A&D marketing for the oil and gas industry

UK North Sea

UK North Sea

Offshore / Exploration

Envoi has been engaged by Summit Exploration and Production (the UK subsidiary of Tokyo based Sumitomo Corporation) to identify a partner to join in the exploration of its P.2382 Licence, covering Block 22/14c in the UK Central North Sea.

Summit was awarded the 181.41 km2 Block 22/14c in October 2018 as part of the 30th Licence Round and operates the Licence with 75% equity on behalf of partner Ping Petroleum which holds the remaining 25%. The initial 2 year, Phase A work obligations required G&G studies and further reprocessing of the 3D MegaMerge+ seismic over the acreage. As the reprocessing carried out for the 30th Round application was later deemed more than adequate to map drillable closures and define conforming AVO based prospectivity, the JV decided that the K2 prospect was already ‘drill- ready’ so instead the site survey was carried out in June 2019 to enable drilling in 2020. (NB – there is no Phase B as no new seismic acquisition was ever envisaged). It is possible that the drilling commitment could be delayed to October 2020 and a well drilled before October 2022.

The Block is situated in the Tertiary sand play fairway of the Central Graben, with southward flowing Tertiary aged sands of the ‘Forties’ channel system’. These are proven reservoirs in a number of existing fields in the area including Everest, Huntington and Forties. The K2 prospect itself lies immediately southwest of the Everest gas field and northeast of the Huntington oil field  and is a four-way dip closure containing the same Forties reservoir sands. Although separated structurally from Everest by a saddle, similar AVO responses are distinct over both K2 and Everest but are absent over the saddle, which reinforces the separation and coherence of K2. The 22/14-1 well drilled in the Block area in 1974 encountered older calcite cemented sands but these lie outside of the closure and mapped AVO that defines the K2 prospect. This is analogous to the initial well (22/9-1) drilled into the Everest field in 1975, which also failed to find reservoir sand until the 1982 22/10a-2 well resulted in the gas discovery where there is an AVO response.

Summit has combined inversion-derived hydrocarbon distributions in their K2 closure with spectral decomposition to image the separate channel systems along the fairway. The AVO and measured DHIs conform strongly to the mapped K2 structure, similar to the same coincidence seen in the Everest and Huntington fields.

The K2 prospect contains an estimated ‘base case’ oil resources of 29 Mmboe or in the gas case 135 Bcf + 5 MMbbls of liquids. The gas case would generate faster returns where a resource over >70Bcf (~12 MMboe equiv.) would be commercial being so close to existing infrastructure. A deeper K2 ‘Mey’ anomaly contains an additional 15 MMboe recoverable. Rustler and Rattler are follow-on Forties prospects in the Block, which also exhibit DHIs that would add a combined 58 MMboe of resources. The combined ‘base case’ Tertiary resource potential mapped in the Block is over 102 MMboe with an estimated upside in excess of 130+ MMboe. Interestingly, the Huntington field was found to contain larger reserves than its mapped 4-way dip closure prediction due to either stepped or tilted hydrodynamic contacts. If similar contacts were defined by drilling K2, the resource potential could be bigger still.

The planned K2 well has an estimated cost of £12.8 million gross (dry hole with 15% contingency). Any development could be rapid due to the nearby infrastructure, with multiple options for tie-back to any of Everest, Huntington, Arran, Nelson or Forties. This should provide a short cycle project with a relatively quick return on investment.

Summit is offering a minimum 25%, up to 40% equity interest in Licence P.2382 and is open to negotiation. Smaller equity positions may be considered if more than one partner wishes to join the JV.