In light of the current Covid-19 and market environment, what contingencies can Angus Energy put in place to continue to proceed with Saltfleetby? We hope all your staff remain healthy.
Also, if it becomes clear that no viable progress will be likely made on projects for a number of months, will Angus be able to ‘mothball’ activities and keep cash burn to an absolute minimum?
ANSWER: We have 3 executive board directors, a 3 man technical team and a 4 man operations team and two office support. All happily remain healthy as do our key contractors. We set up virtual private networks a month ago and sent staff home a over a fortnight ago. Contingencies were put in place for regular monitoring and skeleton security staffing. Oil & Gas workers are key workers which allows for some latitude in essential maintenance if need arises.
We have two daily videoconferences for all staff and a further operations, wells and site teleconference at the beginning of the day. Our experience of remote working has been positive with an equal if not higher level of productivity at least in these first ten business days of lock-down. The work in Saltfleetby planning has moved swiftly and we do expect planning applications to be submitted shortly – these have been very slightly delayed by beneficial developments which have opened up unforeseen opportunities. Tendering for equipment, construction and commissioning is also expected to take place in the month of April although we are unlikely to be in significant cash spend until after council planning in late July.
As to delays: Saltfleetby works were not slated to begin until late summer and tendering at this stage would amount to identifying equipment and further planning on implementation. If we submit planning application for Saltfleetby within a fortnight, there is a statutory 13 week period before a Planning Committee meeting is convened. We are informed that these meetings cannot, by law, happen remotely, so if the lockdown is still in place at the end of July, we will have an issue.
The delay to West Sussex County Council Planning Committee meeting, on similar grounds, may provide a welcome opportunity for further engagement with Council members and officers albeit remotely.
Our submission to Environment Agency regarding water injection at Brockham has been delayed by a bereavement in the family of a key contractor engaged in preparing essential supporting documentation but we hope to submit this during April.
Generally speaking our experience with Oil & Gas Authority, Environment Agency and Health & Safety Executive is that these regulators continue to function admirably during these times and given that the caseload we put to them does not necessitate site visits at present, considerable work can be completed remotely. We have been awarded a permission during this period of lock-down.
In answer to the second question: Could we furlough (put onto half or no wages) staff during this period? Possibly one or two but the impact would not be meaningful. As stated the bulk of cash is held for capex and pipeline construction and 90% of this capex will not be expended until after Planning Approval in Sussex or Lincolnshire – or well after lockdown. In fact, even without the Covid-19 lockdown the bulk of the expenditure would be due in Q3-Q4. We are in many ways fortunate to have already allocated this time to engage in detailed planning at Saltfleetby and not be producing oil at rock-bottom prices, but instead tendering for equipment in a buyer’s market.