We acquired 920km of new 2D seismic data in licenses PL023 and PL024 on an exclusive basis with GSI in early 2006. The processed seismic data is of high quality and covers a number of leads in the south of the acreage, including lead K, as well as a closer grid over target J1, which we now know as prospect Ernest.
The CSEM data acquired by OHM over Ernest and K contains what we believe to be strong signs of the presence of Hydrocarbons within the structures. This is a hugely significant development for the group. We now believe that Ernest is drillable subject to all relevant regulatory requirements and have upgraded this target as a result.
Moving forwards, our 3D will help us to further define a number of targets already mapped in the northern licenses PL032 and PL033. Once that data has been mapped and interpreted, we will be in a position to rank our prospect inventory and begin making decisions on potential drilling targets. Starting the 3D program two months early has allowed us to accelerate this process. Maps of Ernest made using the new seismic data indicated that the structure is both larger and more robust than when mapped on the pre-existing seismic. A clear independent four way closure can easily be mapped, with a larger potential closure possible against a large fault located to the east of the prospect. The areal extent of this four way closure is approximately 2,600 acres. Using a conservative calculation that translates into possible oil in place of over 300 million barrels, or around 100 million barrels of recoverable oil.
In addition to the robust nature of the prospect, we have observed an AVO response on its flank along with possible gas chimneys and flat spots within the area of closure, all of which are potential indicators of the presence of hydrocarbons. The new seismic also contains strong indications of the presence of reservoir units in the area.
Turning to the CSEM data over Ernest, a resistor can be seen easily on the interpreted data. When this CSEM data is co-rendered with the new 2D seismic, it becomes clear that the resistor is coincident with the extent of the four way closure as described above. The fact that this resistor appears to be contained within the Ernest structure leads us to believe that it is indicating the presence of Hydrocarbons trapped within the structure. This has significantly reduced the exploration risk associated with the prospect with the biggest remaining risk is associated with reservoir. Whilst indications of the presence of reservoir are present in the seismic data, we can make no meaningful assessment of the quality of that reservoir until we drill the target. Assuming a recoverable reserve of 100 million barrels, the discovered value of Ernest alone could be in the region of $1,000 million at an oil price of $50 per barrel according to a model built by Scott Pickford at the time of our admission to AIM. Prospect Ernest is located in approximately 160m water depth and only 100km from the Islands.
The CSEM result over K is also extremely encouraging, with a resistor observed which appears to be coincident with a structural closure. This resistor is not present in the original target of the K survey, but in a flanking structure to the north east. More seismic is required over K in order to further define the extent of that closure and to determine any possible well locations. While K and some of the other leads described below are relatively shallow, that does not mean they cannot become productive fields, as elsewhere in the world shallower oil fields are successfully in production, for example, in the UK's Morecambe Bay area where the structure is remarkably similar to that observed in licenses PL023 and PL024.
Finally, the new seismic has allowed us to further develop our existing inventory of leads in wider PL023 and PL024 area. Work on the development of these leads is now continuing. These leads include some highly attractive rollovers, some of which are associated with strong amplitude anomalies. We have also become increasingly confident of the presence of a mature source rock in the southern most areas of our licenses PL023 and PL024, which is good news in terms of the risk associated with the leads in the area.
Our next step is to begin active exploration of licenses PL032 and PL033. The geology of these areas is different to that seen in PL023 and PL024 and makes the use of the CSEM technique more problematic. As a result, we are currently collecting a minimum of 685km2 of 3D seismic data with CGG Marine and we were pleased to be in a position to begin that campaign some two months ahead of schedule. Processing and interpretation of that new data will carry us to the second half of 2007 and allow us to further refine and develop our prospect inventory. Our plan is to develop an inventory of drillable prospects during 2007 so that we are in a position to participate in any drilling campaign taking place in the Islands.
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