IGas notes that the UK Government has announced a moratorium on fracking in Britain, based on analysis by the Oil and Gas Authority (“OGA”), until new evidence is provided.
The Company’s existing onshore conventional exploration and production business, which has a 2P NPV10 of US$160 million, is not impacted by the Government announcement and production and operating expenditure remains in line with expectations for the full year. Incremental projects recently announced remain on track.
The OGA report has now been published. It is an interim report and IGas will now spend time understanding the detail within the report.
As an onshore operator, it is vital that we have, and must continue to have, a good understanding of the potential environmental impacts and any mitigating actions. Each site and basin can have substantially different geology. The OGA Report summary found that susceptibility to seismicity depends strongly on a location’s specific geology with the mere presence of faulting or the parameters of the injection possibly of less importance.
We will continue to work closely with the relevant regulators to demonstrate that we can operate safely and environmentally responsibly. We have done this to date in our shale business, and across our existing c.100 conventional sites that have been operating safely onshore UK for many decades.
Gas plays a significant role in providing energy to the UK, whether through heating over 80% of peoples’ homes or whether contributing c.50% to electricity generation and we currently import c. 50% of that requirement.
The UK Committee on Climate Change (“CCC”) in its May 2019 report clearly forecast a very significant UK gas demand out to 2050 and beyond – approximately 70 per cent of 2019 gas demand still existing in 2050 in a net zero scenario. Under the CCC’s recommended pathway to net zero CO2, this gas would be used as both a feedstock for making hydrogen and a backup supply for generating electricity, and they have recommended that we use domestically produced gas. Without new supplies of gas it is expected that we will be importing over 80% of our gas requirements by 2050.
As announced, following interpretation of the cores at Springs Road in Nottinghamshire, we know that we have a significant recoverable gas resource in the Gainsborough Trough. Following interpretation of the cores taken across the 500m Shale horizon at Springs Road, we estimate that there is 630 Bcf of gas in place per square mile, and if applied to our entire acreage in the East Midlands, this would equate to 270 Tcf of high quality natural gas. At expected recovery rates, this would equate to satisfying up to 19 years of the UK’s gas demand giving this country both energy security for years to come as well as providing billions of pounds of investment into the East Midlands and the creation of thousands of skilled jobs.
Commenting, Stephen Bowler, Chief Executive Officer said:
“We have confirmed a world-class resource at our site in North Nottinghamshire and remain committed to working with regulators to demonstrate that we can operate safely and environmentally responsibly as we have done for decades. Each site and basin can have substantially different geology and we continue to analyse and understand the data available to us.
The Committee on Climate Change has laid out a path to a zero-carbon future, a path that demonstrates a significant requirement for gas in the long term. We, as a country, need to decide whether we are in control of own our carbon footprint or whether we are reliant on imports. Imports from overseas have a higher carbon footprint, and in some cases, this gas comes from countries with significantly lower environmental and human rights standard. Domestically produced gas would generate skilled jobs and investment into the country whilst upholding some of the highest environmental standards in the world.
Given the learnings from the wells that have been drilled recently by the Industry, not least the well drilled in our acreage at Springs Road, we know that UK Shale has the opportunity to contribute meaningfully to the UK’s energy requirements.
Our existing onshore conventional exploration and production business, which has a 2P NPV10 of US$160 million, is not impacted by the Government announcement and production and operating expenditure remains in line with expectations for the full year.”
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