- AJ Lucas (AJL) emerges as an unlikely winner from global oil and gas supply fears after the UK energy regulator lifts a ban on work at AJL’s two UK shale gas wells
- The North Sea Transition Authority (NSTA) withdraws a notice requiring AJL to plug and abandon two shale gas exploration wells at the Preston New Road (PNR) fracking site
- AJL subsidiary Cuadrilla now has until the end of June next year to evaluate its options for the exploration sites
- AJ Lucas Chair Andrew Purcell says the ongoing gas crisis in Europe has highlighted the importance of domestic production in the UK
- Shares in AJ Lucas are up 15.8 per cent to 6.6 cents each at market close
AJ Lucas (AJL) has emerged as an unlikely winner from global oil and gas supply fears after the UK energy regulator lifted a ban on work at AJL’s two UK shale gas wells.
In light of the Russia-Ukraine war and associated energy crisis in Europe, the North Sea Transition Authority (NSTA) withdrew a notice previously issued to AJL subsidiary Cuadrilla Resources requiring the company to plug and abandon two shale gas exploration wells at the Preston New Road (PNR) fracking site.
Cuadrilla now has until the end of June next year to evaluate its options for the exploration sites.
AJ Lucas Chair Andrew Purcell said it was a “sensible” decision from the UK regulator at a time of soaring gas prices in Europe.
“It is widely acknowledged that natural gas will continue to play a key role in UK energy supply for many decades to come, even as the country transitions to a net-zero CO2 economy,” Mr Purcell said.
“We remain convinced that the Bowland shale gas resource has the potential to be a very significant contributor to UK energy supply and, in particular, a source of cost-effective fuel for heating UK homes and businesses.”
The Cuadrilla wells are the only two horizontal wells drilled and hydraulically fractured into UK shale rock, according to AJL.
While previous flow testing of the well confirmed the presence of a “very high-quality natural gas resource”, the UK oil and gas regulator introduced a ban on fracking in November 2019, meaning the AJL subsidiary could never fully fracture or flow test the wells.
Now, AJL said the ongoing gas crisis in Europe has highlighted the importance of domestic production in the UK.
“Given the rapid decline in indigenous North Sea gas production and the ongoing UK gas price and supply crises, we consider that the billions of pounds being spent annually on importing expensive gas from the Middle East, the US and elsewhere might be better directed, in part at least, on developing what is recognised to be a substantial domestic shale gas resource,” Mr Purcell said.
“Developing the UK’s domestic gas resource onshore would help provide energy security, create a significant number of new jobs in the North of England and provide substantial tax revenues.”
Shares in AJ Lucas were up 15.8 per cent to 6.6 cents each at market close. The company has a $68.18 million market cap.