UK's Cuadrilla to permanently seal shale gas wells after government order

UK shale gas pioneer Cuadrilla Resources is to permanently seal the two shale gas wells it drilled at the Preston New Road site after the Oil and Gas Authority (OGA) ordered them to be plugged and abandoned.

The UK government put a moratorium on fracking in England in place in November 2019 after an analysis of the environmental impact of work at Preston New Road.

Cuadrilla was forced to suspend work at the site after a magnitude 2.9 tremor occurred in August 2019.

The decision effectively killed off the UK's shale gas industry, which had already suffered a number of setbacks and widespread opposition from local communities.

"Cuadrilla's parent company AJ Lucas today announced that Cuadrilla will permanently seal the two shale gas wells drilled at Preston New Road, despite concerns about the impact this will have on energy supply," Cuadrilla said late Feb. 9.

"It means the 37.6 trillion cubic meters 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," it said.

Cuadrilla said its joint venture partner Spirit Energy would provide funding towards the cost of the work to permanently plug the wells.

"Cuadrilla expects shortly to mobilize a rig to commence the process of plugging the wells with cement and removing the associated surface pipework and valves from the site," it said.

Energy crisis

Cuadrilla CEO Francis Egan slammed the UK government's decision, saying it came at a time when the UK was spending "billions of pounds" annually importing gas and gas prices for UK households were "rocketing."

"The UK government has chosen this moment to ask us to plug and abandon the only two viable shale gas wells in Britain," Egan said.

"Cuadrilla has spent hundreds of millions of pounds establishing the viability of the Bowland Shale as a high-quality gas deposit," he said.

"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," he said.

"Once these wells are filled with cement and abandoned it will be incredibly costly and difficult to rectify this mistake at the site."

The move comes as UK gas prices remain at sustained highs, having hit all-time record levels in December on winter supply concerns.

The NBP day-ahead price hit a record high of 450 p/th in late December, an increase of 855% year on year, according to S&P Global Platts price assessments.

Prices have cooled since, though they remain high, with the NBP day-ahead contract assessed Feb. 9 at 180 p/th, still a year-on-year increase of 215%.

'Utter madness'

UK member of parliament Craig Mackinlay, chair of the Conservative Net Zero Scrutiny Group, said the order to permanently shut the wells at the height of an energy crisis was "utter madness."

"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," Mackinlay said.

MP Steve Baker, deputy chair of the same group, said that by abandoning the UK's shale gas industry, "we will inflict more costs on our constituents and make Net Zero even more difficult to deliver."

However, environmentalist group Greenpeace welcomed the move.

"All this industry has given us are a couple of holes in a muddy field and some minor earthquakes," Greenpeace UK's head of climate, Kate Blagojevic, said.

"The solution to the energy crisis isn't more gas, but better, greener homes. That's why the UK government should start an ambitious nationwide program to insulate our poor-quality houses," she said.