A larger volume of supply is always good for any consumer as it helps to drive the price down. Oil supply is a significant indicator in the prices our heating oil customers pay and the recent discovery of an oil well near Gatwick could be good news for heating oil prices if initial expectations are discovered to be true.
UK Oil and Gas Investments, a small oil company in Britain has announced the discovery of what they call “a possible world-class potential resource” near Gatwick in the Surry countryside of London. Nutech, an American company, evaluated a well that was drilled by UK Oil and Gas Investments last year and has advised that there were 158 million barrels of oil per square mile in the area around it.
The announcement by London-listed UK Oil & Gas Investments (UKOG) has raised a number of questions including:
1. How big is the field?
UKOG says drilling at Horse Hill-1 on the Weald Basin points to 158m barrels of oil per square mile and that altogether there could be up to 100bn barrels beneath the South of England.
2. How much oil could be extracted?
UKOG admits only a fraction of the potential 100m barrels would be recovered – between 5% and 15%.
But it says this is still a significant amount and by 2030 the field could be meeting 10% to 30% of the UK’s oil needs.
3. How does this compare with North Sea oil production?
Pretty well. The North Sea has produced around 45bn barrels in 40 years. By comparison the Weald Basin could produce up to a third of that – 15bn barrels.
4. And how does that compare with the likes of Saudi Arabia and the US?
It doesn’t. Saudi Arabia produces 11.7m barrels of oil per day, and the US 11.1m. Both dwarf the current UK figure of 770,000 barrels per day.
5. How far down does the Weald oil lay?
UKOG says most lies within the Upper Jurassic Kimmeridge formation at a depth of between 2,500ft (762m) and 3,000ft (914m), so quite a long way down.
6. Will the day-to-day running of Gatwick be affected?
All being well, no – unless there is a major incident, of course. Gatwick Airport is around 2m (3km) away from Horse Hill.
7. Will oil production at Horse Hill involve fracking?
UKOG has consistently stated that it is not intending to frack, which involves pumping water, sand and chemicals into rocks at high pressure to free the oil and gas trapped within.
It says the oil at Horse Hill is held in rocks that are naturally fractured, which “gives strong encouragement that these reservoirs can be successfully produced using conventional horizontal drilling and completion techniques”.
8. What obstacles is UKOG likely to face?
There will undoubtedly be some local opposition and concerns raised by environmentalists. Worries about fracking led to large-scale protests when Cuadrilla drilled at Balcombe in West Sussex, in 2013.
9. Who will benefit from oil production at Horse Hill?
If the figures are correct, the whole country. It’s claimed 1000s of jobs will be created and UKOG’s shares more than quadrupled on the announcement, so it has already done rather well.
10. What next?
“The operator… is now focussed on flow testing the Portland Sandstone and Kimmeridge Limestone sections of the well, to establish producibility and thereby seeking to quantify an overall net discovered resource,” UKOG Chief Executive Stephen Sanderson said in a statement.
In other words, further drilling and testing are needed to confirm the initial results.
Source: Sky News
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