Energy Company Crogga claims the wholesale price of gas in the Isle of Man could be capped at 80 pence a therm if it is allowed to go drilling in Manx waters.
As of March 5, the wholesale market price was £4.78, meaning, if Crogga can carry through with its claims, islanders would benefit from an 80% decrease on current wholesale prices.
In a statement, Crogga said that it believes islanders should benefit from gas exploration in Manx waters and that is has put a proposal to the gov that ‘its licence conditions should include a clause which guarantees affordable gas to Manx consumers during the life of its licence’.
There is currently an extension of the licence agreement between the gov and Crogga, which expires on April 30. Part of the issue around this appears to Crogga says that the gov has ‘indicated’ that it can only carry out surveys between December and April.
It estimates that a survey would take about six weeks, if the gov gives the green light, with the first well drilled within 18 months and production within four years.
One of the most commonly criticised parts of this project has been that with the island committing to going net zero, the gas should be left where it is.
However, Crogga is claiming that any survey would see a ‘carbon offset administered to ensure that the survey is carbon neutral in line with the company’s net-zero philosophy’.
Director of Crogga Energy Ltd Mark Pearce said: ‘Crogga has plans to invest in wind turbines to power the gas extraction which will in time be increased to supply the island with renewable energy for when the gas is depleted. We see ourselves as the part of the solution to a greener future not part of the problem. We will use money from the gas development to reinvest in our island for the future.’
The company also claims that it approached the Climate Change Transformation Board with a proposal to build win turbine in 2020 and are ‘yet to hear back from them’. It says that the first phase of this plan would be to build a 50MW supply, which would be extended at a later date.
No Permanent Riggs
Crogga have indicated that the recoverable resources are in the region of 10 billion therms of natural gas. The tax take for the gov, they say, is about 52% using treasury’s own taxation guidelines for hydrocarbon extraction and if the gas is brought back to the island, then the VAT revenue (20%) would also be paid to the gov.
It adds that there will be ‘no permanent drilling rigs as subsea well heads will be used on the sea bed leaving the entire development under water’.
We have approached the gov for comment on Crogga’s statement.