Saudi Arabia’s plans to issue…
OPEC surprised oil markets on…
Two months ago, UK Oil and Gas Investments (UKOG) said it had found up to 100 billion barrels of oil beneath a field near London’s Gatwick Airport, causing its share price to shoot up. A week later, the company backtracked, saying that maybe there wasn’t as much oil in the deposit as it thought, known as the Horse Hill-1 oil field. The stock took a modest hit.
Now two Houston consultants have raised estimates of what lies beneath the Weald Basin. Two weeks ago the oil services company Schlumberger said that Horse Hill has 271.4 million barrels of oil per square mile. The Horse Hill licensing area for drilling is 55 square miles. And on June 18, the oil reservoir consultant Nutech estimated the total amount of oil at nearly 9.25 billion barrels.
These most recent assessments, commissioned by Doriemus, a group that invests in oil ventures, far exceed what UKOG first announced on April 9, when it pegged the deposit at about 158 million barrels of oil per square mile. And whichever estimate you choose, the Horse Hill find would be one of the biggest onshore oil fields ever found in Britain.
Related: Top Three Rebound Stocks In The Permian Shale
David Lenigas, the CEO of UKOG, said the company is encouraged by the new numbers. “The Weald Basin now has significant value to the UK,” he said on the social media website Twitter. “Lots of work still to do though.”
The reaction from Doriemus’ chairman, Donald Strang, was more formally subdued. “Nutech’s latest report is a significant step towards understanding the resource potential of the Weald licences, being the first independent semi-regional quantification of OIP [oil in place] over the area that incorporates the findings from the HH-1 well,” he said.
The drilling areas in the Weald Basin are covered by two licenses, PEDL137 and PEDL246, which are jointly held by Horse Hill Developments Ltd., which has a 65 percent share, and Magellan Petroleum Corp., which holds 35 percent.
Related: Expect A Wave Of Consolidation In The Oil Industry
Most of the Horse Hill oil, though, appears to be locked within shale, making it expensive and somewhat difficult to extract, and attracting the attention of environmentalists. UKOG says it plans to produce the oil conventionally, but conservationists say they fear drillers may have to resort to hydraulic fracturing, or fracking.
Brenda Pollack, a campaigner for Friends of the Earth, said Doriemus’ announcement of the new estimates by Schlumberger and Nutech “isn’t something to celebrate. The hype created by this company is good for their share price but not for local people” in area near the Weald Basin in southeastern England.
Related: The Next Global Resource Shock
“Local people are rightly concerned about more lorries, air and water pollution, noisy drilling and disruption to village life,” Pollack said. “Industrializing rural areas isn’t something we support.”
And there’s another reason not to celebrate – not yet, at least – according to Matthew Jurecky, the director of energy research at GlobalData. He says claims about the amount of oil beneath Weald Basin are meaningless until UKOG performs what’s known as a “flow test” to determine whether any of it is accessible.
In fact, he told The Telegraph, “It’s not even at the point where we can say there really is anything there yet.”
By Andy Tully of Oilprice.com
More Top Reads From Oilprice.com:
Andy Tully is a veteran news reporter who is now the news editor for Oilprice.com