   - 74,000 jobs in the Red Wall. The Institute of Directors has previously estimated that a fully-fledged fracking industry could produce total of 74,000 jobs as well as £3.7bn of investment each year[6]. And the communities set to benefit from attempts to develop the northern Bowland Shale formation are Red Wall communities that need investment, such as those for miles around the small 0.01 km2 site on Preston New Road, Lancashire.
   - Millions of pounds for red wall local councils. Unleashing shale gas will create income for red wall local councils. As of 2014 local councils kept 100% of business rates from shale gas sites, which could be worth £1.7 million a year per site[7], and the industry committed to give local councils 1% of all revenues on any site where shale gas is discovered is given to the local community. The government believes this “could be worth £5 to £10 million for a typical producing site over its lifetime.”[8]
   - Turning to shale gas is the most realistic and cost-effective way of achieving Net Zero. Extracting UK shale gas is a much better option for the environment than importing Liquefied Natural Gas from elsewhere in the world. UKOOG estimated the production footprint of shale gas is 50% less than LNG (28g CO2/kWh compared to 57g)[9]. The Climate Change Committee has also previously said in March 2021: “available estimates indicate that emissions from LNG supply are likely to be higher than those that would arise from commercial UK shale gas production and could be much higher.”[10]

[1] UK to import record levels of liquified natural gas as Ukraine tensions mount (telegraph.co.uk)
[2] NATO claims Moscow funding anti-fracking groups | Financial Times (ft.com)
[3] • UK: projected gas import dependency 2020-2050 | Statista
[4] BGS_DECC_BowlandShaleGasReport_MAIN_REPORT.pdf (publishing.service.gov.uk)
[5] UK’s shale gas ‘would last for 50 years’ | The Times
[6] RFI6751_Draft_Shale_Gas_Rural_economy_impact_paper.pdf (publishing.service.gov.uk)
[7] Local councils to receive millions in business rates from shale gas developments – GOV.UK (www.gov.uk)
[8] Ibid
[9] UK-Onshore-Oil-and-Gas-response-to-Call-for-Evidence-2018.pdf (theccc.org.uk)
[10] Letter: Advice to the UK Government on compatibility of onshore petroleum with UK carbon budgets – Climate Change Committee (theccc.org.uk)

About Cuadrilla

Formed in the UK in 2007, Cuadrilla is a privately owned British exploration and production company focused on discovering and recovering natural resources, primarily natural gas, from shale rock.