Company switches focus to England

Cluff shelves Firth of Forth gas plan over government ban

Energy company Cluff Natural Resources has abandoned plans to drill for gas under the Firth of Forth because of the moratorium imposed by the Scottish government.

The company wanted to create Britain’s first offshore underground coal gasification (UCG) plant at Kincardine, close to the coal-fired power station that is due to close.

But it has suspended investment on the project in what supporters will see as a blow to plans to develop a big new industry and opponents regard as a victory against controversial mining operations.

The company, which holds three licences to explore for “unconventional” gas in the estuary and nine overall across the UK, claimed the £250 million plan could generate £603 million for the Scottish economy and 1,000 jobs.

It was forced to halt operations in October when Scottish ministers imposed a freeze on the technique over environmental concerns.

Opponents have raised fears over the process into a coal seam below the seabed producing toxic gases.

The Scottish government imposed the moratorium after a petition raised 8,000 signatures, adding to its concerns over fracking which has also been suspended. The moratorium is to remain until at least spring 2017, pending a government study and public consultation.

In relation to the Kincardine project, Cluff said: “While the company is confident that the evidence in relation to UCG will result in the moratorium being lifted, it has stopped all expenditure related to the Kincardine project and is now focusing its attention outside of Scotland, in particular the north-east of England, where the company believes the political situation is more favourable with regards to UCG and considerable support exists for investment in energy and industry with a view to regeneration.”

Dr Richard Dixon, director of Friends of the Earth Scotland, said: “Communities around the Forth will be celebrating the news that Cluff has put all work on hold on its flagship underground coal gasification scheme at Kincardine.

“Cluff’s change of priorities is a major tribute to all those who have campaigned against their plans for a dangerous experiment.

“Sadly, what is good news for Scotland is bad news for England, where Cluff will now more actively try to develop UCG schemes.”

AIM-quoted Cluff released the statement with its pre-close update for the year to 31 December.

The company is seeking industry partners to fund the drilling of wells on its North Sea assets. The company is already in the process of starting the next phase of technical evaluation on its acreage, which will ultimately lead to the identification of drill targets.

Cluff is “attracting and securing one or more industry partners” to fund forward work programmes, including the drilling of one or more wells, according to the company.

Chairman and chief executive, Algy Cluff, said: “With no debt or major work commitments, Cluff Natural Resources is in a comparatively strong position to take advantage of opportunities which may arise given the challenging oil price environment. Our objective now is to complete the process of attracting the partners required to fully appraise the production potential of these exciting assets.”

Cluff iss also awaiting a total of £331,125 from a subscriber to its placing earlier in 2015, for 7,791,188 shares.

“The company believes that it is now unlikely that the funds will be forthcoming and accordingly is considering its next course of action”, the board said.

However, it said early action to curtail major costs associated with the Kincardine Project, along with a focus on cost control, meant the company was in a stronger cash position at year-end than anticipated at the time of the placing. At 31 December, Cluff said its unaudited cash position was £1.1m.


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