Gush Hour: England's commuter-belt oil boom

In the verdant valleys of the Home Counties, prospectors have struck black gold – and landowners are cashing in. But not everyone is thrilled. Nick Harding reports on the back-garden boom that's dividing Middle England
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The Independent Online

Peveril Bruce doesn't look like JR Ewing. There's no ten gallon hat, no smug grin and no Cuban heels. Bruce wears the dirty overalls of a dairy farmer and a pair of Wellington boots. But there are two striking similarities between him and the Dallas baddie. The first is oil: Bruce has a well on his land. The second is that if anyone ever shot him, there would be no shortage of suspects.

His neighbours in the Hampshire village of Ovington, where his family has farmed since 1946, are not happy about Bruce's lucrative sideline. Like oil and water, crude and Home Counties sensibilities don't mix. And Bruce is only one of a growing band of back-garden oil barons who, with a little help from the energy exploration companies, are tapping into the riches below the sleepy British countryside.

Last year, thanks to a combination of policy promoting domestic energy production, new technology making it easier to find onshore oil and gas deposits, and high oil prices, the government issued a record 97 licences to 54 oil and gas exploration companies - all of them intent on striking black gold on the UK mainland. Five years ago, there were only eight applications by six companies.

This is the new domestic oil rush, where prospectors stalk the landscape, waving their exploration licences like lighted matches and enraging Middle England. As Britain's offshore oil and gas reserves dwindle, the focus of the prospectors' attention is a wealthy area stretching from Dorset to Kent and up to Surrey and Hampshire, verdant land where experts believe there are untapped riches a mile under the rolling hills and beautiful countryside. Texas this isn't; but a combination of factors have combined to make micro-level onshore oil exploration financially viable.

An ancient mulch made of decomposed prehistoric plankton and plants, crude oil is, for all intents and purposes, inert dinosaur compost. But when industrialisation cracked open the bowels of the earth and dredged up the sticky muck within, it unleashed a monster; with the power to fuel civilisations, oil is right up there with religion as a catalyst for conflict. In these contemporary Crusades, nations manoeuvre to grab a supply of the world's dwindling hydrocarbon resources and oil and gas barons replace the Templar knights, hitching their corporate wagons to western government policy in a hunt for the holy grail, a stable and controllable supply of carbon-based energy. The movie adaptation of Upton Sinclair's 1927 novel Oil! was renamed There Will Be Blood for good reason; on a geopolitical level, oil and gas have heightened tensions in Russia, Iraq and Nigeria. Now the theatre of operations is the well-heeled South East. There may not be blood - but there will be petitions and there will be strongly-worded letters of complaint to local councillors.

When Peveril Bruce allowed a small exploration company to drill for oil on his land and build a well in a remote corner of one of his fields - in a designated Area of Outstanding Natural Beauty - neighbours feared the worst. After all, who wants an oil well in their village? But, standing by the ramshackle oil compound on Bruce's Matterley Farm, it's hard to see what all the fuss is about. This is oil as a cottage industry. The gentle hum of a generator is the only indication that any kind of industrial activity is afoot. A thousand yards underground thick crude is gently seeping up pipes to the surface and into three steel tanks.

Last week, after years of drilling and exploration, the first commercial tanker-load was taken from the Matterley Farm tanks to a local refinery. Operated by Star Energy, the well produces as much crude a day as Bruce's dairy herd produces in milk.

If Bruce isn't your average oil baron, he's also not your average farmer. Along with the oil interest, he hosts a tank driving school at Matterley Farm and stages the annual Homelands music festival there. Although he won't disclose how much he gets paid to lease the site for oil production, the annual rental for such an endeavour can be between £20,000 and £50,000 a year. For that sum, Bruce is not about to snap up a Premiership football team. He'd be more likely to sponsor the local pub side - though they probably wouldn't accept his filthy lucre.

"I'm not a popular figure in the village," he shrugs. "It's a natural reaction for the local community to be concerned. It was pandemonium when the oil was first found but that was caused by wild speculation and assumption, people heard the word oil and expected some huge BP-type refinery. When you see the reality it's rather disappointing. I understand the concerns about pollution, but the planning conditions enforced on any complex like this are far more stringent than anything I could ever enforce. Ultimately, why would I want to damage my own farm and livelihood?"

When oil was first discovered on his farm six years ago, one community stalwart railed: "This is Winchester, not Texas, and we are not cowboys." Oil industry experts described the find as the most significant for 20 years; local opposition described it as 'devastating'.

Now, as commercial production begins, looking at the sad scratch of land where the oil well sits, the histrionics appear at the very least misdirected. Initial estimates suggested there are around 100 million barrels of oil stored in the porous rocks under Matterley Farm. Only ten per cent of that is currently recoverable. However, as drilling and seismic technology develops, that figure is likely to increase, and Bruce has (unsuccessfully) tried to negotiate a cut of the oil revenue. But he still believes that the advantages outweigh the drawbacks.

"I like to try new things and explore new opportunities," he explains, "But ultimately, I am a dairy farmer and I love my cows. This diversification helps me to keep them."

***

Forty-five miles to the east of Bruce's farm, a declaration of war is flapping in the breeze on a gate post on Leith Hill in the picture-postcard village of Coldharbour in Surrey. Oil company Europa has submitted an application to sink a bore hole under the hamlet, deep in to Forestry Commission land. On these slopes in 851AD, Anglo-Saxons defeated the Danes, saving England for Christianity and sending rivers of heathen blood flowing down the hillside. Today there are only a few hundred residents, but they are just as ready to fight to protect their way of life from what they see as a marauding invader.

This is the latest front to open in Middle England's oil wars and rather than using clubs and swords, they are fighting with technology. The campaign against the site is co-ordinated via the internet and has its own PR representative, website and logo.

The application, which is due to be decided by Surrey County Council this spring, is for temporary permission to drill round-the-clock for months, just yards from the nearest property. The 35-metre rig, which comes complete with oil and gas flares, and an aircraft warning light, will be visible for miles around. Up to 64 lorries a day will carry materials to and from the site up Coldharbour's winding, tree-lined road. The drill site lies within the protected Green Belt, an Area of Outstanding Natural Beauty and the Coldharbour conservation area. Elsewhere, similarly contentious applications have been passed because government policy favours development in the national economic interest.

Europa believes the site will produce significant quantities of crude. In a statement the company says: "This prospect is highly regarded and is thought to be one of the best undrilled UK onshore structures." It also states that the location had the least environmental impact of the six sites it considered.

Alan Hustings has lived in Coldharbour for 14 years and is still stunned by what is happening there. He says, "It's hard to fathom a less appropriate site for an oil well. We get 600,000 visitors a year who come to enjoy the countryside here. I still feel a sense of disbelief. When I first bought the application to the attention of residents most of them asked if it was April 1st. Coldharbour isn't your typical Surrey stockbroker belt, it is very rural, it is remote and there is a strong community spirit here. I am a consultant to the power industry, and over the last 15 years I've done a lot of work in Asia. If this rig is allowed here it would demonstrate rather less concern for the environment than is demonstrated in some of the countries I've been working in. I always assumed that living in an Area of Outstanding Natural Beauty would count for something, but if this gets passed, it would appear not."

The ultimate irony is that if the drilling is successful and Europa discover gas, it would be pumping it out of a village that is deemed so remote by domestic energy companies that it's not even connected to the main gas supply.

***

Oil's inky tendrils stretch five miles away to the equally sedate commuter village of Brockham, Surrey, where, in a quiet field, two nodding donkeys gently undulate to the rhythm of the black gold flowing beneath them. They've been a permanent fixture here for over a decade. This well was originally drilled by BP but was later sold off to smaller operators when the company shelved its UK onshore portfolio. Despite fervent opposition when it was first drilled, the nearest residents now say the milk tankers make more noise than the oil well.

Landowners Julia Ann Brodie and her son Alexander receive a regular income from the lease of their land to Midmar Energy, which extracts the oil. Like many smaller energy companies, Midmar has honed its expertise in smaller-scale exploration and extraction. The Bournemouth-based company has been a player in the UK onshore business since 1995 and that experience has allowed it to take a giant step and expand internationally. Midmar Energy is about to sell the Brockham oil well, which produces 100 barrels of oil a day, and swap the sedate fields of the Home Counties for the blood and dust of Iraq. Whether the experience of fighting middle-class Nimbys in Surrey will help when it comes to dealing with jihadist insurgents remains to be seen, but thanks to its success in the UK, this spring Midmar joined the Iraqi state-owned drilling company in Baghdad to create a joint venture that will look for new sources of oil and gas throughout the war-torn republic. It is the first joint venture of its kind between an oil company and the Iraqi Ministry of Oil since the fall of Saddam Hussein's regime in 2003.

"These assets are extremely important to us because they generate cash flow," says managing director Tom Redman of the Brockham well. "But if anyone made a nice offer for them then we would take it." Midmar spokeswoman Lisa Pope adds: "Midmar has done well with UK onshore but there are limits here and the company wants to apply its skills to larger projects. UK onshore has bought the company to a stage where they can operate in bigger projects. Iraq will take a lot of their time and energy."

***

As Midmar moneymen swap their Barbours for flak jackets, Mike Lakin, a geologist by trade who, from his home in Hanwell, Middlesex, runs an advisory group that markets oil and gas opportunities, is involved in selling the Brockham site, and is also looking for partners to co-fund exploration with another of his clients, Magellan Petroleum, in what could be the next big hydrocarbon find in the South-East.

Magellan owns licences to explore for oil in parts of the Weald basin, the name given to the oil and gas-bearing rock formations under Dorset, Hampshire, Sussex, Kent and Surrey. Similar formations in Paris have produced vast reserves and experts believe exploration in the UK has so far only scratched the surface.

Mr Lakin explains: "After oil prices crashed in 1984, we all got used to cheap energy. It no longer made sense to look for new reserves in the Weald basin. But as prices rise there is an incentive to look for oil, and the technology to do so has improved dramatically. In the Paris basin they found deeper reservoirs, but we never found them here. Magellan has done a new evaluation that has found untested new plays [geographic areas with petroleum potential] that could yield bigger and better reserves. In my view there is without doubt new potential here."

One of the biggest onshore oil fields in Europe, Wytch Farm, lies in the Weald basin, directly under one of the most beautiful and expensive pieces of land in the world, Sandbanks in Dorset. Wytch Farm oilfield was discovered by BP in 1977 and had reserves of 500 million barrels of oil. It is still producing oil today, sucking it from rocks under the seaside millionaire's playground through a bore hole created using directional drilling technology which can drill horizontally. Another find of Wytch Hill proportions would have a small, but nevertheless marked, impact on national oil reserves.

Of course, before any wannabe oil baron gets to the stage where machinery meets bedrock, local opposition needs to be overcome and if that opposition is in a place like Sandbanks, the locals have plenty of time and money to throw at legal challenges. As the new generation of oil prospectors start out on their quest for Middle England's crude, they could be embarking on battles that will be waged for years, tied up in planning inquiries and appeals.

Residents in the small Surrey village of Albury near Guildford know all about the long game: they have been battling against energy exploration for five years. Their nemesis is the Duke of Northumberland, one of the country's richest landowners, who allowed a company to look for gas on his Albury Estate. The prospectors struck rich and used the gas to generate electricity, which they sold back to the National Grid.

Now that gas field is almost depleted and the company want to turn it into a storage facility, pumping gas back into the rock. It has also received permission to do more exploratory drilling. As a result, residents in Albury village have been locked in a duel with the Duke and his business partners. In their latest victory, they forced their enemy to agree to use expensive directional drills to bore outwards from the existing site, rather than from new locations on a nearby common.

The company also now has to seek permission from landowners under whose fields they plan to drill, after Mohammed Al Fayed successfully sued them for trespass last year when he discovered they extracted oil from beneath his Surrey estate without his knowledge. Although Star Energy did not drill the original well, Al Fayed was awarded nine percent of the £7 million the company made from the well in Oxted after a judge found in his favour. That ruling will now slow progress at Albury.

Nick Wenman is the chairman of Albury Parish Council and has been at the vanguard of the battle of Albury Estate for several years. "There are only about a thousand people in the parish but we have 800 signed up to the campaign," he says, "It's been a huge fight and although it is difficult for us not to appear to look like nimbys, we feel that unless you fight for the stuff in your back yard, no one else is going to fight for you. What upsets the people here is that it's difficult to fight an industry like the energy industry, especially when it appears to be government backed, but we certainly have not given up. This has galvanised the community."

And feelings towards the Duke, who many blame for the disruption, run deep. Wenman explains: "He could have stopped this happening if he wanted to. There is a lot of emotion, people feel he shouldn't have let it happen but he is running a commercial business and the trustees of the estate have to look at it on a commercial level. In the meantime the fight goes on."

At present, there are 144 production wells and 157 exploration wells sunk across the region of southern England between Dorset and Kent. With almost 100 new licences, that number will only increase. One expert reckons there could be over 200 million barrels of oil under this stretch. Most of the exploration is being carried out near towns and villages by small-scale companies. Despite the move away from fossil fuels, the 2007 government energy white paper stated that "the UK can to some extent reduce its dependence on imported fossil fuels by ensuring that that we maximise economic recovery of the oil and gas from the UK Continental Shelf".

Instability in the market continues, and a new form of alternative energy still seems decades away. Oil is, of course, a limited resource, and as it dwindles, prices will rise and as they do, the patches of it left under the wealthy South-East will become increasingly attractive. This is where the battle commences.

Crude awakenings: Historic oil rushes

1901 Texas

John D. Rockefeller made his enormous oil fortune on the East Coast in the 1860s, but when prospectors struck it lucky in Texas, the American economy changed forever. When drillers hit the Lucas gusher, which shot more than 75,000 barrels of oil out of the ground every day, the Texan oil boom began in earnest.

1920s Middle East

Oil scouts initially believed the region lacked promise until an Englishman, William Knox D'Arcy, struck oil in Iran in 1908, and British Petroleum (BP) moved into the region. France and the US followed, and drilled in Iraq, Saudi Arabia and Kuwait during the 1930s. Arab states today hold two-thirds of global oil reserves.

1950s West Africa

Since Nigeria produced its first barrel in 1953, the country's leaders have received an estimated $400bn in oil money; leaky pipelines have spilled 1.5m tons. Angola is China's top oil supplier and American think-tanks predict that by 2020 the Gulf of Guinea will supply 20 to 25 per cent of US oil imports.

1950s Australia

Yellow gold may be the most famous Antipodean bounty, but when Western Australia Petroleum found crude oil in Victoria in 1953, vast fortunes were made. Natural gas was also discovered in the Carnavan basin. However, according to an Australian alternative fuels report, the region's oil boom peaked in 2008.

1970s North Sea

For decades, European prospectors battled fierce weather to tap the oil and natural gas beneath the UK continental shelf. BP finally struck big at the famous Forties offshore 'oilfield' (roughly the size of Manhattan) in 1970. Since then, 350 companies have flocked to the area, pumping 35 billion barrels of oil.

2000s Canada

175 billion barrels of crude oil lies beneath Northern Alberta, making it reserve second only to Saudi Arabia; drilling here became economically viable when prices reached $60. Alaskan oil exploration was also given a green light last year, despite serious fears for wildlife, particularly native polar bears.

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