Industry

Stimulation considered as solution to continuing water problem at Horse Hill well

200429 Horse Hill UWOC2

UKOG’s Horse Hill site in Surrey, 29 April 2020. Photo: Used with the owner’s consent

UK Oil & Gas has said it could stimulate or sidetrack its second oil well at Horse Hill in Surrey to achieve long-term production.

The company said the proportion of water produced by the Horse Hill-2z (HH2z) well had built up. This was despite earlier efforts to shut off formation water.

In interim results published today, UKOG said a number of options were being considered for the future use of HH-2z. It said these included:

  • stimulation
  • sidetracking to a different subsurface location
  • converting it into a future water re-injection well to further reduce future operating costs.

UKOG said:

“It is now clear from the image logs recorded in the well, that both the oil and water flow originated from a series of extensive natural fractures, primarily at the toe of the well, although there are also further natural fractures observed higher up in the well.”

The company said installation of a plug to isolate the water inflow had initially been successful. Flow had returned with a high proportion of oil. But UKOG said:

“[the] water cut built up, necessitating the well to be produced intermittently as the water disposal costs outweighed oil revenues.”

The HH-2z well was drilled in the autumn of 2019. UKOG said there were initial high oil flow rates but they declined with continuing production of formation water.

The well is currently shut in for a long duration pressure build up test to re-assess its connected oil volume, UKOG said.

The company said it had sought to extend its current permission to test the well.

At the time of writing, shares in UKOG were down nearly 27% at 0.205p.

Yesterday, the company’s planning application to drill for gas and oil at Dunsfold in Surrey was refused by councillors. Next week, its application to extend the duration of planning permission at the suspended Broadford Bridge site in West Sussex is due to be decided.

Reperforation

UKOG also gave more details of its plans to reperforate and recomplete the first well at Horse Hill, HH-1. It said:

“The current completion and perforation scheme is less than optimal for both pump efficiency and oil inflow. Consequently, if successful we remain confident this programme can further improve the well’s oil production rate.”

The work is due to be done this summer.

UKOG said there would be a full reperforation of the entire Portland section of the well using a different type of perforating gun. A new simpler production tubing completion would also be installed, UKOG said.

“The new completion will permit the downhole pump to be installed below the Portland interval to significantly improve pump efficiency”, the company added.

UKOG said HH-1 had produced more than 300 barrels of oil per day almost continuously. The company said HH-1 was the UK’s most productive onshore well outside of the Wytch Farm field.

Interim results

UKOG revealed revenues were down in the six months to 31 March 2020, mainly because of lower oil prices.

The company cut its operating loss compared with the same period a year before. Administrative expenses were also down.

Key figures

Operating loss: £771,000; 2019: £1,555,000

Revenue: £88,000; 2019: £100,000

Cost of sales: £40,000; 2019: £43,000

Expenditure on exploration and evaluation assets: £7,803,000; 2019: £3,975,000

Receipts from sale of test volumes: £995,000; 2019: £1,773,000

Gross profit: £48,000; 2019: £60,000

Administrative expenses: £715,000; 2019: £1,560,000

Net cash outflow from operations: £1,060,000; 2019: £3,440,000

Total liabilities: £7,931,000; 2019: £4,677,000

Net assets: £47,859,000; 2019: £39,929,000

Borrowing: £5.48m; 2019: £2.3m

8 replies »

  1. They knew it from Broadford Bridge and was confirmed by Angus Energy at Brockham, the Kimmeridge won’t flow without stimulating, they have kept quiet about HH2Z for ages whilst waiting to hopefully hide this news under a successful result at Dunsfold but hey ho , there’s no such thing as a dead cert. March 9th RNS said water was fixed , today is more like the truth . I don’t see a way forward for this company, no cash , no income and wages to pay, good job they bought all that kit which they won’t need😂

  2. Stimulating, Jono. HOWEVER, the well with the water issue is not the Kimmeridge! And, much stimulating can be, and is, done without any fracking-which has been clarified by UKOG time after time.

    • The Kimmeridge is a dud (according to UKOG’s own Dunsfold application) AND the Portland horizontal is a dud.

      Portland HH-1 section has just had a massive re-perforation, and yet another new pump, they are now saying they will re-re-perforate it…..

      Total production is a measly 300 bopd, sometimes, hardly a ‘Gusher’ is it? That’s why UKOG can’t afford security staff, wonder when XR will be back?

      • An awful lot of misinformation within such a few sentences, Dorkinian!

        Keep on that way and events will show the reality.

        I know you will try and produce some fog, so here is an example.

        “A measly 300 bopd”. Hmm. So, how is that calculated? It is quite clear on the UKOG RNS. It is not necessarily current levels, and more an average over a period where all the fiddling with the wells you are happy to refer to in other context, have been going on.

        Desperate stuff.

  3. There seems to be an endless supply of formation water from………..somewhere.
    Cuadrilla and Angus hit similar problems (allegedly) at Balcombe.
    Perhaps it’s due to all the inherent faults through which water flows quite freely from……..somewhere.

    There are known springs around Balcombe, including in the direction towards which the horizontal drilling went. That water is coming from………somewhere.

    Might be worth giving up on selling oil and going into the bottled water business.

  4. Martin. I see that investors are better clued up and realise it is a portland issue. It means more money required, and as anyone with a passing interest in mineral exploration and production knows….many companies fail, but a few do well ( any book on the Cornish Tin mining industry will do).

  5. Indeed hewes62.

    Exploration is just that, and then to get from exploration to production, even more of a challenge.

    At least with gold, if you get through those two phases the price should be pretty stable. Not the case with oil. So, those who invest in such high risk ventures would really do well to remember the risks they knew when they invested. Otherwise, they could always pay an IFA to set up a Conservative portfolio for them.

    (Actually, they do. It is the fringe who make the noise, many of them not investors.)

  6. Would be interested to know how the industry intends to avoid any danger of increasing seismicity risks if it goes for a re-injection of water well option. We know what happened in large areas of Ohio State, maps can be viewed online of the collateral damage caused by reinjection. Given this site is so near an airport, and the world is going into times where weather is so much less predictable, flooding, droughts etc.

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