Recoverable oil & gas volume in Shell’s recent UK North Sea discovery nearly doubled

UK-headquartered energy giant Shell has carried out a post-well analysis of a recent discovery in the North Sea, indicating a significant boost in the estimate of oil and gas resources, which are nearly double initial expectations.

The drilling operations at the Pensacola gas prospect started in November 2022 with the Maersk Resilient – now called Noble Resilient – harsh-environment jack-up rig. News about a gas discovery at this well came in January 2023. Flow test results, disclosed in February 2023, were in line with the pre-test expectations based on the reservoir parameters derived from the well. 

At the time, Deltic said that Pensacola could represent “one of the largest natural gas discoveries in the Southern North Sea in over a decade.” Pensacola is located in licence P2252, which is operated by Shell (65 per cent) with Deltic Energy (30 per cent) and ONE-Dyas (5 per cent) as its partners.

In an update on Wednesday, 12 July 2023, Deltic Energy updated its volumetric assessment of the Pensacola discovery based on data collected from the 41/05a-2 well and the results of lab testing. According to the company, this represents a significant increase in estimated initial in-place gas and oil volumes, thus, the discovery is estimated to contain gross P50 initially in-place volumes of gas and oil of 342 million barrels of oil equivalent.

Furthermore, this analysis indicates Pensacola may contain almost double the volume of recoverable gas and oil than originally thought, with Deltic now estimating a total gross P50 estimated ultimate recovery (EUR) of around 99 mmboe, up from 50 mmboe immediately after well completion.

Graham Swindells, Chief Executive of Deltic Energy, commented: “The Pensacola oil and gas discovery is transformational for Deltic. Well data indicates that Pensacola contains close to double our original estimate, representing one of the most significant discoveries in the North Sea in many years.”

While the expected presence of oil in the south of the prospect represents highly material upside, Deltic explains that the discovered gas volumes in the northern part of the Pensacola prospect are better constrained and therefore the gas is still likely to be the initial focus of near-term appraisal and development activity.

Based on preliminary reservoir engineering work completed by Deltic, a range of potential development scenarios have been assessed to allow an estimation of recoverable volumes which could be produced from the Pensacola discovery. In all of these scenarios, it has been assumed that hydrocarbons will be exported via a new offshore installation and pipeline to Teesside. 

Moreover, Deltic highlights that the interpretation work by the JV team, following the post-well analytical programme, has reinforced the conclusion that thicker and better quality Hauptdolomite reservoir is present across the crest of the Pensacola Reef, which will be targeted in future appraisal and development drilling.

The Hauptdolomite cores collected at the well location have an average porosity of 18.8 per cent with a maximum permeability of 40mD (average of 6mD), better than the reservoir quality initially estimated from wireline logs. The company’s dynamic reservoir modelling indicates that the reservoir quality encountered at the well location would support commercial flow rates from horizontal wells, without requiring any improvement in reservoir quality up-dip.

Shell and its JV partners are working to develop the appraisal programme for the Pensacola discovery and subject to JV and other regulatory approvals, the drilling of an appraisal well on Pensacola is being targeted for late 2024. In parallel, the JV will undertake various studies to define optimal development plans for the Pensacola discovery.

In addition, Deltic has also started a formal process to pursue the value crystallisation options that exist for the Pensacola discovery which may involve monetisation and/or farm-down of its equity interest in the Pensacola discovery.

“We look forward to working with our JV partners to continue moving this exciting asset through the appraisal phase and onward towards development. With the significant additions to our resource base, we will also continue to pursue monetisation options in line with our stated strategy,” concluded Swindells.