Cuadrilla Gets Fracking Consent, Must Post Bond

The UK government said July 24 it has approved Cuadrilla’s request for hydraulic fracturing (fracking) at its horizontal well ‘PNR-1z’ at its Preston New Road site in Lancashire.

It represents the final approval for this well. However, it must first pay £557,000 ($732,000) into an escrow account before it can start fracking.

Cuadrilla operate the PEDL 165 onshore licence, where the fracking will occur, alongside equity partners AJ Lucas (a co-investor in Cuadrilla) and Spirit Energy.

Energy minister Claire Perry said that either a full year’s accounts of Spirit Energy (69%-owned and controlled by Centrica) must be submitted to the government – something not currently possible as the joint venture was formed late last year – or “you must provide [government] with evidence of the deposit of £557,000 in a suitable escrow account in support of your potential decommissioning cost liability.”

The government also said that environmental monitoring practices set out by Cuadrilla previously must continue to be enforced. The full consent letter is provided here.

In a January 2018 ministerial statement, UK business and energy secretary of state Greg Clark, to whom Perry reports, had set out that financial resilience of shale gas operators would be factored into policy.

Cuadrilla CEO Francis Egan said his company was "very pleased to be the first operator in the UK … awarded final consent to hydraulically fracture the UK’s first onshore horizontal shale exploration well." The exploration well was completed by Cuadrilla in April 2018. He said the company had already invested over £10mn to date at Preston New Road and is now in the process of applying for consent to frack its second horizontal well there. After both these wells have been fracked, Cuadrilla will run an initial flow test of the gas produced from both wells for roughly six months. That looks likely in 2019.