The Press and Journal (Inverness, Highlands, and Islands)
It’s a billion barrel North Sea lifesaver
Oil & gas: Discovery could yield billion barrels – and produce until 2050s
THE biggest untapped oil find in years has generated fresh optimism about the future of the North Sea oil and gas industry.
Analysts said the “absolutely colossal” field discovered by Hurricane Energy off Shetland had the potential to yield a billion barrels of black gold over 30 years or more.
Oil & Gas UK said the breakthrough, which would be the biggest since 2001, “bodes well”, while the Scottish Government said it underlined the “very significant potential” still held by the country’s waters.
And with the first oil potentially being produced as early as 2019, it was hailed by local politicians as a much-needed “shot in the arm” for a region still reeling from the devastating consequences of the oil price slump. Hurricane’s boss said it was a “highly significant moment" for both the firm and the North Sea.
The discovery of an “absolutely colossal” untapped oil field has given the North Sea a welcome shot in the arm.
Hurricane Energy’s claim of the “largest undeveloped discovery on the UK Continental Shelf” was greeted with delight by government and the industry.
One analyst claimed that
“Something of this size could go on for 30 years-plus, assuming full development”
the mega-find west of Shetland, potentially the biggest in the North Sea since 2001, could provide up to a billion barrels of oil equivalent (boe).
And if measures were taken to ensure every last drop was squeezed out of the fractured basement reservoir then it could keep on producing until “beyond 2050". The bedrock bonanza between the Solan and Schiehallion fields has neighbouring acreage that was snapped up by super majors BP and Royal Dutch Shell in last week's 29th frontier licensing round, making them potential partners for Hurricane.
The previous find which was close to this size was Nexen's Buzzard field in 2001, which has estimated reserves of 1.5billion barrels. It was the largest find in British waters since 1993.
Hurricane's stock was up from 11.8p last year to just under 60p.
Ashley Kelty, an analyst with securities firm Cenkos said: “It's absolutely colossal.
“It appears to be one structure that runs some 18 miles north-east of Lancaster up towards Halifax.
“It would be quite easy to say it is 800million barrels and it probably wouldn't be difficult to get to a billion.
“This will be producing beyond 2050. Something of this size could go on for 30 years-plus, assuming a full development of all the resources.”
Hurricane's chief executive officer, Robert Trice, hailed the discovery as a “highly significant moment" for the firm and the North Sea.
The potential bounty comes just days after North Sea regulator the Oil and Gas Authority handed out 17 licences for frontier exploration blocks.
Mr Trice said: “We believe that the Greater Lancaster area is a single hy--
drocarbon accumulation, making it the largest undeveloped discovery on the UK Continental Shelf.
“The discovery of a 1km hydrocarbon column at Halifax validates the efforts the company undertook to acquire the licence and drill, test and log the Halifax well through the winter months.”
Initial results of that operation back Hurricane's view that the Lancaster Field and the Halifax well are one large, connected structure.
A technical report is due “imminently" with a Final Investment Decision for the Early Production System (EPS) on track for this summer.
The first oil is expected in 2019.
Oil & Gas UK said the “very exciting” news “bodes well for the basin”.
Upstream policy director Mike Tholen said: “This announcement flags the potential of the basin which after 50 years still comes up with some surprises.
“The whole of the industry will be watching these developments with interest.”
He added: “There are up to 20billion of barrels of oil – and gas still to be recovered from the UKCS and the cost and efficiency improvements made by industry over these last two years mean we are much better placed to compete for the exploration funds and investment we so badly need to ensure we maximise the basin’s potential.”
Scottish Government Energy Minister Paul Wheelhouse said it came as part of a broader sense of optimism about the “very significant potential” that Scotland’s waters still offered.
“Today’s announcements of the first oil from the Flyndre field and the undeveloped discovery within the up to one billion barrels of oil equivalent thought to be recoverable from the Greater Lancaster field make it clear that the continental shelf in waters adjacent to Scotland, such as areas to the west of Shetland, continue to hold very significant potential.
“I congratulate both companies on their announcements, which further demonstrate Scotland's oil and gas industry has a bright future for decades to come."
“This flags the potential of the basin which still comes up with some surprises”
Hurricane Energy has just blown a big hole through the wall of anxiety which has been an obstacle to oil and gas growth in recent years.
Exploration is the key to success, but lack of investment in this critical area of development has been, quite literally, an energy-sapping drain on the industry in recent years.
Ill-judged past tax interventions by the Treasury, lack of collaboration within the industry and the shocking downturn caused by falling oil prices have all played their part in this.
They blunted oil exploration at the sharp end, butHurricane Energy’s breakthrough has come like a breath of fresh air. It has been described as the largest undeveloped discovery on the UK Continental Shelf for 16 years.
Thecompany predicts that one billion barrels of oil could be lying within the Halifax well in the Greater Lancaster zone, 60 miles west of Shetland. Oil found in two drills almost 20 miles apart suggests a giant field lies untapped, but could start flowing in two years.
Not surprisingly, the find has generatedhuge excitement and brings hope to those who believe that persevering with smaller pools left behind in the past could reap rich rewards.
Significantly, with longevity amajor issue in the sector, this field has the capacity for a production span of at least 30 years.
The implications are obvious in this respect, but Hurricane Energy’s good news reinvigorates others to have the confidence to step up exploration work to unlock the extra billions of barrels that still lie in the North Sea.
“Hurricane Energy’s breakthrough is the largest undeveloped discovery in North Sea for 16 years”