The toys, the pram and the minister

So this week has been quite eventful after the deceptive peace of January, where all we could see happening was a bit of patio gas helping the “flaring” at Preston New Road. The week began with a blustering threat from Ineos to the government in which multi-billionaire man-child, Jim Ratcliffe accused the people he was trying to persuade of

lacking a “basic understanding of the Richter scale” and warned that a failure to support Britain’s fledgling shale gas industry would leave the country’s energy policy reliant on wind and gas imports from countries “which are potentially unstable”.

and told them that their rules on fracking

have “no basis in science” and risk doing “long-term and irreparable damage to the economy”.

Sir Jim obviously missed the interpersonal skill training whenever Ineos were running it. Unsurprisingly the government remained tight lipped, no doubt waiting for the “Mini Me” version of the tantrum that they knew would be forthcoming from Francis Egan.

Sure enough today (6th February 2019) Cuadrilla went for a last throw of the dice and announced their flow test results.

The accompanying presentation made interesting reading. We’ll start by pointing out  their apparent inability to count, and we’ll charitably assume that they didn’t have an actual intention to mislead.

According to the BGS there were in fact 25 tremors greater than or equal to 0 Ml and 8 greater than or equal to 0.5 Ml.

We were then treated to the PR spin on the flow rates they had achieved. Given the lack of flaring that was observed some people are asking what they did with the gas they claim to have measured as they were not allowed to simply cold vent it into the air. However, they claim to have measured a flow rate from their managing to frack a whole 2 stages out of the planned 41 which if they scaled it up would equate to an initial flow rate of “between 3 and 8 million standard cubic feet per day gas for a 2.5km lateral section with all stages effectively hydraulically fractured”.

This is interesting as their parent AJ Lucas has been wooing shareholders with a story that they expect to be able to get 6.5 billion cubic feet (bcf) of gas for each 2.5km lateral.

If we look at the decline curve that AJ Lucas used in that presentation we can see that in year one they would have to produce about 2.7 bcf of gas which equates to a daily average in the first year of about 7.5 million cubic feet.

This would suggest that this flow rate is going to be rather disappointing to AJ Lucas shareholders as it means a 2.5km well would have a range of estimated ultimate recovery between about 2.6 bcf and 6.9 bcf and not the confidently projected 6.5 bcf even assuming that Cuadrilla are not being “optimistic” with their results. It is also worthy of note that the range is huge and that at the lower end would require more than twice the number of wells to be drilled and fracked as at the upper end. It sounds to me as if they are trying to give themselves wiggle room here for a dramatic reduction in expectation for the shareholders.

Anyway moving on, having dramatically revealed their stunning results they then announced to the press that they have “requested the Oil and Gas Authority (OGA) to urgently review the TLS to enable the PNR exploration wells.”

Obviously this was a little more polite than Monaco Jim’s tantrum but the implication was clear.

“We want you to believe we have a tremendous result, even though we were only able to frack two stages and needed patio gas to help burn what came out, and if you don’t relax the regulations we will have to up sticks and leave“.

Mr Egan must have felt that with two fracking companies threatening the government they would be in an unassailable position. However he appears to have reckoned without the fact that Claire Perry knows that if she relaxes the regulations, not only would she be toast politically if there were further, stronger quakes, but she also knows that she’d provoke a back bench rebellion in the Tory party. They can’t afford that just now.

So … It only took an hour and the reply came back from the Oil and Gas Authority

“There are no plans to review the limit under the traffic light system.”

So what do you do when you have shot your bolt?

Well you get your pals at the Chamber of Commerce to have a last throw of the dice.

and then maybe you dust off your CV and hope somebody is hiring in the USA.

Goodbye Cuadrilla.