No equipment to identify the source of formation water in the new well at Horse Hill was available in the UK or Europe until next month, the main investor in the Surrey site said today.
A statement from UK Oil & Gas plc (UKOG) said the work would not begin until February.
“No suitable slim-hole production logging tool essential to identify the exact source of water ingress into HH-2z was available within the UK or Europe until this time.”
Just before Christmas, the company said the operation to find the water source would be in the New Year.
It also said then that the formation water was “interpreted to be from an open natural fracture in the “toe” (or far end)” of the horizontal section of the HH-2z well. Details
UKOG’s chief executive, Stephen Sanderson, said today:
“We are pleased that the necessary production logging tool equipment is now available and secured, enabling the HH-2z water shut-off intervention to proceed ahead in February.”
The statement also announced changes to the production plans at Horse Hill and a general meeting seeking approval for the issue of more share issues.
UKOG said future share issues would fund the final £1m payment for the acquisition of Magellan, which had a 35% direct stake in the Horse Hill oil field. The payment must be made by 31 March 2020.
The company said share issues would also be needed to fund the Horse Hill field development plan and to establish production.
Earlier this month, UKOG issued 1/3 billion new shares, valued at £3m, as part of the second payment for Magellan. This share issue and one in December took the number of shares in UKOG to more than 7.3 billion.
The statement said a revised field development plan had been submitted to the industry regulator, the Oil & Gas Authority.
This would see two initial phases of production, instead of the single phase in the original plan.
The statement added “further possible infill wells”, water injection and electricity generation from gas would be added to the field development plan. These were granted planning permission in September 2019.
Production from first Horse Hill well, HH-1, had been brought forward by six months to Spring 2020, the statement added.
The extended well test on the Portland section of HH-1 had resumed on 16 January 2020. The initial flow rate was 435 barrels of oil per day over a six hour period, UKOG said. Over the past 24 hours, stable dry oil flow averaged 293 bopd, UKOG said.
The company said the Kimmeridge interval in HH-1 remained shut in for a further pressure build-up test.
It said full production from HH-2z would begin in the third quarter of this year, after an extended well test following next month’s water intervention.
Mr Sanderson said:
“During the past few weeks we have also re-established good Portland dry oil flow from HH-1 and have determined that both HH-1 and HH-2z can be produced from the Portland at the same time, without any detrimental effect to the reservoir’s overall performance.
“This key finding means we can accelerate the start of up to 25 years of continuous Production via HH-1, whilst HH-2z continues to be tested.”
UKOG described production as a “key milestone”. It will enable recoverable reserves to be allocated to the project. “This is the first step to help access debt-based funding” which would help meet the cost of current and future projects, the company said.
UKOG shares closed up 1.14% on the day at 0.71p
- The UKOG general meeting is at 10am on 12 February 202, 8th Floor, The Broadgate Tower, 20 Primrose Street, London EC2A 2EW. Details