Drilling underway at hotly anticipated Shell, Deltic gas prospect

Drilling operations have begun at an eagerly awaited gas prospect that could open up part of the Southern North Sea.

It was announced on Wednesday that the Maersk Resilient rig is now safely installed on location at Pensacola, the Shell (LON: SHEL) and Deltic Energy (AIM: DELT) target.

Spudding is now taking place, with operations expected to last between 60 and 90 days.

Once complete, the well will be plugged and abandoned.

Deltic, which has a 30% working interest in the licence, will update the market upon completion of operations.

Pensacola is located in the emerging Zechstein Reef play fairway in the Southern North Sea.

Research body Westwood Global Energy Group believes the exploration target “could represent one of the largest gas discoveries in the UK offshore SNS in the last decade.”

According to estimates from Deltic, Pensacola contains gross P50 prospection resources of 309 billion cubic feet of gas.

The London-listed firm has quoted with a 55% chance of success, while operator Shell has quotes 30%.

In the mid or high-case, Pensacola will likely be produced via a new pipeline to the Teesside Gas Plant.

But if it is towards the lower end of prediction, plans are in place to develop the field as a tie-back to the Ineos Breagh platform, about 45 miles off England.

Deltic owns 30% of the project, after farming out the other 70% to Shell in 2019.

© Supplied by Deltic Energy

Graham Swindells, chief executive of Deltic, said: “We are excited to have commenced the well operations of our first exploration well on the Pensacola gas prospect. Pensacola is a high impact, potentially play opening prospect and represents what we hope will be the first of many wells as the Company continues to implement its strategy to identify opportunities and discover gas to support the UK’s energy needs.”

Westwood Global named Pensacola amongst its “key wells to watch” for the rest of 2022.

And senior manager for north-west Europe at the group, Peter Henry, previously said success here would also provide impetus for 15 other licences targeting the same “under-explored” Zechstein geological play.