AJ Lucas begins review of UK assets

AJ Lucas bought out its joint partner at its Preston New Road shale project in the UK two months ago, well before the OPEC+ talks fell apart and COVID-19 hit fuel demand. Combined, these two issues along with the UK government's moratorium on fraccing, have forced the company to conduct a “detailed review” of the project.
AJ Lucas begins review of UK assets AJ Lucas begins review of UK assets AJ Lucas begins review of UK assets AJ Lucas begins review of UK assets AJ Lucas begins review of UK assets


Paul Hunt

Senior Journalist: Energy & Commodities

Paul Hunt

Since buying out Riverstone's shareholding interest in Cuadrilla, AJL now holds 93% of the subsidiary company alongside private investors. 

It also bears all of the costs associated with the Preston New Road project, and eight other licenses across onshore UK in Lancashire, West Sussex, Yorkshire, Kent, and Surrey. 

"AJ Lucas has undertaken a detailed review of the carrying costs of the UK shale gas explorer," the company said. 

"While this remains ongoing, AJL confirms significant progress has been made in rightsizing the business to meet the hiatus in 2020 operations following the initiation of a moratorium in the UK on hydraulic fracturing." 

At the start of November last year, the UK government put a halt on Cuadrilla's operations, introducing a nation-wide ban on fraccing until "compelling new evidence is provided" that activities could be conducted in a safe and environmentally sensitive manner. 

The watershed decision was met by cheers from activists and environmentalists but flew in the face of earlier statements from conservative British prime minister Boris Johnson who has referred to fraccing as "glorious news for humanity." 

"Leave no stone unturned, or unfracced," he said just months before running for the top job of prime minister. 

AJL said yesterday it was proactively working with industry bodies to provide the government with the "compelling" evidence in an effort to have the moratorium lifted "as soon as practical." 

The UK has always been especially tough on the few onshore companies attempting unconventional exploration, with a strict traffic light system in place that mandates work must stop for 18 hours should an ‘orange' seismic event of 0.5 magnitude occur. 

The head of the Royal Geological Society has previously likened the 0.5 magnitude tremors to a "bin lorry" passing by on the street and suggested they are far too conservative. 

Estimates from the UK Oil and Gas Authority show the UK could reduce its dependency on imported gas by 50%, create £1.8 billion in revenue through taxes and other community benefits, and up to 64,000 jobs by 2035. In addition the supply chain could benefit by up to £33 billion.