Island Oil & Gas plc, through its subsidiary Island Expro Limited, has been awarded a new Licensing Option in the North Celtic Sea basin, off the south coast of Ireland, subject to Board Approval and the execution of the Licensing Option Agreement.
The Barryroe Licensing Option has been granted to Lansdowne (40%), Island Oil & Gas plc (30%) and Providence Resources plc (30%). Lansdowne will act as the operator of the license for the period of time up to and including the acquisition of any seismic data over the acreage. Thereafter, Providence will become the operator for any drilling and development activities.
The Barryroe Licensing Option (08/1) covers the same acreage included in the Seven Heads Oil Licensing Option (03/5) previously held by the Company. The new License has been renamed Barryroe to avoid confusion with the Seven Heads Gas Field which is partly situated above the deeper oil accumulations.
Part of the Barryroe acreage lies beneath the Seven Heads Gas Field, with the boundary between the two concessions lying at 4,000ft (approximately 1,250m) sub-sea. Within the Barryroe area oil has been successfully tested at flow rates of between 1,300 and 1,600 bopd, from three exploration or appraisal wells. The reservoir sands are in the Cretaceous Middle and Lower Wealden sequences between 1,400m and 2,300m (approximately 4,600 to 7,550ft) below sea level. The oil is light (30 to 42 degrees API) and contains relatively high wax contents ranging from 12 to 22 per cent, which may require treatment to avoid production difficulties.
From the previous technical work carried out, the two main challenges to commercial development have been identified as the reservoir continuity and the high pour point of the oil caused by the high wax content.
The significant increase in the price of oil since 2006 has materially improved the likelihood that these reserves could be exploited commercially. The work program for the new Licensing Option will focus upon these challenges.
"The new long term oil price environment, driven by the sustained rise in oil and gas prices has transformed the operating environment compared to when these oil accumulations were last tested in 1990," said Island CEO Paul Griffiths.
"Subject to a positive outcome from feasibility studies, the chances of a commercial oil development beneath the Seven Heads gas field is enhanced by the current and predicted pricing environment. In addition, gas associated with the oil could also feed into the existing Seven Heads infrastructure, potentially prolonging the life of the infrastructure and increasing the value of these assets to Island," said Griffiths.
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