Now that UK regulator the Oil & Gas Authority has approved plans to test the Horse Hill well, near Gatwick airport, operations could get underway in a matter of weeks.
Neil Ritson, Solo Oil (LON:SOLO) chairman, has told Proactive Investors that following the OGA clearance the partners now need to secure and mobilise key equipment, most notably a work-over rig, before the testing programme can start.
This morning it was confirmed that the project had received clearance from UK regulator, the Oil & Gas Authority.
Ritson, who spoke to Horse Hill’s operator at the end of last week, says key equipment will be mobilised in the coming weeks.
He added that there will be a testing phase of about 30 days, with three separate zones being flow tested.
Horse Hill comprises a relatively shallow discovery, called Portland, which is estimated to host around 21mln barrels of oil-in-place, as well as a deeper and possibly larger ‘hybrid’ play.
The deeper play is referred to as being ‘tight’ and it comprises both conventional and unconventional formations.
It is this area that was the subject of huge oil-in-place estimates (put in billions of barrels). Just how much of this ‘in-place’ oil could be recovered is as yet unknown, but, flow testing at this current location is one of a number of necessary steps to move the project forward in this regard.
Ritson explains that from Solo’s perspective the Portland test would be primary interest as the results may allow the partners to begin planning the development of an oil field.
He does, however, add: “once we’re in the well with the equipment, we’ll test the Kimmeridgean limestones to see if we can get a sample and to get any kind of flow information from that so we can look for a development of that in the future.
“But, that’s a longer term prospect,” he added.
Ritson highlights that Portland development is “available now” and he would like to proceed with that element of the Horse Hill project if it can be commercial.
The threshold for deciding whether or not the reservoirs are commercial will be in the range of 100 to 150 barrels per day, he says.
“We are not looking for large volumes to be flowed here, but, a prediction that the Portland reservoir could support initial flow rates of 100-150 barrels of oil per day would seem to be likely to be commercial, even in the current oil price environment.”
He also, however, cautions that the Horse Hill partners and its investors should not get ahead of themselves as firstly the programme is about data collection.
Furthermore, he says the deeper zones are unlikely to flow substantial volumes in this well though would allow the operators to think about the kind of wells that could yield commercial rates in the future.
“To my mind, it [the deeper play] is more speculative at this stage. But, it is going to be very valuable information.”
He goes on to highlight that consultants Schlumberger and Nutech, which have both estimated the in-place resource in ‘billion barrel’ terms, have done a great deal of work based on the well logs gathered to date.
However, he says such work “only goes so far”. According to Ritson, new analysis following the upcoming tests will help reveal how much of the potentially huge prize can actually be recovered and what extraction mechanisms would be required to do so.
Solo Oil owns a 6.5% interest in the Horse Hill asset, via a 10% stake in the Horse Hill Development vehicle (which in turn owns a 65% stake in the project).
It is just one of several AIM companies to have invested in the project.
UK Oil & Gas Investments (LON:UKOG) is another, with a 20%, while the other include Alba Minerals (LON:ALBA) (9.75%), Stellar Resources (LON:STG), Doriemus (LON: DOR) (6.5%) and Evocutis (LON:EVO) (1.3%).
Angus Energy, which has 11.5% of Horse Hill, in December revealed plans to float on AIM.