The company behind the UK’s two shale gas wells has urged the government to overturn an order they be sealed, arguing they could help bolster the country’s energy security in the wake of Russia’s invasion of Ukraine.
The Oil and Gas Authority (OGA) had ordered Cuadrilla Resources to fill in the exploration wells, at Preston New Road in Lancashire, with concrete after the controversial extraction process, known as fracking, was all but banned in the UK.
But the company’s chief executive Francis Egan argued on Monday that the wells should have a role to play in raising domestic natural gas supplies amid the European price spike prompted by president Putin’s decision to send troops into Ukraine last month.
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That saw the contract for next-month delivery rise as high as 800p per therm. Prices during spring months tend to be below 50p in normal times.
Households were already bracing for an unprecedented rise in energy bills through the price cap from April, which will take average costs to almost £2,000 a year.
Cost of living crisis for people ‘for a long time to come’
Cuadrilla made its case for government intervention as an energy market expert told MPs the cap was on course to rise by a further 50% from October but said the idea that domestic fracking could help costs come down was a “red herring”.
Nathan Piper, head of oil and gas research at Investec, used his evidence to the Treasury committee hearing on the energy crisis to make the case for higher North Sea output.
“We’ve got to be up front, this is going to last for a while. This is not just this year, and maybe if there’s a peace accord between Ukraine and Russia it all goes away,” he said.
“Maybe it moderates, but this is going to be a cost of living crisis for people for a long time to come.”
Boris Johnson and senior ministers held a meeting on Monday with the bosses of UK-based offshore oil and gas companies to discuss ramping up investment to bolster supplies of gas.
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A Downing Street spokesperson said the topics included “how the UK can remove barriers facing investors and developers, and help projects come online more quickly”.
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The UK relies on Russia for about 3% of its natural gas needs currently but faces stiff international competition for supplies as countries race to replace hugely depleted stocks in time for next winter.
Mr Egan insisted shale gas extraction from the two wells could only help, but explained that Cuadrilla was facing down a June OGA deadline to complete their permanent destruction.
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He said: “On Wednesday morning, I read in the newspapers that the Prime Minister had decided that concreting up Britain’s only two shale gas wells, in the midst of an energy crisis and given his own assessment that Europe is “addicted” to Russian gas, would be a terrible idea.
“Later on Wednesday, in the House of Commons, the Business Secretary said that “it did not necessarily make any sense to concrete over the wells” at the Preston New Road site in Lancashire.
“Unfortunately the government is failing to match its rhetoric with action”, he said.
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“If the words from Downing Street and the House of Commons are to have any practical meaning I urgently request the Business Department and the OGA to formally withdraw their instruction to plug the wells.”
He added: “If we are serious about energy security, as a very basic, first step we must not concrete up these wells, and then we need urgently to lift the shale gas moratorium and use these and additional wells to produce domestic shale gas.”