Letter to Greg Clark

 

To:

Secretary of State Rt Hon Greg Clark MP                                                                        Department for Business, Energy and Industrial Strategy
1 Victoria Street
London
SW1H 0ET

 

20 April 2018

 

Dear Secretary Clark:

We [Ref BOW] are writing to draw to your attention loopholes and failings in the regulatory system for onshore oil and gas. This industry is being promoted by the Government, but its operations are having a serious impact on the effective operation of the planning regulatory process, local communities and the environment.

In January 2017 Angus Energy drilled a sidetrack well at Brockham in Surrey in breach of planning control, ignoring prior warnings from Surrey County Council. The breach was accompanied by other serious issues, which in our view clearly show that Angus Energy is an irresponsible operator which consistently flouts the rules, lacks basic operational competence, and treats the local authority and local people with contempt. This calls into question whether this company should be allowed to continue to operate.

It would be expected that the UK onshore oil and gas regulatory system would have prescribed consequences for Angus for their scandalous behaviour at Brockham, yet the Oil and Gas Authority appears to have ignored industry guidance by issuing their permits despite lack of planning permission. This, and other inconsistencies have not been picked up on because each of the regulators operates within its own framework and assumes that the other regulatory regimes operate effectively. I am drawing this to your attention because I believe it should be the role of the Secretary of State to take on overall responsibility and accountability for the proper operation of the system. We are worried that these omissions can put in danger the health and safety of local communities and workers, and pose significant risks to the environment.

Angus Energy, and other operators in South-East England, are pressing on with drills targeting unconventional deposits that will likely (and probably already do) require the use of ‘stimulation’ techniques such as acidisation and hydraulic fracturing, which are exempt from the fracking regulations because they are not caught by the ‘associated hydraulic fracturing’ definition in the Infrastructure Act 2015, or the subsequent statutory instruments and directions. This loophole allows the operators to claim that what they are doing is ‘conventional’, pulling wool over our eyes and delegitimizing opposition. It is not what we would expect from a “gold-standard” regulatory system we so often hear about from politicians and the industry.

We are writing to bring this to your attention, and ask that you investigate these matters further and produce recommendations for a coherent and effective regulatory system for onshore oil and gas that falls outside the “fracking” and “unconventional” regime.

We have detailed below what happened at Brockham in January 2017 so that the Department has a clear understanding of how these loopholes have an effect in practice.

 

Sincerely,

Brockham Oil Watch

 

PART 1

Appendix 1 at the end of the letter provides a timeline of relevant permits and communications around the drilling of BRX4Z.

Unauthorised Drilling

Angus Energy drilled the unauthorised sidetrack BRX4Z at its Brockham well site in January 2017. There was no planning permission in place for this work, which Surrey County Council (SCC) made clear to Angus at least twice prior to drilling in letters dated 14 September and 12 December 2016. But Angus told the planning authority that they would only do maintenance works on a different well, and proceeded with drilling anyway. When this had surfaced, the planning authority asked Angus to apply for retrospective planning, but Angus have consistently maintained that the drilling was fully authorised, and they have threatened the council with legal action for stating otherwise. They also put in at least one formal complaint regarding a media report on this issue. As of the writing of this letter, Angus still state on their website that sidetrack to Well BR-X4, drilled in January 2017, is authorised by one of the earlier permissions. This message was also included in their annual report published in early March.  

However, a recent issue of the Private Eye (1) suggests that Angus knew about the need for fresh planning permission to drill as early as 2014. The Eye refers to “an eight—page report specifically commissioned by Angus from Prospect Ltd, a specialist planning consultancy”, which said that Angus would “require a new planning application for any works” at Brockham. In light of this new information, Angus’s claim that they thought they had an existing planning permission to drill sounds rather hollow. And their assertion that they had a QC’s opinion that supports their view remains untested. Furthermore, the fact that Angus are now complying with SCC’s request to submit a retrospective planning application, and they have chosen not to challenge this request further, suggests that they either have no faith in their QC’s opinion, or that it does not exist; and that the legal threats were an attempt to intimidate the council and the media.

Discrepancies Between the Regulators

Other regulators, including the Environment Agency (EA), the Health and Safety Executive (HSE) and the Oil & Gas Authority (OGA), were all informed about the planned drilling, and all gave prior consents. The OGA also gave their go-ahead for well completion and production from BR-X4Z in October 2017, after having consulted with SCC, who made it clear that the well had been drilled without authorisation and that there was no permission for production from it.

A government document on onshore oil and gas regulation issued by DECC in 2015 says that “OGA grants consent to drill only once all permits are in place” and that the OGA may provide consent to drill once the operator has secured planning permission from the Local Planning Authority and discharged any relevant conditions. It also says that the same approvals process applies if an operator wishes to start production.

Commenting to Drill Or Drop, the OGA said: “The consents issued by the OGA and planning permission are separate processes. The OGA is not in a position to form an independent view of the validity and scope of the existing planning permission. This is a matter for Surrey County Council”. But no independent view needed to be formed because SCC had already provided theirs.

Why was this guidance not respected at Brockham on two separate occasions? (The first being the OGA’s approval to the sidetrack to BRX4; and the second – the more recent OGA approval to the FDP Addendum and well completion for the sidetrack BRX4Z despite the fact that it still does not have planning permission.) Why does the OGA prioritise the view of the operator and not that of the planning authority?

Confusion Over Wellhead Numbering

Prior to the drilling of BRX4Z, all the regulators (HSE, EA, OGA) were informed that it would be drilled from wellhead BRX4, except for the SCC, whom Angus told that they would be doing a workover and logging the “Brockham Number 2 well”, and later clarified that it was “the original Brockham well that BP drilled in 1987”. But on 18 January 2017, Angus reported through the London Stock Exchange regulatory news service (RNS), that they anticipated “the re-entry of the original Brockham-X1 well being completed within the week” (Brockham-X1 is in fact the original well drilled by BP in 1987), and on 26 January they said that “the well will now, upon OGA confirmation, be renamed BR-X4Z”. The OGA confirmed that they had no record of such well re-naming. Later on Angus told the OGA in a meeting that they had intended to drill from BRX4, but when the well was entered they thought it was Brockham-X1 because of a different size of casing hanger found inside of the well. However, as well intervention progressed, Angus said they recognised that they were indeed working on BRX4 and they continued on.

After discussing this with Angus, the OGA concluded there was lack of clarity in the decision making chain, lack of documentation around key decisions, and that the well-numbering error could have been avoided had Angus undertaken more analysis such as simply tracking of aerial imagery on Google Earth. Angus received a ‘slap on the wrist’ with the order to conduct structured search for information and review its internal processes.

Oil and gas drilling is an inherently dangerous business, and accidents not infrequent. How can the local residents, some of whom live close enough to see the site from their windows, have trust in an operator who lacks the most basic competence to know which well they are working on?

Even more worryingly, one possible explanation for the confusion would be that Angus deliberately engineered a situation in which it could drill the sidetrack (which it knew had no permission) before SCC knew anything about it, and before enforcement action could be taken to stop the drilling.

Health & Safety Risk

In January 2017, SCC thought Angus were carrying out maintenance under the existing planning permission, which did not allow night time work. On 17th January Angus emailed SCC saying that they opened the well the day before, and found it “to be live”, and that due to safety concerns they needed to “kill it” and complete the “abandonment section in a timely fashion”, and that they would go back to daylight operations only once the well was safe, which was expected within 7 days. This information was relayed onto the HSE, who commented that “it asks more questions than it gives answers”, and requested additional details while advising the SCC to allow 24-hour working for safety reasons. Subsequently, HSE confirmed to us that they had no record of any additional information supplied by Angus around this incident and we take it that none was ever supplied. The next development was a visit from HSE (jointly with the EA and SCC) on 26th January, when Angus confirmed they drilled a sidetrack from BRX4.

Finding a live well (hydrocarbons present in the wellbore) unexpectedly and having to work 24-hrs pattern over 7 days (in breach of planning permission) on health and safety grounds sounds like a serious and urgent matter. Yet, apparently Angus never supplied the HSE with any additional detail regarding this situation for a whole 10 days. Should this type of behaviour by an operator be tolerated within a gold-standard regulatory system?  Or was this “incident” also engineered by Angus to disguise the unauthorised drilling and avoid enforcement action by the planning authority? Either way, this points to serious – in our view disqualifying – competence issues.

Consequences for Operator?

We would like to ask that these issues above of unauthorised drilling, confusion over wellhead numbering, and health and safety risk be investigated further, and responsible parties brought to account. Angus have not suffered much repercussions for their actions, apart from the SCC asking them to submit a retrospective planning application (which was finally done in March 2018 after a year-long delay caused by Angus themselves). Other than that, Angus are simply allowed to continue with business as usual. How can the so-called gold-standard regulatory system carry no consequences for such a flagrant, and apparently intentional breach? We think that it should be made clear whose responsibility it is to ensure the system is efficient and that stronger powers should be introduced to punish the type of behaviour we’ve seen at Brockham, including the withdrawal of the operator’s licence.

 

PART 2

The Unconventional Kimmeridge Clay (Shale) Formation & Acidisation

The reason we are concerned and closely following activities at Brockham is because Angus wants this site to be the first in the UK to produce commercially from the Kimmeridge Clay Formation (KCF), which is currently targeted by a group of oil firms in South East England.  The British Geological Survey compared the KCF to “hybrid Bakken-type shale play” in its 2014 report on Jurassic shales of the Weald Basin – one of two reports on shale deposits in England commissioned by DECC before it transformed to OGA (the other report is on the Bowland Shale). The Kimmeridge is a shale-dominated strata intersected by several thin muddy limestones. It’s characterized by very low permeability of the order of 0.005 to 0.03millidarcies, which by any scientific definition is unconventional, meaning extraction will require stimulation by fracking or its sister method applicable on carbonate-rich formations – acid stimulation. The industry itself admits this. (2)

Acidisation uses less water than high volume fracking, but the proportion of chemicals in the acidising fluid is higher, and the expected risks of this process are similar: risk of pollution to groundwater, surface water and air, stress on water supplies, toxic and potentially radioactive wastewater, and industrialisation from drilling multiple wells in close intervals, both in space and time. (Links to reports here and here) (3,4)

Yet, all the applications targeting the Kimmeridge are going through the planning system described by their proponents as conventional hydrocarbon developments, with cosy nodding donkey-style pumps, simply because there are no existing planning policies, either national or local, in place for what they are (that is unconventional hydrocarbon developments with potentially significant environmental impacts).

The existing national legislative and regulatory framework does not focus on conventional versus unconventional hydrocarbon developments, but rather on the method of extraction itself – high volume hydraulic fracturing – which is defined in the Infrastructure Act 2015 as “associated hydraulic fracturing” by arbitrary and very high volumes of fluid used. This definition, which BEIS clarified is designed to protect the industry’s ‘so-called’ conventional, low-volume fracking operations from burdensome regulation (5), omits to regulate higher volume fracking operations that do not meet the arbitrary thresholds. This includes the Preese Hall operation in 2011 – the only high volume fracking performed in the UK to date, which produced seismic tremors and effectively stopped the industry for 7 years to date). Preese Hall fracking used ‘only’ 8,399 cubic meters of fluid and one of the stages was only 759 cubic meters of fluid – both below the IA 2015 definition of 10,000m3 of fluid in total or 1,000m3 of fluid at each stage. The IA2015 definition doesn’t capture much of the operations known as high volume hydraulic fracturing in the USA, and it will certainly not include acid fracturing or matrix acidisation, as these are performed at lower volumes. The focus of the regulatory regime only on the very high volume hydraulic fracturing operations is wrong.

The Environment Agency is the only regulator that has recognised acid stimulation techniques in a recently produced factsheet (but only for conventional sites), but the Agency doesn’t have any meaningful regulation in place to monitor these operations and enforce breaches.

For comparison, in California all acid-based stimulation is regulated within the state’s fracking regulations (in the same way as hydraulic fracturing) that follow the framework set out in Senate Bill No. 4 of 2013. In Florida, a bill seeking to ban all types of fracking, “including hydraulic fracking, acid fracking and matrix-acidizing” is currently going through the state legislature.

We think that the current framework, excluding much of the fracking and stimulation activities from proper regulation, allows unacceptable risk to the environment and human health. This is especially true now, that the technologies of directional drilling and heavy stimulation developed in the USA in recent years, are imported and deployed in England under an outdated regulatory framework. In our view, gold standard regulation should not allow this.  At the very least, all well stimulations, regardless of the volume of fluid used (including matrix acidisation, acid fracturing and hydraulic fracturing), should be regulated up to the same standard across the regulatory regime, and an independent review of the cumulative impacts of drilling requiring any form of stimulation should be carried out. Until then, these developments should not be allowed to continue in the South East, or other parts of the country.

 

Notes:

(1) Private Eye No. 1466, 23 March – 5 April 2018

(2) “Kimmeridge Limestone Oil likely requires “stimulation” to flow to the surface at commercial rates. The primary stimulation method for wells in limestone rock formations is acidizing.”

(3) Toxicity of acidization fluids used in California oil exploration, Khadeeja Abdullah, Toxicological & Environmental Chemistry Vol. 99, Iss. 1, 2017

(4) Abdullah, K. (2016). Acidizing Oil Wells, a Sister-Technology to Hydraulic Fracturing: Risks, Chemicals, and Regulations. UCLA.

(5) From BEIS response to an FOIA request by Lorraine Inglis, [FOI #424943]“The reason for setting any threshold here is to ensure that the well stimulation techniques used for decades in conventional onshore oil and gas operations, which fracture using lower volumes of fluid, are not inadvertently impacted.”

 

 

 

Appendix 1: TIMELINE OF PERMITS AND COMMUNICATIONS AROUND THE DRILLING OF BRX4Z AND WELL NUMBERING

2014
Angus Energy are advised by a specialist planning consultant commissioned by Angus themselves that any works at Brockham would need a fresh planning permission

14 September 2016

SCC says that Angus Energy do not have planning permission to undertake drilling operations at Brockham under any of the existing permissions and that should they “wish to carry out a ‘side track’ a fresh new planning application seeking planning permission will be required.” This is in response to a letter from Angus dated 8 August 2016 indicating the intention to drill a “side track”. (link)

14 November 2016

The EA grants permit (EPR/EB3604MZ) to operate a mining waste operation. The corresponding application was submitted along with Environmental Method Statement for Drilling of BROCKHAM BR-X4Z WELL. (link)

6 December 2016

Email to SCC from Angus Energy’s planning consultant  stating that works will be undertaken at Brockham Number 2 well. It clarifies an earlier email dated 2 December describing the work to be done as “abandon several open hole sidetracks” and “to mirror the existing well to gather geological information that was not acquired when originally drilled. No formation deeper than the original wellbore is to be evaluated.” (link)

12 December 2016

SCC confirms that Angus Energy can carry out maintenance activities on Brockham No.2 (as set out by Angus in email on 2 December) under an existing planning permission, and that if Angus wish to drill any new boreholes or sidetracks, then fresh planning permission would be required. (link)

13 December 2016

Jonathan Tidswell, CEO of Angus Energy, explains in an email to SCC that Angus Energy plans to “re-enter the original Brockham well that BP drilled in 1987 down to the great Oolite formation (…) to geologically assess these formations before running liner and cementing in place.” (link) [note: the original wellbore that went down to the Oolite formation is Brockham-X1]

14 December 2016

The OGA issues approval for well LR/24-X4. (link)

15 December 2016

Angus reports in an RNS that they received the HSE’s consent. HSE later confirmed that “the well notification submitted by Angus Energy was for the partial abandonment of the Brockham X4 well and to drill a sidetrack from the partially abandoned well.” (links here and here)

17 January 2016

Email from Jonathan Tidswell that the day before at 16:00 they opened the well and “found the well to be live and decided to run in hole a kill/cementing string straight away and displace the well to heavy fluid.” They anticipated to have completed this process within seven days. (link)

18 January 2017

Angus reports in RNS announcement that well intervention on Brockham-X1 was underway and that re-entry was expected to be completed within the week. (link)

26 January 2017

Angus reports in RNS announcement that “further to the 18 January 2017 announcement, work to complete, log, case and cement the well at the Brockham oilfiled has now been successfully completed” and that the well would, upon OGA confirmation, be renamed BR-X4Z. (link)

26 January 2017

During a joint site visit from the EA, HSE and SCC, Angus confirmed they drilled a sidetrack from BRX4.

27 July 2017

OGA confirmed in response to an FOIA request (reference FOI-2017-0019) that they do not have any documents relating to renaming of Brockham-X1 well to BR-X4Z. (link)

2 August 2017

Letter from OGA to Angus recounting the explanation of confusion over wellheads explained by Angus in a meeting, listing the OGA’s conclusions, and requiring several follow up actions. (link)