Shell’s UK prospect seen as one of North Sea’s ‘largest natural gas discoveries’ in over a decade

UK-headquartered energy giant Shell has completed flow test results for the Pensacola well in the North Sea, which is said to have opened a new Zechstein play in this mature basin.

Following a positive well investment decision for Pensacola in March 2022, the drilling of this prospect was scheduled to begin towards the end of 3Q 2022. Shell picked Maersk Drilling, now part of Noble Corp., to provide the Maersk Resilient – now called Noble Resilient – harsh-environment jack-up rig to carry out the drilling of the Pensacola well.

The drilling operations at this gas prospect started in November 2022 while a gas discovery was announced in January 2023. 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, 8 February 2023, Deltic Energy confirmed that flow test results were in line with the firm’s pre-test expectations based on the reservoir parameters derived from the well. The company claims that the significant gas and oil discovery at Pensacola could represent “one of the largest natural gas discoveries in the Southern North Sea in over a decade.”

Once the well 41/05a-2 reached a total depth of 1,965 metres true vertical depth subsea (TVDSS), the presence of mobile gas and oil in the primary Zechstein Hauptdolomite carbonate target interval was confirmed via wireline logs. Based on Deltic’s statement, the well encountered the top Hauptdolomite reservoir at 1,745 metres TVDSS and confirmed a reservoir thickness of 18.8 metres with better-than-expected porosity averaging 16 per cent. 

Deltic says that the well penetrated the edge of the Pensacola structure in a down dip location and has proven a substantial hydrocarbon column. Post acidization, the well flowed gas at peak rates of approximately 4.75 mmscf/day declining to 1.75 mmscf/day after 12 hours of the test.

Being located down dip, the flow rates observed during the well test are not expected to be representative of flow rates of potential future production wells, which would likely target the central part of the Pensacola structure and are expected to generate higher rates, highlights Deltic.

Graham Swindells, Chief Executive of Deltic Energy, commented: “Deltic’s first exploration well at Pensacola has resulted in a highly positive outcome and, at approximately 300 BCF, would represent one of the largest natural gas discoveries in the Southern North Sea in over a decade. 

“This discovery is a major milestone in the development of our company as we continue to execute our exploration led strategy and progress our portfolio of high-quality drilling opportunities as we seek to create value for our shareholders.”   

According to the company, light oil with a preliminary gravity of 34-36° API was also produced at a rate of approximately 18 bbls/day during the well test, however, the potential of this oil with respect to the Pensacola opportunity is yet to be determined.

Based on the data collected during drilling and testing, Deltic has updated its volumetric models and now estimates the Pensacola discovery to contain P50 EUR of 302 BCF – P90 to P10 Range = 164 to 519 BCF – which are fully aligned with its pre-drill guidance. 

“We believe that the Pensacola discovery will open a new Zechstein play in this mature basin and highlights the remaining potential of the North Sea as a source of further discoveries which can provide domestically produced natural gas, supporting UK energy security while we transition toward a net-zero economy,” added Swindells.

Following completion of the well test programme, the well will now be plugged and abandoned in line with the usual procedure for a well of this nature, and the Noble Resilient rig will be demobilised from the site. 

The net cost to Deltic of drilling the Pensacola well is expected to be £11.1 million (about $13.4 million), reflecting certain additional operational requirements during drilling, weather conditions, additional testing costs, as well as market influences, including inflation and exchange rate movements.

The company will now incorporate the findings from the well into its geological and commercial models and work with the Joint Venture on the forward appraisal and development plan. Following this discovery, in line with its strategy, Deltic intends to consider all options in relation to its interest in Pensacola, including appraisal and development as well as potential full or partial monetisation of value. 

“As we continue our preparations for drilling the Selene well, we are now looking forward to working with our partners as we continue to progress this exciting and significant gas discovery at Pensacola, and look forward to updating the market on our future plans,” concluded Swindells.