Union Jack Oil confirms significant shale oil and gas potential in UK
Union Jack Oil plc (UJO: AIM), an onshore oil and gas exploration company with a focus on drilling, development and investment opportunities in the United Kingdom hydrocarbon sector, announce potential material unconventional shale oil and gas in place within the northern section of PEDL201, in which Union Jack holds a 10% interest. An independent technical review has been undertaken by Molten Limited (“Molten”). The results of this work indicate that the mean gross unrisked deterministic in place volumetric estimates approximate to 5.4 billion barrels of oil and over 2.7 trillion standard cubic feet (scf) of gas.
The technical report (“Report”), prepared by Molten, examines the shale resource potential of part of PEDL201 within the Widmerpool Gulf. This Report was prepared to the standards of a Competent Person’s Report as set out in the AIM Note for Mining, Oil and Gas Companies, except that the Report contains no valuation and no risk factors. No shale oil or gas production has yet occurred in the UK, therefore Molten has not attempted to risk the in place volumes nor attempted a valuation of the shale prospect.
The Report highlights that within the northern section of PEDL201 there exist areas with significant thicknesses of Upper and Lower Bowland Shale, which Molten believes are likely to be primarily oil-bearing due to the geological history and proximity of shallower oil field developments.
Union Jack’s equity interest in the mean un-risked in place volumes within that shale area would amount to approximately 540 million stock tank barrels of oil initially in place (“STOIIP”) and approximately 270 billion standard cubic feet of gas initially in place (“GIIP”). Molten’s estimates of undiscovered STOIIP and GIIP are subject to exploration risk, which may be considerable.
There is no certainty that any portion of this resource will be commercially producible.
The Report also comments that, if recovery factors, even at the low end of those achieved in the United States (1% to nearly 10%) can be achieved in the UK, the volumes highlighted above would have a significant commercial value.
The Burton on the Wolds-1 conventional well is planned to commence drilling operations in Q3 2014. The well is located in the southern half of PEDL201, outside of the Widmerpool Gulf and is not considered by the Board to be prospective for shale oil or shale gas.
David Bramhill, Executive Chairman, commented: “The interest in onshore conventional and unconventional oil and gas in the United Kingdom is gathering pace throughout our industry.
The level of corporate activity within the sector is reaching levels not observed for decades.
The Board of Directors considered it prudent to have the Company’s interest in PEDL201, where there is known shale potential, independently reviewed to identify the unconventional resource potential. This exercise has proved to be very worthwhile with compelling “in place” un-risked scoping volumetric estimates for both shale oil and shale gas.
However, the Company’s immediate priority remains to unlock the conventional exploration potential within our current licence interests. We look forward to the imminent drilling of two exploration wells, Wressle-1 and Burton on the Wolds-1, both targeting conventional reservoir objectives.
In addition, the Company intends to be involved in bidding for certain interests at the forthcoming Onshore UK Licensing Round, expected to be announced by DECC later in 2014.”
Source: Union Jack Oil