Cuadrilla now has until the end of June 2023 to evaluate options for its Preston New Road and Elswick sites in Lancashire. However, if no ‘credible re-use plans are in place by then’, the NSTA says it will reimpose decommissioning requirements.

Cuadrilla had previously been required to plug and abandon the two shale gas exploration wells drilled at the Preston New Road site. The wells, the only horizontal wells to have been drilled and hydraulically fractured into UK shale rock, will instead be temporarily plugged and suspended. 

Fracturing and flow testing of each well had confirmed the presence of a very high-quality natural gas resource, which flowed to surface from the underlying Bowland Shale. However, seismicity induced during the fracturing process, above the UK regulatory limit of 0.5 on the Richter scale, meant that neither well could be fully fractured, or flow-tested, to properly assess how much gas might be commercially produced.

Given the ongoing UK and European energy price crisis and government focus on domestic sources of energy supply, Cuadrilla says it proposes to use the suspension period to evaluate the productive options for these wells.

Commenting on the development, Cuadrilla CEO Francis Egan said: ‘We remain convinced that the Bowland Shale gas resource has the potential to be a very significant contributor to UK energy supply and in particular a source of cost-effective fuel for heating UK homes and businesses… Given the rapid decline in indigenous North Sea gas production and the ongoing UK gas price and supply crises we consider that the billions of pounds being spent annually on importing expensive gas from the Middle East, the US and elsewhere might be better directed, in part at least, on developing what is recognised to be a substantial domestic shale gas resource… The government should now urgently reverse its decision to impose a moratorium on shale gas. It should also set safe and sensible regulatory limits, in line with construction, geothermal and other onshore industries, that will allow shale operations to take place and help unlock a valuable and sorely needed domestic source of energy.’

Cambo licence extension

Meanwhile, the NSTA has also granted Siccar Point Energy and Shell a two-year extension to the licences for the Cambo oil field off Shetland, paving a potential future for the project.

The project had become a target for environmental lobbyists in late 2021 as world leaders gathered in Glasgow for the COP26 UN climate change summit. Shortly thereafter, Shell announced it was withdrawing from Cambo, citing the economic case, together with possible regulatory delays, as the reason. However, the company now says that while there is currently ‘no change to our position of December, the extension will allow time to evaluate all potential future options for the project’.

Offshore Energies UK (OEUK), whose 400 members include the established oil, gas and offshore wind sectors, plus emerging technologies such as hydrogen production and carbon capture, all operating in UK waters, welcomed the NSTA decision to extend the licence for the Cambo field.

Mike Tholen, Sustainability Director at OEUK, said: ‘The UK relies on oil and gas for 75% of its total energy so it makes sense to produce as much of our own needs as we can, and as cleanly as we can. The global energy crisis triggered largely by the tragic events in Ukraine has shown us the importance of minimising reliance on imported energy. But at the moment, UK gas and oil production is declining at about 15%/y, which is much faster than the predicted reduction in UK energy demand. Last year the UK had to import 62% of its gas and this could reach 80% by 2030 – so investment in exploration, new fields and wells is important to protecting the UK’s future energy security whilst meeting our climate targets.’

However, environmental campaigners have slated the NSTA decision. Philip Evans, Climate Campaigner for Greenpeace UK, said: ‘In granting this licence extension, the government have highlighted yet another weakness in their supposed “climate checkpoint” regime for new oil and gas – they will just sidestep it entirely when it’s inconvenient…Cambo will do nothing to ease the current gas price crisis.’

The project is a political sticking point with Nicola Sturgeon, Scotland’s First Minister, adamant that Cambo ‘should not get the green light’, while UK Prime Minister Boris Johnson recently told a Scottish Conservative Party conference in Aberdeen that cutting off oil and gas production would be ‘crazy’. However, market commentators will watch with interest how the general public react to any suggestions that Cambo may be developed in the future, as sentiment may be influenced by ongoing high energy prices and the cost of living crisis.