The main investor at the Horse Hill oil site in Surrey has announced plans for two new production wells.
UK Oil & Gas plc also said it would convert an existing well into a borehole for water reinjection.
Horse Hill has two existing wells, known as Horse Hill-1 (HH-1) and Horse Hill-2z (HH-2z). It also has planning permission for another four production wells.
But drilling the new wells is unlikely in the next few months. UKOG has said it would concentrate in the first half of 2021 on appraisal of its new licence in south east Turkey.
In a statement to investors this morning, UKOG said it had identified “several significant infill drilling opportunities” at Horse Hill.
This was the result of a “far better understanding of the Portland reservoir”, UKOG said, informed by data from:
- Pressure build up test on HH-1 in November 2020
- HH-2z cores
- Revised seismic interpretation
One new well, to be called Horse Hill-3 (HH-3), would target the Portland oil formation, UKOG said. The well would be updip of (shallower) existing wells and above the oil-water contact, the company said.
The other new well, Horse Hill-4 (HH-4), would identify the lateral extent of the Kimmeridge oil pool. This would also be updip of existing wells. It was likely to be a highly inclined or slant well, the statement said. It would be a right-angles to the known regional open natural fracture and designed to maximise the number of open fractures that it would penetrate.
HH-3 and HH-4 would be planned and drilled following operations in the company’s Basur-Resan licence in south east Turkey planned for the first six months of 2021, the statement said.
UKOG said the pressure build-up test confirmed previously-reported oil-in-place of 7-11 million barrels in the Portland formation. Alba Mineral Resources plc, an investor in Horse Hill, said this “untapped production” could not be fully realised from HH-1 alone.
George Frangeskides, Alba’s executive chairman, said:
“The plans, therefore, to drill another two vertical wells up-dip of HH-1 are welcome, not least in the light of the sustained rally in the oil price over the past three quarters.”
He also said:
“HH-1 has already proven the Kimmeridge’s ability to contribute substantial production to the overall field, so there is certainly merit in testing the Kimmeridge’s producibility from a new vertical well.”
Formation water in the oil has become a problem for Horse Hill.
The volume of formation water rose dramatically in June 2020 to 236 tonnes, up from 88 tonnes in May 2020. It fell slightly in September 2020, the most recent public figures available, but the ratio of oil to water fell to 2.1, down from 2.4 in August. DrillOrDrop report on most recent production data
UKOG said it planned to turn the HH-2z production well into a water reinjector. The company said this would save money on taking water offsite by tanker for disposal. It will also help to maximise oil recovery by supporting reservoir pressure, the company said.
Horse Hill has planning permission for a water reinjection well but consent would be needed from other regulators for the conversion from HH-2z. UKOG said the consent process was underway and a decision was expected in spring 2021.
In the meantime, UKOG said it aimed to maintain the proportion of water to oil at below current levels.
The UKOG statement said the Horse Hill field has produced more than 132,000 barrels of oil from the Kimmeridge and Portland oil pools.
In the three months to December 2020, the company said HH-1 had produced 7,045 barrels from the Portland, despite well intervention work to improve oil flows.
HH-1 produced for 37% of time in October, the main period of the intervention, and 85% of time in November, after the work had finished.
Trials followed the intervention and are expected to continue for several months. UKOG said this aimed to “achieve an optimum balance between oil revenues and water handling and other operational costs”.
The statement said:
“Early results are encouraging, with stable water influx levels achieved by the end of 2020.”
UKOG also said it had cut operating costs from January 2020-January 2021 by 66%. This was a response to “the challenging oil price environment”.
Stephen Sanderson, UKOG’s chief executive, said:
“We look forward to the conversion of HH-2z into a water injector in the Spring and to the resultant increase in net revenue from the reduction in water handling costs.
“The significant 66% reduction in general field operating costs over the past year also allows the field to take full advantage of the current strengthening oil price.”