100 years of UK oil
Britain’s first oilfield started production in 1919. CNOOC International Limited Production Engineering Advisor, Craig Durham, looks at the project that laid down the law for oil production.
This year marks the 100th anniversary of the first commercial production from a UK oilfield. On 7 June 1919, it was confirmed that oil was flowing at approximately 11 barrels per day (1.75m3/day) from the Hardstoft-1 well, near the village of Tibshelf in Derbyshire, UK. Although modest in rate, the event was a media sensation, as experts of the day had thought it unlikely that the UK had indigenous oil reserves.
This success raised debate over who should own the rights to extract oil. At the time, coal was the dominant energy resource and mineral rights were held by landowners. Hardstoft well was drilled on land owned by the Duke of Devonshire, and in response to a statement made in the House of Commons on 24 June 1919, Derbyshire North East MP, Stanley Holmes, repeated part of a speech by the Duke’s son, Lord Hartington, at a ceremony to mark the spudding of the well in the previous year.
‘He wished to make it clear that the landowners did not permanently give up their rights over the oil. The government were sinking the well with their sanction. If they had not given that sanction they would have been served with a notice under the Defence of the Realm Act. The landowners were not prepared to let this right stand for one moment in the way of this vital matter of the production of oil necessary for the prosecution of the war [however] they were not prepared to see large fortunes made out of Derbyshire oil without compensation to those interested in the soil, whether as owners or occupiers,’ Holmes said.
There’s a war on
Hardstoft-1 well spudded on 15 October 1918, just a month before the Petroleum (Production) Act passed into law, prohibiting exploration and production of oil and gas other than by the Crown or under licence from the Crown. The idea of exploring for oil in the UK had been raised several years earlier when the Royal Navy converted from coal-fired steam turbines to oil, and so became vulnerable to supply shortages due to German U-boat activity.
In response, the government contracted Samuel Pearson and Sons, an engineering conglomerate with experience of oil exploration and production in Mexico, to undertake a survey of potential oil resources in the UK. After much debate, the government decided to fund the drilling of seven exploration wells in Derbyshire, two in Staffordshire and two in Scotland. The presence of oil seeps in nearby mines in the Derbyshire coalfield had hinted at the potential, so Hardstoft-1 became the first oil exploration well in the UK, although the first recorded hydrocarbon well was a gas well at Heathfield in East Sussex.
Ownership of the Hardstoft oil resource remained unresolved for years after the war, but as the Defence of the Realm Act provisions could not be justified in peacetime, the Duke of Devonshire served an injunction on the government and was granted a licence for the well in March 1923. Oil and gas resources were subsequently brought fully under Crown ownership with the passing of the 1934 Petroleum Production Act, but interestingly, Production Licence 1 is still owned by the Duke of Devonshire and is the only UK licence not owned by the government. This explains why the well, which was capped in 1945 after producing approximately 28,000 barrels of oil, has never been officially plugged and abandoned, and still seeps oil today.
What goes around
So what are the parallels with today’s nascent UK shale gas industry? Like now, there was a degree of scepticism over whether there was any resource at all, and if money should be spent finding this out – although 100 years ago it was government money, not the private sector funding of today. Exploration was driven by an urgent need to maintain security of supply and a similar urgency exists, with 55% of natural gas required to fuel power stations, and central heating imported and at risk from disruption – 15% of the gas is shipped in as liquefied natural gas from the Middle East and 40% via subsea pipeline from Europe, including a significant share from Russia.
While oil and gas mineral ownership is now undisputed, the shale gas question has revived debate over whether and by how much those affected should be compensated or benefit. This is one of the key differences between UK and US shale gas, and why the latter has seen massive development in shale oil over the last 10 years, as landowners have rights over any minerals and therefore a strong financial incentive to support development. In the UK, public opinion remains strongly opposed.
A further difference is the environmental debate. In the past, photographs published in Illustrated London News showed a black and muddy effluent streaming away from the rig, whereas today, the UK has some of the toughest environmental oil and gas legislation in the world.
Although none of us will be around to see the 250th IOM3 anniversary, it will be fascinating then to look back to the UK’s first shale gas well and see whether it spawned a new age of cheap and relatively clean energy, or if it turns out to be no more than a drop in a very large ocean – which in Hardstoft’s case turned out to be the North Sea oil and gas industry.