AJ Lucas hails completion of UK’s first horizontal shale gas well

AJ Lucas Group ASX AJL Cuadrilla Resources horizontal shale gas well Bowland
Cuadrilla Resources' Preston New Road exploration well site in Lancashire, UK.

AJ Lucas Group (ASX: AJL) has announced its 47.4%-owned shale gas exploration company Cuadrilla Resources has completed drilling of the United Kingdom’s first ever horizontal shale gas well at its Bowland project in Lancashire.

AJ Lucas is a drilling, engineering and investment company which holds a 48% stake in the Lancashire Bowland exploration licence area, through both its direct shareholding in Cuadrilla and an indirect investment.

The well, located at the project’s Preston New Road exploration site, was drilled through the Lower Bowland shale at a depth of about 2700m below ground. The well was then extended horizontally for about 800m through the shale gas reservoir.

“Our completion of the UK’s first ever horizontal shale gas well is a major milestone towards getting Lancashire gas flowing into Lancashire homes as we lead the way on UK exploration,” Cuadrilla chief executive Francis Egan said.

Cuadrilla reported drilling work would now commence on the second horizontal exploration well – this time through the Upper Bowland shale.

The company has been granted consent to drill up to four horizontal wells on the Preston New Road site.

Cuadrilla designed this drilling program earlier in the year, based on core analysis and other test data taken from a vertical pilot well drilled through the Upper and Lower Bowland shale rock, in addition to data from the company’s three previous Lancashire shale exploration wells.

Analysis of this data confirmed that both the Upper and Lower Bowland shale rock formation had low overall clay content, meaning it was very well suited to hydraulic fracturing, Cuadrilla said.

“From the data we have amassed so far we are optimistic that, after fracturing the shale rock, natural gas will flow into this horizontal well in commercially viable quantities demonstrating that the UK’s huge shale gas resources can be safely produced and contribute to improving the UK’s energy security,” Egan said.

Cuadrilla anticipated completing hydraulic fracture stimulation of the first two horizontal wells in the third quarter, then planned to run an initial flow test of both wells for about six months, with the aim of connecting the wells to the local gas grid in 2019.

Cuadrilla’s shale gas projects

Cuadrilla holds onshore exploration licences in Lancashire and Yorkshire in the north of the UK, as well as three licences in the south.

According to Cuadrilla, the UK currently uses about 3 trillion cubic feet of gas per year, with over half being imported. The company believes at least 200 tcf of natural gas is trapped in the shale rock in its Lancashire Bowland exploration licence area, which could contribute significantly to the country’s natural gas requirement.

The Bowland licence area also includes Roseacre Wood, another proposed shale gas exploration site.

Cuadrilla also reported this week that a new planning inquiry for this site, focused on highway issues, would commence next week.

The company said it had proposed three new routes to be considered, and would await a final decision from the Secretary of State for the Ministry of Housing, Communities and Local Government following the planning inspector’s report from the inquiry.

Shares in AJ Lucas jumped 14.3% to $0.36 on Cuadrilla’s announcement by midday trade on Wednesday.

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