Investors in UK Oil & Gas Investments PLC (LON:UKOG) may start counting down the remaining number of sleeps, as they giddily look forward to a much hyped and long anticipated day - not Christmas - but the start of the new programme at the Horse Hill project, near Gatwick airport.
In a stock market statement, the company told investors that the Horse Hill operating vehicle, HHDL, has confirmed that the programme will get underway “in late winter 2017/18”.
The programme, which includes a 150-day production test and new drilling, is designed to confirm the commerciality of the Portland and Kimmeridge oil discoveries.
It will also set up the project for the start of long term production, targeting early 2019.
A "key step" towards the start of oil production
"The 2018 Horse Hill programme is a key step towards delivering UKOG's goal of commercial production and significant cash flow by early 2019,” said UKOG executive chairman Stephen Sanderson.
“The programme, geared to provide data to support a declaration of commerciality, will benefit greatly from the many significant Kimmeridge and operational learnings gained at our Broadford Bridge discovery. “
“Horse Hill remains a fundamental part of the Company's core portfolio and we therefore look forward to returning to the birthplace of the Kimmeridge Limestone oil play."
Meanwhile, Alba Minerals chairman George Frangeskides added: “We are pleased that, together with our consortium partners and the operator HHDL, we have now clearly mapped the path towards commercial production at Horse Hill.
“The execution of this programme in 2018 will be a key step towards delivering the goal of commercial production and significant cash flow at Horse Hill."
UKOG is the largest London-listed stakeholder in Horse Hill, with a 32.435% interest, while Alba is the second largest having recently increased its holding to 18.1%.
Long term production testing
First the existing well will be tested for production, starting with the Portland zone – which flowed at a rate of 323 barrels of oil per day previously - before the KL3 and KL4 Kimmeridge zones are tested.
Each zone is to flow for 30 to 40 days. It will see sequences of steady state production and shut-in periods, this will be done to help establish how much of Horse Hill’s oil-in-place is directly connected to the well.
It is also planned that a short maximum rate flow test will take place for each reservoir, and, schedule permitting, previously untested deeper Kimmeridge zones may be undergo short-term tests.
After that, it is planned that the Horse Hill 2 appraisal well will be drilled, likely by summer 2018.
The well is being planned with ‘optionality’ to deepen into the Kimmeridge and could also be deviated northwards to access the Portland in the Collendean Farm fault block (where significant oil-in-place is seen).
It is now anticipated that the new sidetrack to the first Horse Hill well will now move into the schedule for 2019, once a new Kimmeridge reservoir model has been developed using the longer term production test data in addition to the well data from Broadford Bridge and Horse Hill 2.
A new planning application for long term oil production is due to be submitted to the authorities by late spring 2018.
It was also confirmed that an increased security presence will remain at the Horse Hill site, until the completion of the 2018 programme.
This comes after around 20 activists were removed from an illegal occupation of part of the Horse Hill site – by a 42 person team including High Court bailiffs and “the UK's pre-eminent specialist protester removal contractor”.
UKOG said it is “rigorously pursuing all available legal means” for recourse in regards to the security measures related to these events and any future events that prevent or obstruct its right to conduct its lawful business.