Egdon Resources plc (AIM:EDR) notes the announcement by government that it will introduce a temporary moratorium on hydraulic fracturing for shale gas.
Over the last 6 years Egdon has built a significant acreage position in UK unconventional resources focused on the Gainsborough Trough in Eastern England. The results from the Springs Road-1 well drilled earlier this year, have shown the potential for a world class gas resource in this basin, with analysis indicating gas in place of 640 billion cubic feet of gas per square mile. Each basin and site is different and the Gainsborough Trough is characterised by its simple structure and limited faulting.
We note the comment made by Oil and Gas Authority (OGA) Director of Regulation Tom Wheeler who stated that “the OGA believes that further detailed geomechanical analysis would be needed before we could evaluate with confidence whether hydraulic fracturing could resume in the Fylde, or elsewhere, consistent with the Government’s policy aims”. Egdon along with the rest of the industry is fully committed to working closely with the OGA and other regulators to demonstrate that we can operate safely and in an environmentally responsible manner, and we are confident of doing so.
We also reiterate the comments of Ken Cronin, Chief Executive of UK Onshore Oil and Gas, the industry body in his response to the announcement;
“Since shale gas exploration commenced in England we have confirmed a world-class resource. Flow testing and core sampling across Lancashire and North Nottinghamshire show that our high-quality indigenous gas can reach the surface, leaving the UK with no excuse to continue importing overseas gas that generates double the emissions and provides British workers, businesses and communities with no economic benefit.
“As the Committee on Climate Change has stated, there will be a significant need for natural gas in 2050, approximately 70% of our current consumption, to meet our future demand for hydrogen.
“The Committee also reiterated in their Net Zero report something any climate change conscious Government should pay heed to: it is essential that we do not simply offshore our emissions – and environmental responsibilities – to other countries.”
Mark Abbott, Managing Director of Egdon said;
Whilst growth of our unconventional resources asset base has formed an important and successful part of Egdon’s strategy over recent years, it should be remembered that Egdon also has a broad range of conventional oil and gas assets within its diverse portfolio. We expect numerous catalysts across the conventional portfolio in the coming months, including further positive developments relating to today’s announcement of entering an exclusivity agreement with respect to a farmout of the offshore Resolution and Endeavour gas discoveries with a large internationally recognised exploration and production company.
We will now take some time to review the detail of the OGA report and the government announcement of a temporary moratorium and its implications for our business before reporting to shareholders in due course.
My immediate focus is on presenting our case to the Planning Inspector at the Public Inquiry for the Wressle oil field development which commences tomorrow (5 November 2019) in Scunthorpe and is scheduled to last up to six days.