Orcadian Energy has published further details on its development plans for new licences, including at Fynn Beauly where it hopes to use geothermal heat to help produce heavy oil.
Orcadian Energy (AIM: ORCA) outlined the plans in a biannual results update, in which it hailed a “transformational” end to 2023 following the farm-out of its flagship Pilot field to Ping Petroleum.
In December the firm confirmed Ping would take on an 81.25% operated interest in licence P2244, ending months-long farm-out negotiations and sealing a deal Orcadian boss Steve Brown said it had been seeking since it first took on the field.
In his update, Mr Brown also welcomed the award of offered a 50% working interest in the Fynn licence as part of the 33rd Licensing Round last month.
Covering blocks 14/15a, 14/20d and 15/11a, it will be operated by Parkmead Group and contains a “very substantial” heavy oil discovery at Fynn alongside six other undeveloped oil discoveries, with estimated gross P50 contingent recoverable resource of 292 million barrels.
Orcadian warms up to geothermal
Mr Brown said the firm now sees opportunities “to deploy geothermal heat sources to raise the reservoir temperature and boost production rates sufficiently to enable a polymer flood of the reservoir to be highly successful.”
Orcadian says about 88% of the resource on a best technical case is estimated to lie within the area of the licence, adding a possible 129 million barrels of 2C contingent resources to its portfolio – though this remains an internal unaudited estimate.
“This large heavy oil discovery is situated between the prolific Claymore and Piper fields. The field extends across all three awarded blocks and is estimated to contain oil-in-place of between 740 and 1,330 million barrels,” Mr Brown said.
“This is an important award because the acreage which encapsulates this significant oil field has not previously been licensed to a single partner group, creating an exciting opportunity for Parkmead and Orcadian to advance the development of this substantial, previously untapped resource.
“The current licence commitment requires no major capital outlay. The work programme is focused on assessing the feasibility of reducing Fynn Beauly oil viscosity using enhanced oil recovery techniques.
“This work will include assessing the potential to utilise geothermal energy as part of the recovery mechanism to avoid the need for injected hot water. This would allow for the delivery of a successful development of this major field which is in line with the NSTA’s Net Zero Strategy.”
Mid North Sea High
Mr Brown said the company was also pleased to have secured its first gas prospect with a licence at Mid North High Sea covering nine North Sea blocks and unrisked P50 prospective resources of over 300 billion cubic feet.
The two largest prospects – Glenlough and Breckagh – are estimated to account for about 80% of the resource potential.
Marking a departure from its previous focus on heavy oil deposits, he said this offered “new possibilities” for Orcadian, secured in partnership with Australian-listed Triangle Energy.
“We have a couple of interesting development concepts for any discoveries here, and we see the potential to use wind power to compress the gas for export as an excellent example of how new developments can be designed to deliver new gas production with emissions far below LNG imports and wholly within our own borders,” he added.
More licences to come?
With no assets yet in production, Orcadian reported a loss of just over £488,000 for the six months ending December 2023.
Looking to the rest of 2024, it will focus efforts on finalising the farm-out deal for Pilot. Under a licence extension granted by the North Sea Transition Authority (NSTA), the transfer must complete by the end of March 2024, and Orcadian remains confident this timeline will be met.
It will also prepare for potential further awards of new licences in the next phase of the 33rd Round.
Mr Brown has previously suggested this could unlock plans for an ambitious gas-to-wire and carbon capture project in the southern North Sea.
Plans would see a converted jack-up used to house power and CCS equipment, with electricity output tied into a nearby wind substation.
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