Serica Energy plc (Serica Energy) has been awarded Frontier exploration license FEL1/09 covering blocks 5/17, 5/18, 5/22, 5/23, 5/27 and 5/28 (the license) in the Rockall basin off the west coast of Ireland. Serica Energy is the license operator and holds a 100% working interest. License FEL 1/09 lies in the northeastern part of the offshore Rockall basin and the six blocks cover a total area of 993 square kilometers.
The Rockall basin has an areal extent of over 100,000 square kilometers in which only three exploration wells have been drilled to date and the basin is therefore regarded as very under explored. Of these exploration wells the 12/2-1 Dooish gas-condensate discovery, drilled by Enterprise Oil in 2002, lies approximately nine kilometers to the south of the license and encountered a 214 meter hydrocarbon column.
A 3D seismic survey has already been acquired and Serica Energy will reprocess this data in order to enhance its understanding of the principal prospect, a structure known as Muckish that covers an area of about 30 square kilometers in a water depth of 1,450 meters. Serica Energy estimates that Muckish has a most likely prospective resource of 675 billion cubic feet of gas equivalent although, given the frontier nature of the area, it is also possible that the structure could contain oil. In order to learn more about its hydrocarbon potential, Serica Energy will acquire several 2D long-offset seismic lines across the Muckish structure.
The license is classed as a Frontier exploration license and may be held for up to sixteen years subject to work programme and relinquishment requirements. On a commercial discovery a Petroleum Lease will be granted. In the initial license phase of four years Serica Energy is committed to carry out geological and geophysical studies and to acquire 400 kilometers of long-offset 2D seismic data.
Serica Energy’s Chief Executive Officer, Paul Ellis said:
The award of this new License in the Rockall Basin represents a significant addition to Serica’s exploration position in Ireland, following our recent Bandon oil discovery in the Slyne Basin. Several of Serica’s present staff were involved in the Corrib and Dooish discoveries west of Ireland whilst at Enterprise Oil and have a detailed knowledge of exploration and operations in the Atlantic Margin of Ireland. The award is a further example of Serica’s strategy to access acreage where 3D seismic data is already available, which enables exploration drilling to take place at an early stage.
Supplemental information:
The area covered by the license is about 993 square kilometers. The license was granted on July 21, 2009 for a period of up to sixteen years subject to certain work programme and relinquishment requirements. The initial phase of four years requires a programme of geological, geophysical and environmental studies, the acquisition of 400 kilometers of 2D seismic data and the reprocessing of 400 square kilometers of existing 3D seismic data. To extend the Licence into subsequent phases, Serica Energy would be required to commit to a programme of exploration drilling. Upon a commercial discovery, Serica Energy would have the right to enter into a Petroleum Lease covering the expected life of the field.
Sandstones of Permo-Triassic age are the principal reservoir targets and are expected to be encountered about 4,000 meters below sea level at the Muckish prospect. Water depth at Muckish is approximately 1,450 meters. An exploration well drilled to test the Muckish prospect could cost $50-$60 million, but Serica Energy would seek a partner to share the cost before electing to drill a well.
Although gas-condensate is the most likely reservoir fluid to be expected in the license, it is also possible that dry gas or oil could be found, since the basin is very under explored and its thermal history is not yet well understood. The estimate of most likely prospective resources is 675 billion cubic feet of gas equivalent. A large reserve would need to be proved before any development could be undertaken, due to the depth of water, the extreme winter weather conditions and the lack of existing infrastructure in the immediate area. The probability of technical success for the Muckish prospect has been estimated at approximately 20%. These estimates of prospective resources and probabilities of success have been made by Serica Energy’s in-house technical team. The prospective resources are the quantity of gas presently estimated to be potentially recoverable from this undiscovered accumulation. If discovered in this quantity, it is expected that they would be technically and economically viable to recover. However, there is no certainty that these prospective resources will be discovered or that they will be able to be developed at the time of discovery.
Serica Energy is the operator of license FEL 1/09 and is also the operator of another Irish Atlantic Margin license, FEL 1/06, in which the Bandon well 27/4-1 was recently drilled and announced as an oil discovery. Serica Energy operates other exploration ventures in the UK, Spain and Indonesia and has a 50% interest in the Kambuna field in Indonesia that will soon provide the Company’s first significant production revenue. Serica Energy was recently awarded two exploration blocks in the Atlantic Margin offshore Morocco and is participating in a three well exploration programme offshore Vietnam.