Three announcements today on the so-called Gatwick Gusher oil site at Horse Hill near Horley in Surrey.
The Environment Agency said it had issued a draft environmental permit for flow testing and further drilling. The planning application for this work could be decided in a matter of weeks and one of the companies with an interest in the well has increased its stake.
The Environment Agency has begun a consultation on a draft permit issued today for future work at the Horse Hill well site.
The permit is a variation of the original one issued in 2014, which had allowed the drilling of a single exploratory borehole. If confirmed, the variation would permit:
- Short-term and extended well tests on the technical and commercial viability of the existing Horse Hill-1 (HH-1) well
- Deviated side-track from HH-1 and extended well test for up to 75 days
- New appraisal well, Horse Hill-2 (HH-2), and extended well test for up to 75 days
- Flaring of gas during the tests up to 10 tonnes per day
A separate application has been made for an oil storage permit.
“Our mind remains open at this stage: although we believe we have covered all the relevant issues and reached a reasonable conclusion, our ultimate decision could yet be affected by any information that is relevant to the issues we have to consider.
“Unless we receive information that leads us to alter the conditions in the draft permit, or to reject the Application altogether, we will grant the permit in its current form.”
The permit proposes standard controls on emissions, smell, noise and vibration. It sets limits on emissions from the flare of oxides of nitrogen, carbon monoxide, total volatile organic compounds and hydrogen sulphide. It requires measurements of the gas flare feed rate and combustion temperature. Produced water must not be reinjected but transported off-site to a treatment facility. The permit also prohibits storage of waste for more than three months on site.
Public Health England recommended conditions to ensure there was no impact on public health from emissions of nitrogen dioxide and particulates from flaring and diesel engines or volatile organic compounds from oil tanks.
In earlier public comments on the application, there were concerns about the use of acid in the wells. The EA responded that the process would “not present a risk to groundwater”.
There was also concern that the operator would use well stimulation techniques on tight deposits of shale. The EA said:
“If … the Applicant decides it wishes to proceed either to further testing using methods not approved in this permit a variation of the permit will be required.”
In response to concerns about threats of contamination to surface or groundwater, the EA said:
“We are satisfied that the methods of well construction, including drilling additives and extended well tests, which are controlled by this permit, will not pose a risk to groundwater or surface water given the mitigation measures required. We are satisfied that drinking water supplies are not at risk.”
UK Oil & Gas, one of the companies with an interest in the Horse Hill well, announced to shareholders this morning the planning application for testing and new wells would come before Surrey County Council within weeks.
The company said the council expected the application would be considered at scheduled meetings of the planning committee on either 2 August or 13 September.
The extended well tests were scheduled to start in the final quarter of this year (October-December 2017), UKOG said. This would follow testing at the company’s nearby oil site at Broadford Bridge in West Sussex, which received an environmental permit last week (DrillOrDrop report)
If the Horse Hill well tests were successful, UKOG said production could begin at the end of 2018 or in early 2019.
UKOG also announced it had increased its interest in the Horse Hill licences. It has acquired a 1.9% shareholding from Regency Mines plc in Horse Hill Developments Ltd (HHDL), the site operator.
The transaction, which has to be approved by HHDL, will take UKOG’s interest in the licences, PEDL137 and 246, to 32.435%. The cost is £54,498 in cash and £268,502 in the issue of new ordinary shares in UKOG.
This is the first acquisition since UKOG released unaudited accounts last month in which it said it planned to expand its licence position onshore in the UK, particularly in the Weald of southern England.
UKOG’s Executive Chairman, Stephen Sanderson, said today:
“This acquisition fits perfectly within UKOG’s stated strategy to further consolidate and increase its holdings in the Kimmeridge oil play in the Weald. The licences remain a significant part of UKOG’s extensive Kimmeridge portfolio, containing both the HH-1 oil discovery and its likely continuation across much of the licenced area.”
Also today, Egdon Resources announced it had acquired the oil field at Fiskerton Airfield in Lincolnshire from Cirque Energy. The transaction cost $750,000 (about £590,000).
The deal comes a week after councillors in North Lincolnshire refused Egdon’s application for oil production at the Wressle site near Scunthorpe.
The Fiskerton oil field, in licence EXL294, is about 7km east of Lincoln. Oil was discovered in 1997 and cumulative production totalled 440,000. It is currently producing about 19 barrels a day from one of two production wells. The second well is shut-in awaiting a work-over.
Egdon said it planned to increase production to 30-40 barrels per day following what it called “low cost well interventions”. It estimated more than 100,000 barrels remained recoverable from the existing wells.
Mark Abbott, Managing Director of Egdon Resources, said today:
“We are pleased to acquire the Fiskerton Airfield oil field for a modest cash outlay. The field has suffered from a lack of investment over recent years and we plan to undertake simple low-cost workovers to enhance production and profitability in the short-term, adding valuable near-term cash-flow to Egdon’s portfolio. In the longer term, we will investigate the potential to enhance productivity through in-fill drilling.”