ENERGY entrepreneur Algy Cluff has said he has switched his focus to the North Sea after giving up on a controversial plan to create gas by burning coal held under the Forth for the time being.
The Cluff Natural Resources business run by the North Sea veteran said it has written off the £337,000 value of its nine UK underground coal gasification licences after concluding there is no current prospect of developing any.
The London-based company noted politicians on both sides of the border had imposed moratoriums on such gasification schemes, which have attracted fierce opposition from environmental campaigners.
After posting a £1.9 million loss for 2015, Cluff Natural Resources said: “The Company is confident that the existing evidence base and pressure to support the UK’s energy intensive industries will eventually result in the emergence of policies which are supportive of the development of UCG projects in the UK.”
However the company said it will invest no more in gasification projects beyond paying fees to renew licences for now.
Mr Cluff, who founded the firm that discovered the Buchan oil field in the North Sea in 1975, has decided the time is right to refocus attention on that area in spite of the crude price plunge.
“Although this febrile atmosphere shows little immediate sign of recovery it is our considered judgement that this will prove to be a time of opportunity for expansion,” he said.
“We shall continue to seek to add to our North Sea portfolio consistent with our belief in the geology, in the opportunities, in the positive and helpful attitude adopted by the Oil & Gas Authority, the UK’s licencing authority and above all in our conviction that the North Sea is the correct place to be as the oil market moves towards equilibrium.”
Cluff Natural Resources believes the downturn has created opportunities to buy assets at attractive prices, as some firms look to reduce their exposure to the area.
Verus said it didn’t want to risk money drilling exploration wells with the crude price in the doldrums and would focus investment on production assets.
Cluff Natural Resources said it expects to buy other North Sea exploration and appraisal assets as it looks to build a new UK based oil and gas company.
Other sector entrepreneurs including Tom Cross have underlined their appetite for North Sea deals.
Mr Cluff believes there are still big finds to be made in the North Sea.
Earlier this week he noted the downturn has also resulted in a sharp drop in the cost of services such as drilling in the North Sea, which he expects to prevail for the foreseeable future.
Cluff Natural Resources said a recent expert report on the five Southern North Sea exploration licences awarded to the firm in 2014 confirmed its views on the highly prospective nature of the acreage.
The company has agreed a memorandum of understanding with oil services giant Halliburton to focus on the development of its Southern North Sea assets. It said this will allow it to access experienced technical specialists and cutting edge technology and process which would normally be out of the reach of companies of its size.
The agreement reflects the emerging trend for closer cooperation among exploration and production and services businesses as they look to maintain activity amid tough trading conditions.
Cluff Natural Resources had £1.1m cash at 31 December. It raised £722,000 though a placing in April.
The company lost £1,872,099 before tax in 2015, up from £1,725,014 in the preceding year.
Shares in the Aim-listed company closed unchanged at 1.22p. It has a market capitalisation of around £3.2m.
After making his name in the North Sea, Mr Cluff moved into gold mining in Africa before returning to the oil and gas business.
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