Flow testing at Horse Hill, Surrey. Photo: Eddie Mitchell

The leading company behind exploration at the so-called “Gatwick Gusher” oil site has said all the consents are now in place to allow extended flow testing to begin “shortly”.

UK Oil & Gas Investments plc said the Oil and Gas Authority has granted permission for the tests at the Horse Hill well, near Horley in Surrey.

In a statement today, the company said the tests were designed to establish whether the rocks held commercially-viable volumes of oil.

Previous tests in March 2016 led to headlines about outstanding and unprecedented onshore flow rates. But the rates were achieved during test periods lasting only a matter of hours.

The new, extended tests are expected to last for a total of about 150 days.

UKOG said there would be three separate tests. They would begin with the Portland zone, followed by the Kimmeridge Limestone 4 zone (KL4) and ending with the deeper Kimmeridge Limestone 3 zone (KL3).

The company said the tests would

“determine commerciality by confirming that [the existing Horse Hill well] HH-1’s reservoirs are each connected to a commercially viable oil volume”.

Portland

The 2016 test of the Portland zone produced 323 barrels of oil per day (bopd) over an 8.5 hour period, UKOG said. This test had been constrained, the company said, by the pump’s capacity. The new test would use a larger pump with a capacity of 475 bopd.

UKOG’s consultant, Xodus, estimated in 2017 there were 32 million barrels of Portland oil in place. Given that the production costs of $20-25 per barrel, UKOG said it believed “the Portland is a strong candidate for commercial viability”

Kimmeridge

UKOG said the 2016 Kimmeridge test produced a flow rate of 1,365 bopd. This was made up of 901 bopd from the KL4 and 464 bopd from the KL3. These rates were recorded over 4-7.5 hour flow periods, the company said.

According to today’s statement, the 2018 test would be in 30m zones for the KL3 and KL4, at depths of 840m and 900m. UKOG said the test would assess “whether the Kimmeridge is one large single reservoir where both KL3 and KL4 are connected by natural fractures within the encasing oil generative shales.”

New wells

If the extended flow tests were successful, UKOG said it planned to drill a second well, HH-2. This would be used to produce oil from the Portland formation. Drilling would begin in late 2018 or early 2019.

UKOG said there was an option to deepen this new well into the Kimmeridge formation to gather more data. It could also be used to access Portland oil in the Collendean Farm Fault block further north.

Depending on the success of the flow test, UKOG said a sidetrack could also be drilled off the first well, HH-1, into the Kimmeridge. This well, HH-1z, would be planned for 2019.

Planning approval and environmental permits were in place for these wells, UKOG said.

New planning application

UKOG said it was preparing to submit a further production planning application to Surrey County Council this summer. This would seek consent to produce oil from the HH-1, HH-1z and HH-2, along with further production wells in a second drilling phase.

Stephen Sanderson, UKOG’s Executive Chairman, said:

“Horse Hill is the first in a series of planned near-continuous appraisal drilling and testing operations designed to convert the company’s recoverable resources into permanent production and reserves.

“UKOG remains confident that the comprehensive long-term flow testing campaign will provide the necessary data to fully assess Horse Hill’s commerciality and, most importantly, help meet our corporate target of first stable oil production and significant positive cash flow in 2019.”

• Earlier today, UKOG’s subsidiary, Kimmeridge Oil & Gas Ltd, gave formal notice that it was seeking to extend the planning permission at Broadford Bridge in West Sussex for another 18 months. The most recent KOGL statement on the site said drilling a further sidetrack at Broadford Bridge “remained very much on the cards”. DrillOrDrop report

Update: £5.5m funding

On 15 June 2018, UKOG announced it had raised £5.5m from a share placing. Link

It said 611,111,105 shares had been placed with new and existing investors.

The company said the money would be used to:

• Fund its portion of the Horse Hill-2 appraisal well
• Prepare applications to convert Horse into production
• Lease two well sites in the Broadford Bridge licence, PEDL234, in West Sussex
• Lease well site and prepare applications to drill and appraise oil at Arreton on the Isle of Wight
• Fund UKOG’s share of the exploration at Bury Hill Wood (Holmwood)