Singapore — China's state-run CNOOC and French major Total announced Tuesday a new gas and condensate discovery at their Glengorm prospect in the central part of the UK North Sea estimated to hold recoverable resources of nearly 250 million barrels of oil equivalent.
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CNOOC, the operator of License P2215, said in a statement the discovery was made with a 5,000 meter well in the Glengorm prospect, encountering "net gas and condensate pay zones with a total thickness of 37.6 meters."
The discovery "demonstrates the great exploration potential" in the license area, CNOOC executive vice president Xie Yuhong said. "We are looking forward to further appraisal."
The estimate of "close to" 250 million boe (37.5 Bcm) of recoverable resources came in a statement from Total, which noted that the discovery lies close to its existing Elgin-Franklin and Culzean facilities, potentially easing the process of bringing the resources into production.
Further drilling and testing will be carried out to appraise resources and the reservoir's productivity. CNOOC holds a 50% stake in the license, while Total holds 25% as part of its purchase last year of Denmark's Maersk Oil, and Euroil, a wholly owned subsidiary of Italy's Edison E&P, owns 25% of the stake.
Total senior vice president for exploration Kevin McLachlan said the results were at the "top end" of expectations and noted a "high condensate yield in addition to the gas."
"Our strong position in the region will enable us to leverage existing infrastructures nearby and optimize the development of this discovery," he said. "Glengorm is an achievement that demonstrates our capacity to create value in a mature environment thanks to our in-depth understanding of the basin."
The UK Oil & Gas Authority's chief executive Andy Samuel commented in a statement Tuesday: "This is very exciting news; Glengorm was first mapped as a prospect around 20 years ago and it is great to see CNOOC taking up the exploration opportunity and completing a difficult high-pressure, high-temperature exploration well. Initial results show that Glengorm could be one of the biggest finds in the UK [Continental Shelf] in recent years, possibly the biggest since the Culzean gas field was discovered 11 years ago."
"This underlines the considerable potential of the UKCS. Our official estimate is that there still remains between 10 and 20 billion barrels plus to be recovered, so there is every chance of yet more significant finds, provided industry can increase exploration drilling and capitalize on the real value to be had here in the UK," he added.
The volume being discovered in the UK has, provisionally, more than doubled between 2014 and 2017, from 83 million boe to 175 million boe, according to OGA.
The body added that the costs associated with finding these volumes have dropped dramatically, from an average of $9/barrel in 2014 to just over $1/b in 2018.
Andrew Latham, global exploration vice president at consultancy Wood Mackenzie, said: "Exploration industry returns averaging 13% in 2018 were the highest in over a decade, driven by lower costs and a focus on drilling prospects with a straightforward route to commercialisation in the event of success. Glengorm fits this revitalized exploration model perfectly. It looks to be a valuable discovery that should help sustain the industry's profitability into 2019."
Simon Wood, European gas manager at S&P Global Platts Analytics, said: "This is a significant discovery and if it is able to utilize its reported proximity to existing fields to share infrastructure, it will not only be extremely economically attractive but could also extend the economic life of the entire basis. Once again increased costs savings and the OGA's encouragement of exploration around existing infrastructure has paid dividends with wider benefits."
In September, Total announced it had found major recoverable gas resources from its Glendronach field in the West of Shetland, the largest UK offshore find in a decade, estimated at 1 Tcf (28.3 Bcm).
CNOOC is operator of the largest producing UK oil field, Buzzard, through its Calgary-based subsidiary Nexen. It is due to start work on a second phase of development at Buzzard later this year.
Total said its equity production in the UK North Sea last year amounted to 179,000 boe/d and reiterated plans to bring on stream this year the Culzean gas and condensate project, which was also part of the Maersk Oil purchase.
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