UK Oil and Gas has announced that a section of the reservoir at its Broadford Bridge oil well in West Sussex is “unproductive” because of low permeability.
In a statement (pdf) to shareholders, the company also said it was seeking two new sites in the Broadford Bridge licence area and expected to submit a planning application in spring 2018.
The company has been carrying out tests to measure the flow of oil in the Kimmeridge Limestone at the Broadford Bridge well near Billingshurst.
UKOG has consistently argued that the Kimmeridge Limestones of the Weald were naturally fractured and wouldn’t need fracking techniques to make the oil flow.
But in today’s statement, UKOG gave this result from test four, in a section of the Kimmeridge Limestone horizon it has called KL3:
“Whilst containing moveable hydrocarbons, [it] appears to be unproductive due to low reservoir permeability.”
UKOG said there had been mechanical and other problems with the test. Fluids initially flowed at 300 barrels of fluid per day (bfpd), dropping to 30-50 bfpd, it said. This was mainly completion fluids with traces of live oil and a gas blow during pressure build up periods.
UKOG has experienced problems with the Broadford Bridge well since the summer. In July, it confirmed it had drilled a side-track well, BB-1z, after a section of the original borehole washed out. There were later cement bond problems with the side-track. Today’s statement did not say whether these issues had been resolved.
The company had consent from the Oil and Gas Authority (OGA) to conduct the flow tests until December 2017. Last week, a group of residents offered to help UKOG to restore the site (DrillOrDrop report). But today the company said the OGA had extended consent for flow testing until the end of February 2018.
A spokesperson for Broadford Bridge Action Group sad:
“This confirms what we have said all along – they have found nothing,
“They are breaking their promise of needing only 14 weeks for flow testing and the extension into spring could seriously impact on the wildlife and lives of people in the local area.
“The only people benefting are the management of the company paying themselves huge salaries.
“UKOG’s new commitment to carry on prodding more deep holes into two further new sites in the Weald regardless of their failures is nonsensical. We want them to back off the whole of the Weald and put their energies into renewables which will bring them much better returns.”
At the time of writing, the UKOG share price was down more than 26% at 2.92p.
UKOG’s statement also said the company had accelerated plans for further drilling in the licence area around Broadford Bridge, PEDL234. This followed analysis of the Kimmeridge source rocks at the well, it said.
“Planning Consultants have been engaged and are actively pursuing the acquisition of two further drilling sites in the central sector of the licence.
“An application for planning consent on the first of these planned locations has commenced and is expected to be submitted to the local council in mid-spring 2018, with drilling planned for spring 2019.”
UKOG said flow test 5, in the upper 100ft of KL3, would start in the New Year. It said analysis indicated that this zone contained around 54 ft of oil-bearing limestone, similar in thickness to the Horse Hill oil discovery, with multiple open natural fractures.
Testing in the horizons KL4 and KL5 would also be carried out in 2018, UKOG said. Analysis had revealed a further 60ft of oil reservoir in KL4 and a further 20ft in KL5, the company added. These horizons would now be perforated before testing.
Depending on these results, a 40ft limestone section in the KL1 horizon may be perforated and flow-tested, UKOG said.
It expected testing would be completed by the end of January 2018.
UKOG said analysis from Broadford Bridge had demonstrated that 38.5° API gravity low sulphur oil was generated from a limestone-rich Upper Jurassic shale source-rock, probably the Kimmeridge Clay Formation.
The oil had near identical geochemical properties to that produced at Horse Hill, today’s statement added.
“It is therefore interpreted that the BB-1 and HH-1 oils are from the same family of oils representing a common Upper Jurassic stratigraphic origin.”
UKOG said analysis confirmed that Broadford Bridge was within the Kimmeridge continuous oil play and that most of the 300 km² of the PEDL234 licence to the north of BB-1 fell within the prime Kimmeridge exploration so-called “sweet spot”.
The company’s Executive Chairman, Stephen Sanderson, said:
“These data have also opened our eyes to the possible additional ways to extract oil at commercial rates from BB-1 and future wells elsewhere in the play.”
Core analysis confirmed that the Kimmeridge shales in BB-1 contained world class oil-source potential, UKOG added.
It said several Kimmeridge zones exceeded 30% Total Organic Carbon (“TOCs”) by weight, three times higher than the equivalent section seen in Horse Hill. The richest source potential lay within shales between KL3 and KL4, as is the case at Horse Hill, the company said.
The clue is in the share price – down. Smart money as increasingly is on renewables whose costs are going down. With oil price high, electric cars become more attractive. Their batteries can discharge to the grid as well as charge to the grid, helping to even out discrepancies in supply and demand. Oil and gas are on way out: demand starts to fall slowly, then falls more rapidly. Tick tock.