IGas Energy Starts Work On Its Second Pilot CBM Project In The UK
oilbarrel.com
Two years ago, just a couple of miles from your correspondent’s leafy abode in the Midlands, there was a strange juxtaposition of old energy and green energy that demonstrated the growing tension at the heart of the UK’s energy policy. Ancient woodlands where Charles Darwin, that father of modern thinking, used to walk and meditate were to be ripped apart to make way for wind turbines, so beloved of our previous Government despite growing doubts about their efficacy. Local residents were up in arms; there were well coordinated letter writing campaigns, a rash of anti-turbine posters appeared and protesters attended council meetings to demonstrate against the development.
Yet at the very time the green energy developers were under attack, a Nexen-operated gas well was drilled just a mile down the road, without protest. Unlike the renewable energy plan, the gas well was virtually invisible to local residents, destroyed no site of natural beauty and promised to deliver locally-sourced, reliable energy to local businesses. It was not only its low profile that ensured the Nexen gas well escaped the ire of local NIMBYs; this kind of low impact drilling near an existing gavel quarry, close to local customers, makes sense in the way the destruction of woodland for supposedly green purposes does not.
What’s more, the well was targeting an unconventional gas resource, tapping into gas trapped in the coal seams of this former coal mining area. IGas Energy, Nexen’s 35 per cent partner in the project, known as Swallowcroft, said the well proved the permeability of the coals in this area. A second well is now drilling at Keele University Science Park, some 5.5 miles to the north east. This well is expected to produce gas from a lateral in the Great Row seam at a depth of 1,757 feet. Following completion of the well and de-watering, a long term production test will be conducted.
This will be IGas Energy’s second pilot production site in the UK. The first, at Doe Green in the Northwest, has been in production for more than a year and rates have exceeded the AIM company’s models for commerciality. Gas from Doe Green is turned into electricity onsite and sold into the National Grid, a first in the UK. IGas plans to move this project to full scale commercial production next year.
There is a third pilot production site on the books, Point of Ayr in North Wales. Here the company has re-interpreted the 790 km of existing 2D seismic to firm up its resource range for the acreage ahead of drilling later this year. IGas has a 75 per cent interest here, an area where there is also significant potential for shale gas as well as CBM.
By the end of this year, this should add up to an interesting business, with three pilot sites in production, one of which should be gearing towards full-scale production. This will move the company from the resource-building to production phase, at which point it starts to look like an increasingly serious player in the UK gas market. IGas is already the UK’s largest independent coal bed methane producer in the UK: it is reckoned the AIM company now has enough gas to supply electricity to over seven per cent of the UK's household's for 15 years.
And there is more to come, with the company building a land bank of multi-well production sites, including permitted sites at Ellesmere Port, M6 Junction 21 and Ince Marshes. Last year IGas raised £17.21 million before expenses, giving it the financial head room to execute its production plans for 2010 and 2011. With a market cap of £73 million, the IGas business case is resonating with the markets, particularly in the wake of the harshest winter for 40 years, with the share price putting in a solid performance over the first six months of the year. |
