A little-noticed announcement by a tiny oil company on 26th June could be the key to a massive uplift in an independent Scotland’s reserves and should finally put to bed the No campaign’s ceaseless warnings.
Hurricane Energy released the news that its appraisal well drilled horizontally through the fractured basement granite of the Lancaster prospect west of Shetland had flowed oil at a highly respectable rate of 9,800 barrels per day, and the reservoir contained an estimated 207 million barrels. That is about ten times the average amount of recent North Sea discoveries.
So that’s good news, but it is not exactly earth-shattering when you consider that the Brent field east of Shetland produced 2 billion barrels over its lifetime. To understand why Hurricane’s success is significant, it is necessary to understand a little about the geology.
What is fractured basement granite?
The layer of granite west of Shetland is among the oldest rocks around. As the name suggests it mostly lies deep below younger formations. In some places, however, earth movements have pushed the granite upwards, fracturing it in the process, so that it contains a network of cracks and fissures.
Where the granite has pushed up into oil-bearing younger rocks, the pressure can force oil into these fractures. Since granite is not porous, the oil can go no further. Oil companies have known about this process for years, but have never seriously tried to exploit it until recently. Unless you have some kind of map of the fractures, there’s little hope of extracting oil in quantity.
How 3D seismic has changed the ability to map oil reservoirs.
3D seismic, as the name suggests, allows oil companies to build up accurate pictures of underground geological structures in considerable detail. Back in the 1980s, 3D seismic was exceptionally expensive and difficult to analyse, but with the huge increase in computing power since then and the comparative reduction in costs, it has become the norm. Granite and seismic don’t mix very well, but techniques are now sufficiently good for an oil company to be able to build up a picture of the chief faults and fissures running through a structure. Add in some expert geophysical analysis, and it is possible to accumulate sufficient data to judge whether and where it is worth drilling into a basement structure.
Horizontal Drilling – the key
Bending a drill string away from the vertical is a technique that dates back to the 1920s. But a whole raft of inventions and developments of existing technologies have gradually turned horizontal drilling into a precision process. When it comes to extracting oil in commercial quantities from fractured granite, planning a well so that it intersects the most promising fissures is of vital importance. Without the precision guidance which is now possible for horizontal drilling, this would be far more of a hit or miss affair.
Why aren’t the big oil companies interested?
They are, but as we have seen, mapping and drilling fractured basement is a complex, time-consuming, uncertain and expensive process, and so long as easier prospects remain, the big companies will prefer the heavy work to be done by smaller specialist explorers, such as Hurricane. That said, they know the potential of basement granite. The huge Bach Ho field off Vietnam, which has produced over a billion barrels to date, is not dissimilar to Lancaster in its structure, and there are successful basement fields in Yemen and elsewhere. But so far little work has been done on the UK continental shelf. Nevertheless, just from basement discoveries already known about but not exploited, Dr Trice from Hurricane estimates there are at least 1.54 billion barrels to be had. The Department of Energy and Climate Change estimates the total amount of oil that can be recovered from the West of Shetland/Atlantic margin structures to be in the region of 7.9 billion barrels.
West of Shetland, the biggest field currently in production is Clair, operated by BP, which announced in 2013 that it and its partners were investing $4.5 billion in extending the field. That is a huge commitment in anyone’s books – and while BP is not specifically targeting the granite basement, its geolgists will be acquiring as much knowledge as they can get, since the ultimate recovery of much of the field’s oil will depend on it.
Hurricane’s success will no doubt encourage some of the major companies to ‘farm in’ (ie take a stake) in the development of Lancaster, and it will also lead them to look more carefully at basement plays in the licensed blocks they own. The extent of the potential reward is best shown by this map from the Pilot exploration task force.
The fact that Hurricane has proved that fractured basement ‘plays’ can be successful on the UK continental shelf shows that an independent Scotland has the potential to increase its oil output by encouraging companies to explore this resource, and that, with possible reserves of 7.9 billion barrels, talk of the oil running out is – as ever – entirely wide of the mark.