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UK Oil & Gas declares Horse Hill’s Portland reservoir “commercially viable”

Last updated: 13:31 18 Oct 2018 BST, First published: 07:28 18 Oct 2018 BST

oil and gas operations
The proposed HH-2 horizontal well will target 720 to 1,080 bopd

UK Oil & Gas PLC (LON:UKOG) has now officially declared the Horse Hill Portland oil field “commercially viable”.

It follows on from the successful extended test of the conventional Portland reservoir, which exceeded expectations with a calculated vertical well production rate of 362 barrels of oil per day.

READ: Horse Hill’s Kimmeridge test rates impress

The company now envisages a further field development, including the proposed horizontal Horse Hill 2 well which will have a targeted production rate of 720 to 1,080 bopd from the Portland.

UKOG noted that it already has planning and environmental consent for the drilling of HH-2 and it is scheduled to start in early 2019.

Consultant Xodus has modelled the Portland’s production profile and claims that up to 45% of the Portland reservoir’s oil-in-place could be recovered if certain pressure support measures are put in place.

A development of the Portland would comprise up to three production wells and two pressure support wells, UKOG added.

It is envisaged that long-term production operations could begin during 2019. The development – of the Portland and Kimmeridge zones - will require additional planning permission. UKOG said the application is nearing completion, and, submission is anticipated before the end of 2018.

UKOG holds an indirect 46.735% beneficial interest in Horse Hill, via its shareholding in the HHDL vehicle which in turn owns 65% of the asset.

"HHDL's declaration of Portland commercial viability is a significant milestone for the Company,” said UKOG chief executive Stephen Sanderson.

“It transforms Horse Hill from solely exploration into a fully-fledged field development with a full-scale oil production start-up targeted in 2019.”

He added: “The better than expected EWT results have robustly demonstrated that the Portland has significant daily production potential in its own right, which could see the first planned horizontal producer attain sustained oil rates of 720-1,080 bopd.

“If realised, these rates could make the Horse Hill Portland oil field one of the UK onshore's top producers.”

Kimmeridge testing continues

Sanderson also highlighted that the Portland conventional oil field project could be combined with the development of the deeper, unconventional Kimmeridge zones – which are presently on the extended test.

Latest results, released earlier this week, exceeded those seen in the previous tests back in 2016.

The first Kimmeridge test has seen oil flow continuously and naturally from the KL3 zone to surface.

Test flows measured production rates between 563 and 771 barrels of oil per day, before further testing programme resumed with pressure build up, clean-up, flow stabilization, oil sampling.

After that, the programme moves on to test production from the KL4 zone where, in 2016, a rate equivalent to 901 bopd was measured over a four-hour period.

UKOG shares gained more than 5% to trade at 2p.

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