Rowman, handling oil at the surface and keeping it flowing is much easier than trying to make it flow in the near wellbore. Submersible downhole pump tech is expensive, has issues and is difficult to service. Anything that can be done to maintain the downhole temp to help pumps and flow will be a massive benefit. Plus, they have an EWT to prove they can already cope with the oil.
I thought it strange that it switched from details of another MOU to a demonstration of pouring Bentley oil into a glass after being heated to 40 degrees. Apparently the reservoir temp is 40 degrees. Previous operators on Bentley couldn't lift the oil because they were using ambient temp brine in down hole fluids which cooled the near well bore. By heating the brine in down hole fluids the oil is mobile. The problems arrive after the oil is lifted to surface where the average temp in winter is about 7 degrees. Separation, storage and transport would seem to be more difficult when the temp drops closer to the pour point which is the ability to flow with liquid properties. Perhaps a more viable demonstration would be to pour the oil into a glass at surface temp. Big difference.
Good read below detailing how they overcame the down hole temperature problems.
Target price 263p | Published price 42p Baker Hughes has joined the partnership of service companies seeking to develop the Bentley field. All the major services required, except the drilling rig, are now covered by MOUs. As those are converted into detailed contracts and the development plan submitted to DECC, we expect the Xcite price to move toward asset value. Even at US$80 Brent, this offers significant upside.
There should be a series of positive updates to come as a rig contractor joins the partnership and MOUs are converted into firm contracts detailing the provision of services, commercial terms and risk sharing. Then, in 2015, the development plan can be submitted to DECC and the capital costs, lease costs and timing will become clearer.
View Such progress should provide the catalysts to move the share price closer to our unchanged 263p target price (based on the value of 2P reserves at US$100 Brent). The E&P sector and Xcite have been hit hard recently by concerns that the oil price is heading towards even low levels and will stay there. Our value of Bentley is subject to change when the development costs and the terms of commercial agreements with service providers are finalised. But, at present we would value Xcite at 133p if Brent stayed at US$80 forever. "
We are in a very fortunate position regarding a farm in partner (i.e we don't need one to fund Bentley), read below the statement made by RC to Upstream on September 14th 2014:
"While not disclosing the identity of the farm-in candidates, Xcite chief executive Rupert Cole said the ongoing process would not be allowed to disrupt the development timeline for the field, which is set to be brought on stream in mid-2018 after expected approval of the development plan by the middle of next year.
“We aim to progress these discussions as quickly as possible but we are not dependent on finding a farm-in partner and are intent on executing our plan A for the scheme,” he told Upstream on the sidelines of the Pareto Securities conference in Oslo."
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