Here is the report in full: EY Kimmeridge Limestone Report 180416
UK Oil & Gas Investments PLC (London AIM and ISDX: UKOG) has today released a commissioned Report, authored by EY, a global leader in assurance, tax, transaction and advisory services, which assesses the economic impact and benefits of future Kimmeridge Limestone oil production projects over the Weald Basin. The Report highlights the significant positive contribution to the UK economy, jobs and energy security that could result from this new potential oil production. EY’s analysis builds on the recent highly successful oil flow tests from the Kimmeridge Limestones at the Horse Hill-1 (“HH-1”) oil discovery, in which the Company has a 27.3% interest.
It should be noted that the Report is solely in relation to the potential extraction of oil from the two main Kimmeridge Limestones over the entire Weald Basin and is not an assessment of the Company’s own 11 individual licence interests in the Weald.
Kimmeridge Limestone Oil – Economic Impact Highlights:
· Future peak oil production could provide approximately 4% to 27% of 2014 UK daily oil demand over the life of the project
· The Gross Value Added to the UK economy could range from £7.1 billion to £52.6 billion
· Generation of between approximately 1,000 to 5,600 jobs in the UK, averaged over the project’s lifetime
· Lifetime tax revenues of between £2.1 billion to £18.1 billion
The Report:
Over the past decade, North Sea production has declined to the point where the UK is forecast to import over 50% of its daily oil demand by 2020. In this context, and following the HH-1 flow tests, EY have now produced a detailed analysis of how the extraction of oil from the Kimmeridge Limestones in the Weald could help arrest the decline of indigenous oil production and strengthen the UK’s long-term energy security.
EY’s economic impact forecasts utilised the Company’s internal assumptions on production rates for a multiple horizontal well production site, together with Xodus Group’s conceptual multi-well site development study and Nutech’s calculated oil in the ground and likely oil recovery factors. These external studies were previously reported by the Company. The assumptions on individual production well performance were made prior to the unexpectedly high HH-1 flow test results, as first announced on 16 February 2016.
The EY Report states:
“The development of Kimmeridge Limestone Oil in the Weald Basin, assuming it can be extracted from a development site at the volumes projected by UKOG, has the potential to generate significant economic value to the UK economy, partially off-set the decline in oil production from UK fields, support employment, and generate significant tax benefits to the exchequer.
“These benefits will be maximised via the development of a UK-based supply chain, and through a series of targeted policies and initiatives to appropriately mitigate potential barriers to development.
“Conceptual studies and oil in place estimates previously conducted suggest a significant opportunity for the UK to secure a proportion of its energy from the Weald Basin.”
Click here EY Kimmeridge Limestone Report 180416
Stephen Sanderson, UKOG’s Executive Chairman commented: “This Report confirms UKOG’s view that the development of Kimmeridge Limestone oil in the Weald Basin can make a very significant contribution to the economy, employment and energy security of the UK.
The Report’s conclusions are given credence by the recent results of the highly successful Kimmeridge Limestone flow tests at the Horse Hill-1 oil discovery. The tests demonstrate that significant volumes of high-quality light oil exists within the Kimmeridge Limestones and can flow naturally to surface at commercial rates.
The unexpectedly high aggregate flow rate of over 1365 barrels per day (“bopd”) from Horse Hill’s two Kimmeridge Limestones far exceeds the study’s modelled peak flow rate of 400 bopd per horizontal well. It is, therefore, possible that the overall economic impact of Kimmeridge Limestone oil could be significantly higher than this initial Report describes.”
