A bunch of small-cap oilers involved in the Horse Hill development near Gatwick Airport has been given a boost by the Oil and Gas Authority, which has allowed them to retain the whole 55-square mile area for up to another two years.
Licences PEDL137 and PEDL246 have been converted under the latest protocol, which means the consortium can “continue without further relinquishment”, said one of the group’s members, Solo Oil PLC (LON:SOLO).
Known as the Gatwick Gusher, Horse Hill could be one of the most important onshore UK oil discoveries ever, having flowed at rates of almost 1,700 barrels per day from just one zone.
The extension of two years for PEDL137 an one year for PEDL246 will allow the Horse Hill partners, including UK Oil & Gas Investments PLC (LON:UKOG), to carry out further work.
This will include long-term production testing of the three Kimmeridge Limestone zones and the overlying Portland Sandstone, two further appraisal or development wells and 3D seismic.
Solo’s Neil Ritson said: "We are pleased that the operator has agreed with the Oil and Gas Authority to adopt the 14th Round licence terms and that the entire licence area will be retained during the ongoing appraisal of the Horse Hill-1 discovery which tested at such exciting flow rates earlier this year."
The operator of the project is a company called Horse Hill Developments.
'100bln barrels of oil'
The ‘Gatwick Gusher’ was originally claimed to be one of the biggest oil finds ever in the UK.
It had initially been suggested that the discovery could produce anywhere between 50bln to 100bln barrels of oil, although this has since been tempered to a more modest 10bln barrels.
Earlier this year, flow tests at Horse Hill were labelled as “outstanding” by UKOG's chief executive Stephen Sanderson.
The aggregate flow of oil measured in the programme was estimated to be equivalent to 8.5% of the UK’s total daily production from onshore fields.
The project’s discovery hasn’t come without repercussions though, and the drilling at the site near Horley in Surrey has faced increasing scrutiny from protestors over the course of this year.
Nine protestors were in court last month having been arrested earlier in the year for wilful obstruction of the highway as they protested near the site where flow tests were taking place.
As well as environmental protestors, the project has its detractors who argue that it isn’t viable from an economic standpoint.
Horse Hill context. 460 b/d oil x $35 Brent - $25 lifting cost/trans = $4600. Then - 23% taxes/royalties = $3542 or £2453. #gatwickgusher
— Andy Critchlow (@baldersdale) February 16, 2016
Horse Hill Developments – a consortium of companies including UKOG and Solo Oil – owns a 65% participating interesting interest in Horse Hill and is the operator of the licence area.
As a result, UKOG has a 27.3% interest in PEDL137, the onshore licence that hosts the Horse Hill discovery, whereas Solo Oil has a 6.5% interest in the project.
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