On March 27, the AIM-listed junior Hurricane Energy issued a statement intimating that it had made its fourth major UK Atlantic Frontier oil discovery on the trot in “fractured basement”.
Wee Hurricane dared to try what no-one else would and it won the jackpot, or at least that’s how it seems.
Doubtless there were and will still be sceptics and I know some of them. After all they say, the UK Continental Shelf is kind of played out isn’t it? Just 20 or so billion barrels to go, is that not so? Mostly difficult stuff, yes?
And no-one had made any allowance for basement resources in such estimates as they were disregarded totally.
I’ve been attempting to report on the offshore industry since late 1989 and at no time along those 27 years can I remember any company hitting the money on the UK Continental Shelf in such a manner. Four consecutive big finds … no misses, just equally successful appraisal of one of those finds.
I would have to travel to deepwater Brazil or Angola to identify that level of success over the period. I’m thinking of Petrobras with pre-salt finds like Libra; and the several strings of successes offshore Angola by various operators, especially Total and BP.
I’m sure someone will now tell me that my recall is wrong. But I hope it’s not. A few years ago it looked as if tiny EnCore was drilling up a storm in the Central North Sea with a new play and notably the Catcher discovery that it said could be around 300million barrels.
However, each time EnCore, led by Alan Booth of Buzzard fame, achieved a drilling success, Premier Oil, a licence partner, would play it down. But of course, Premier wanted to take over EnCore and eventually did for a mere £220million or so. Booth had little choice, the City of London was screwing EnCore anyway.
Hurricane is lucky; it’s not lumbered with any licence partners, though it does have Premier as the operator of the troubled and neighbouring Solan oilfield development. The fact that the company is led by a geologist who founded it … Robert Trice … and who clearly has his head screwed on tight probably helps.
It is still too early to confirm barrelage, but between its four West of Shetland finds … Halifax, Lancaster, Lincoln and Whirlwind … Hurricane would appear to have comfortably located way north of 1billion barrels of good quality light, recoverable oil, plus some gas, and multi-billions of barrels. But that cannot be confirmed without a great deal more work including appraisal drilling.
Even just for starters, that beats EnCore’s Catcher and related successes. The company is quite literally opening up a new hydrocarbons fairway; little wonder Shell and BP have crowded in around, picking up neighbouring Rona Ridge licences in the UK’s latest (29th) Offshore Licensing Round.
Do please remember that both have considerable interests in and experience of West of Shetland with BP operating production from Clair (a giant), Foinaven and Schiehallion, which is now a part of the Quad 204 redevelopment).
Let’s turn to the Halifax result and interpret the language used.
“The company can confirm that the well is an oil discovery with initial data analysis indicating Halifax is linked to the Lancaster field forming a single large hydrocarbon accumulation.”
This is fantastic news as it bears out CEO Trice’s model that the two are contiguous. And it seems that it has been possible to say this even though it was not possible to carry out the planned drill-stem test for a variety of clearly stated reasons.
My understanding is that the very behaviour of the drill-bit as it chewed ever deeper through fractured basement granites will have provided important clues as to likely connection..
As Hurricane says in its statement: “The reservoir interval encountered is pervasively fractured with porosities similar to those at Lancaster.”
Another really good reason to be optimistic about the result is that, rather than give up at the original planned total depth and be perhaps dispirited by the thwarted DST, the decision was taken to deepen the well further as this would provide further valuable data. That’s why it was extended from 1,801m to 2,004m before the rig Transocean Spitsbergen was released to go to its next assignment. Had the rig; used it strategically on the hoof.
Don’t forget, this well will have been extensively wirelined before being suspended for future potential re-entry and there will be cores too. A huge amount of information will have been gathered and it will take time to interpret fully.
I have no doubt that Hurricane will be back at Halifax but it won’t be until next year at the earliest and then most likely with a farm-in partner; unless of course the company gets taken out in the meantime by a resource-hungry major.
Say BP? It has made a major commitment to further UKCS exploration but, as everyone knows in this industry, the cheapest way for majors to build their reserves base is generally through the wallet, not drill-bit.
Next step is the updated CPR (Competent Person’s Report) by RPS on Lancaster that incorporates the results of last year’s appraisal work and so-forth. Due towards the end of Q1, it has yet to appear as I write this.
My hunch is that the consultants carrying out the work will want to incorporate at least some of the information harvested from the Halifax well; So maybe it will be a week or two yet and worth the short additional wait.
Finally, at least some members of the UK’s political zoo will have clocked Hurricane’s successes, not least the Tory “Cadaver”, PM Teresa May, and Holyrood FM Nicola Sturgeon.
Oil & Gas became a political football during the run-up to the first referendum on Scottish independence and you can be sure it will with Indyref-2.
Except this time it looks as if there will be even more oil in Scotland’s hydrocarbon bank … you know, the one that Westminster claims to itself.
It really wouldn’t matter what the oil price is doing come the second referendum … and there will surely be one … it looks as if a huge new oil-play is opening up West of Shetland and it is near certain that basement geology exists elsewhere in the North Sea.
That would change the game profoundly for Scotland.