By Selina Williams and Cassie Werber
LONDON--U.K. shale pioneer Cuadrilla Resources Ltd. said
Wednesday it will submit a new planning application for its
controversial oil-exploration well in southern England, adding
further delays to a project that has already been shut down once
during anti-fracking protests.
This, coupled with a delays at Cuadrilla's operation in northern
England, are a setback for U.K. government ambitions of replicating
the North American shale boom that has lowered energy prices in the
U.S. and helped reinvigorate the economy. It also illustrates the
hurdles for companies and governments that are finding that
supportive policies and attractive tax incentives may not be enough
to counter strong local opposition to the extraction technique of
hydraulic fracturing, also known as fracking.
Cuadrilla's decision to submit a new application to cover flow
testing and to avoid legal challenges on underground work at its
Balcombe site -- instead of extending its current license -- comes
amid strong local opposition to the drilling.
Last month the company temporarily halted drilling operations at
the site, after several hundred environmental activists who are
opposed to fracking descended on the area. Some local residents are
also opposed to the method, although Cuadrilla hasn't said if it
will need to use the technique at Balcombe.
Earlier this year Cuadrilla delayed plans to start fracking and
to drill exploration wells at its licenses in the Bowland Shale in
northern England, while it selects sites and undertakes
Environmental Impact Assessments. The company had originally
planned to start fracking there this summer.
Unlike in the U.S., development of potential shale resources in
the U.K. has proceeded at a snail's pace. There has been no
commercial shale-gas production, only a handful of exploration
wells have been drilled and only one well has been fracked. As a
result there is as yet no reliable estimate of how much of the
U.K.'s potential shale resources can be produced at a profit.
The U.K. government is hoping a shale-gas boom could help shake
off economic stagnation by lowering the cost of energy for
businesses and consumers, and creating many jobs.
Cuadrilla's new planning application in Balcombe will cover the
same testing that is currently permitted, but will include revised
planning boundary lines showing the extent of the horizontal well
being tested. The application won't include additional drilling or
fracking.
Cuadrilla's original planning application was approved in 2010
with a boundary delineation covering only the surface drilling site
area. Lawyers had advised the company that there were ambiguities
about whether its current license would cover underground works and
advised it to submit a new application to avoid a potential legal
challenge.
Cuadrilla expects to finish drilling its vertical and horizontal
well at Balcombe this month. The current permits are due to expire
Sept. 28.
Cuadrilla is jointly owned by U.S. private-equity firm
Riverstone LLC, Australian mining group AJ Lucas Ltd. (AJL.AU) and
management.
-Cassie Werber contributed to this story
Write to Selina Williams at selina.williams@wsj.com
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