Tiny UK explorer makes big claim of oilfields near Gatwick
UKOG claimed to have discovered a “world-class potential resource” in a 650ft section some 3,000 to 5,000ft below the ground after drilling into the Weald Basin at Horse Hill in Surrey. However, industry analysts were sceptical about the company’s claims and how much oil could be economically recovered from the area.
David Lenigas, chairman of UKOG, extrapolated that the whole basin could contain “multiple billion barrels” and was “turning into a potentially strategic asset for the UK”.
“The key thing about this discovery is about what Britain and the British government want to do about this strategic asset,” he said in an interview with BBC News. “All we’ve done is find it.”
His enthusiasm contrasted with a report from the British Geological Survey last May that estimated there was 4.4bn barrels of shale oil in the Weald Basin, but warned it was “not known” how much could be commercially extracted, as it was believed to be present in the rocks.
UKOG said that new oil extraction technology had “comprehensively changed the understanding of the area’s potential oil resources”.
Mr Lenigas admitted it was impossible to say how much of the oil could potentially be recovered until flow testing of the 30m-deep well occurred, but said approvals were “in process” for this to happen this year.
Shares in UK Oil & Gas more than doubled to 3.58p in morning trading in London on Thursday. They closed up 169 per cent to 2.98p. But industry analysts questioned the claims being made by the company, which has a market capitalisation of just over £48m and is the latest of several small oil explorers that Mr Lenigas has been involved with.
“You would need to have a lot of wells,” said Malcolm Graham-Wood, founding partner of Hydrocarbon Capital, an independent oil advisory company. “That is easy in Texas or Louisiana where you can put nodding donkeys all over the place, but it is less easy when you’re next to Gatwick airport.”
“I would not, as of yet, get overly excited,” he added. “This is at a very early stage. The recovery factor they are claiming is between 3 and 15 per cent, but the physical point of getting oil out of this kind of limestone is far from being proven.”
http://www.ft.com/cms/s/0/5b316402-d...#axzz3WrmqULBA
