Member Info for ZYX098

TH2,

You are right, for a change.

It will be a fun ride as the UK H2 story evolves.

Such a pity that UKOG / UKEn won't be around to see it...

Ocelot,

More #hopium.

1 - We have been waiting YEARS for anyone to invest in ANY of UKOG's operations. Despite various statements over the years made by the ramptastic crew that such investment is 'imminent' - not one has. Irrespective, even if they did somehow manage to get anyone interested in a lease on a field in Dorset, that would be ring fenced for UKEn.

2 - There is no progress in UKEn application for Government revenue support and there will be no progress - especially since they don't even meet the criteria required to make an application.

How many times do the simple facts have to be pointed out to you and the likes of TH2?

A storage facility has to be constructed, filled with H2 and then - and only then - will revenue support become available.

In the meantime, UKOG have ZERO chance of getting anyone interested in a project that's in the wrong place for caverns to be leached, where there is no supply of H2 available and there is no demand for H2 in the area.

To put it as simply as possible;

UKOG have no income.

UKOG have no chance of any getting any income in any reasonable time frame.

UKOG have little (if any) cash left.

What cash is left is rapidly being drained by the BoD's salaries.

UKOG have £Millions in liabilities that they cannot hope to meet.

UKOG are going bust.

Ocelot,

W.R.T. to HH, SCC will no doubt have taken note of UKOG's share suspension and lack of engagement with SCC so far.

UKOG may try and kick the can further down the road, but ultimately they are still legally liable for the decommissioning of HH.

The last set of accounts published contained the following statement from the Auditors:

We draw attention to note 2b in the financial statements, which indicates that the group will require additional funding in the

coming twelve months to meet their ongoing cash requirements. Whilst the directors anticipate that such funding may be

obtained from a number of sources, there can be no certainty that such sources of funding are obtained in the timeframes

necessary. As stated in note 2b, these events or conditions, along with the other matters as set forth in note 2b, indicate that a

material uncertainty exists that may cast significant doubt on the company’s ability to continue as a going concern. Our opinion

is not modified in respect of this matter.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

There were as yet unannounced penalties that had to be paid for exiting Türkiye.

UKOG have no income.

Despite the claims of a couple of Uber-rampers, UKOG have no hope of getting any income stream up and running in the foreseeable future.

What little cash they have left is being depleted at a rapid rate to pay for the CEO's salary.

They have liabilities of £3.5 - £4 Million for decommissioning BB & HH.

WSCC have already served notice to Decom BB.

SCC are liable to be not far behind.

There is only one conclusion to be had from the above set of facts; UKOG are going under.

Absolutely nothing for UKOG.

Which he will, of course, casually ignore because it's an 'inconvenient truth', thus maintaining his impressive track record of failure when it comes to his predictions.

LTT,

I'm a bit rushed (Teams meeting incoming....), but I posted some "bar talk" a while back;

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Apparently the Navitas legal people aren't experienced in the Oil Industry, so they've brought in a team of high priced City lawyers to "help" - who also know nothing about the oil industry. Allegedly they are proving to be "difficult" (I'm paraphrasing there....) and also seem to think they can dictate T's and C's to multi-Billion $ Companies, which has caused numerous delays and the main reason why contracts have yet to be signed.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

But as far as I am aware, they have been negotiating with a couple of Rig Contractors for several months - and yes, it's a very lucrative contract to get.

Also, they are supposedly very close to (if not already have) signing the major supply services contracts for Drilling & Completion.

My guess is they may be in a bit of a 'chicken and egg' situation.

Lead times mean to meet the planned 1st oil date that they should be signing the major contracts now, but they don't want to commit to spending money before FID is confirmed.

Equally, the Service Companies will want some guarantee that the project will go ahead - this may mean asking for "regret payments" to cover their expenditure in the (very unlikely) event the project doesn't get to FID.

NN,

I'd argue that the NFB is already a new oil province!

However, Navitas and RKH simply won't have the cash to spare to go to Isobel until at least 2030 - 2 yrs after 1st oil on SL.

Trying to go down there sooner would mean farming down, and I don't see either of them voluntarily giving up what would have to be a fairly large %, just to appraise Isobel sooner - the NPV figures simply wouldn't add up.

Equally, I don't see a "big boy" getting on board any time soon either.

Way to much Geopolitical risk for them, both w.r.t. Argentina and Israel.

Yes, relationships with Argentina appear to be improving under the current Argentinian Govt., but that could all change at the next election.

W.R.T. Israel, in the UK we've already seen what has happened to other Companies with only 2nd tier links to Israel when Palestine Action targeted them (and the RAF).

LdC,

Correct, any other structure in the NFB should requires fewer Wells to appraise, as they get more knowledge of the basin, it's depositional environment and are able to use the information obtained to better refine their seismic interpretation and geological modeling.

Whether or not it would be half depends on a number of factors, but certainly fewer.

As to the "high" pressure, it would be more correct to call it "higher" pressure.

This might seem like semantics, but the reality is that the pressure seen wasn't out of the ordinary at all compared to pressures commonly seen elsewhere.

PMO got over-confident with the successful 'slim hole' casing program they'd used, and got caught out when the pressure encountered was slightly higher than expected, in combination with a weak formation higher up the Wellbore.

In the next attempt to explore this area, they'd revert back to a 'conventional' casing program and use the appropriate mud weights, so it really won't be an issue.

Would a higher pressure lead to higher production rates? All other things being equal, yes, but there are numerous other factors both downhole and at surface that may mean that this is not the case in practice.

Evening All,

I've said in previous posts here that I think we are getting ahead of ourselves w.r.t. Isobel.

While Navitas and RKH are currently both 100% focused on getting SL to 1st Oil (as they should be), nobody in either organisation seems that keen to get down to Isobel A.S.A.P.

This makes me think that they've seen something in the data they already have that means they don't see Isobel as a high priority.

There is another aspect w.r.t. it's distance from SL, which I'll come back to.

Concerning the cost, the 1st Rig is going to be fully occupied in drilling Phase 1 & 2 of SL for several years, so that implies they'd have to mob another Rig down there for an Exploration program.

Neither Navitas or RKH have the funds available to do that until at least SL has been onstream for at least two years, and there would be no point in farming down just to accelerate an Isobel Appraisal program - which would indeed cost in the region of $100 Million for a couple of Wells in this scenario.

There is another scenario (already put forwards by some others) that they could find a surprise when they start the development drilling on SL.

Now, there are more than enough holes already poked into SL that I doubt it will be a Geological surprise.

However. the one previous attempt to drill a deviated Well in the area was a complete failure and they have never gone horizontal in the Reservoirs either.

So if there are any issues, it could be on the mechanics of drilling the tangent section to get to the Reservoir and/or the horizontal section within the Reservoir itself.

If Navitas / RKH are prudent (and so far they seem to be), then they really should have an Exploration / Appraisal Well or two in their back up planning.

So if they do have issues on SL, then they have the option to go to another location at short notice while they analyse the problem on SL and work out how to solve it.

However, in this scenario, I don't think they'd go as far South as Isobel.

I think they'd go for a much closer option, which then has the potential to be tied back into the subsea production manifolds that they will put in place for Phase 1 & 2 of SL.

Isobel is simply too far (over 20km, if I recall correctly) from SL to be tied back like this - even if the crude wasn't waxy, which we know it is.

So Isobel would need a completely new Development (FPSO, subsea trees, flowlines, manifolds etc) to bring it onstream.

In this scenario, I suspect the operating rate will be around $1 Million pd, so including moving, drilling, E-logging and moving back, I'd be looking at around $35 Million for the Well.

This would NOT include testing, as there would be insufficient time to mobilise once from elsewhere and the cost wouldn't justify having one in the FI on standby.

Ripley94,

I have over 200k shares in RKH and I find you boring.

I herby banish you to the land of the Green Box.

Nastynick,

Yes, the funding is just for SL and doesn't include any Exploration / Appraisal work.

Also, yes, it wouldn't take a decade once it was appraised - I meant a decade from now.

When you look at the planned work program to develop SL (60+ Wells and 2 FPSO's), it will be at least a year after 1st Oil before Navitas, RKH or even the FIG have enough resources (cash and manpower) to spare to look at an appraisal program.

Why go out to the banks to get more funding (at an additional cost) when the timeline shows it won't bring forwards production anyway?

Yes, they could get in funding earlier by farming down - but why would they? They'll do the NPV calculations just the same as anyone else, and I can't see that showing it would be beneficial to RKH to farm down any of their share of SL, unless they absolutely had to.

NIKB,

Absolutely - I would say it's more common than not that you stick the string while sorting out an internal blow out.

Certainly happened the last time I was involved in one a couple of years ago.

From what I recall, it also happened to PMO in this case too.

Took what is likely to be my last IWCF exam before I hang up my boots last year :-)

Mirasol,

With respect to Abandonment liabilities, I am sure that the FIG will follow the same model used on the UKCS (but NOT Onshore, as we both know from UKOG..) since it's inception.

This is essentially each field paying additional tax during production (used to be called PRT in the UKCS) which is put into a Decommissioning fund.

This tax is then rebated during the Decom operations, so it's essentially a giant, decades long loan to the Govt.

In that respect, the size of the Company is irrelevant.

Of course, the two problems with this system are that the additional tax was never ring fenced - the Politicians (of both Parties) spent it as soon as it was received - while certain pressure groups (e.g. XRO / JO / Greenpeace) and at least one paper (yes, I'm looking at you, The Guardian) misleadingly call this a tax subsidy rather than a rebate.

Incidentally, until George Osbourne changed the system in the mid-2010's, if a field changed Operatorship (e.g. Apache taking over Forties) then all the funds in the Decom fund were simply taken by the Treasury and the new Operator had to start contributions from scratch.

In addition, the cash left in the Decom fund after all the Decom work has finished isn't refunded to the Operator - it's kept by HM Treasury....

In the case of the FIG and RKH, I don't think your 2nd, 3rd and 4th reasons are valid - especially since the FI already has 100% employment!

Also, the days of large Companies 'gold plating' projects are long gone (unless your name is Equinor...).

In fact, an argument could be made for using smaller Companies as their Overheads are much lower.

Mirasol,

You are correct - RKH would have to pay their share on any Isobel / Elaine exploration Well - which clearly they don't have the cash for.

Yet!

While they could mobilise a Rig earlier to drill a couple of Exploration / Appraisal Wells, there actually isn't any point in doing so.

It would mean bringing forward the time line for building the supply base and getting the sea and land logistics bridges sorted out - which may be impractical if they aren't committing any expenditure funds before FID anyway.

It would also mean diverting manpower resources to prepare the G&G and Drilling programs, materials requirements etc and, just as importantly, getting the permits approved by the FIG.

For both Navitas and the FIG, these are manpower resources they really can't spare, as they are focused on getting SL across the line.

As an aside, the 'bar talk' is that Navitas are confident they'll have everything required for FID by late September / early October, but will then be waiting on the FIG to finalise the various approvals before they can announce FID.

Anyway, proving up the resources at Isobel / Elaine wouldn't actually add anything to the bottom line right now - they would be spending money on a potential field that wouldn't be developed for at least a decade.

Far better all round to commit the available resources to get SL up and running so they can get the cash flow coming in, then look at other potential locations for exploration / appraisal.

My own view is that they've seen something on the data acquired at the time which means that they aren't overly keen on Elaine / Isobel for some reason.

As this is a fan type play, it could well be that Elaine / Isobel are quite far from the material source for the fan.

If that's the case, then all the larger sand grains have already dropped out (maybe at SL?) and the smaller particles (sands and clays) make up the E/I fan. The smaller particles would result in lower porosity (less oil in place) and also lower permeability (lower production rates and recovery).

But that's pure speculation on my part.

Part 2;

You can often open the Well up at this point if you want, because there usually is no surface pressure (one reason why it couldn’t have been a blowout at surface).

Now, as Alma said, this particular situation is called “an underground blowout” – because the well is uncontrollably flowing from one zone into another.

The conventional way to correct this is to cure the losses first, so you can then pump the heavier kill mud around the Well.

But this isn’t so easy when the loss zone is above the zone to be killed. I have no doubt PMO tried this first, but in all likleyhood couldn’t cure the losses with the materials they had immediately available.

So they went the other way – possible in this case because the formation flowing was actually at quite low pressure. What they did is put a heavy weight pill from the bottom of the hole up to the loss zone, which was enough to stop the flow – usually called a “sandwich” kill.

By the time they got that sorted, the hole had collapsed and they’d lost the BHA, so they cemented up the loss zone and then P&A’d the Well.

Could they have done anything else to prevent this happening in the first place?

With 20/20 hindsight, yes. They could have set an additional casing string after drilling the main payzone (they still had the 9 5/8” available) prior to drilling deeper.

But they would have done a formation strength test (called an LOT or FIT) after drilling out the 13 3/8” casing and that obviously gave them enough confidence to drill ahead.

There must have been a weaker formation deeper down that broke down during either the kick or the kill operation.

BTW, in the case of SL crude, the other reason why there wouldn’t have been an uncontrolled flow back to surface is that the crude is very waxy and would solidify as soon as it reached surface, plugging the Well. This is why they had to mobilse specialist test equipment and PMO (and Navitas) put a great deal of effort in the design of the Completions, flowlines and the FPSO to make sure that it doesn’t cool down enough to solidify.

Pauldrayton; your 12:53 post of yesterday;

OMFG NO!

NO! NO! NO! NO!

THERE IS NO WAY IT WOULD HAVE RESULTED IN A DEEPWATER HORIZON SITUATION!!!!!!!!!

And PMO certainly did NOT “narrowly avoid a major accident” – they weren’t even close!!!

It is absolute f’ing BS like this that the likes of JSO and the rest of the ‘green’ mob jump on, push round as ‘fact’ and cause us all sorts of grief.

****(insert 10 min rant here….)****

O.K.

GOYB and Alma have got it mostly right.

PMO drilled into a formation which had higher pressure than they were expecting.

As GYOB said, this is by no means uncommon on Exploration Wells and it’s not a big deal.

To ensure it’s not a big deal, we train incessantly for it with kick drills on the rig every 1 – 2 days and the Sr personnel have to renew our BOP Certification by taking exams every 2 years.

Now, this higher formation pressure would have produced a flow (i.e. more fluid coming out of the hole than they were pumping in) and a pit gain (i.e. increase in fluid volume in the rigs tanks).

These indicators were picked up by the rig crew and/or Mud Loggers and they shut the Well in (i.e. closed the BOP).

IIRC correctly, the formation pressure was about 12.0ppg (so really not high pressure) and they were using 10.0ppg mud. This would have produced a shut in surface pressure of less than 1,000 psi. The BOP Stack was rated to 15,000 psi, so not even close to its limits.

The normal sequence of events after shutting in on a kick (as per GYOB) is you weight up the mud (increase it’s density) in the pits to sufficient weight to ‘kill’ the Well, with an additional safety margin (usually c. 200 psi over bottom hole pressure).

You then pump this kill mud down the drill string while the influx is simultaneously coming up the outside – you control the different pressure by using the ‘choke’, which essentially restricts the flow out of the Well (prevents the ‘U’ Tube resulting from pumping higher weight mud down the inside) and maintains the pressure at the bottom of the hole high enough to stop more formation fluid coming in.

In PMO’s case, higher up in the open hole there was a ‘weak’ formation, which, when exposed to this higher pressure, fractured – i.e. the fluid in the Well started to go into the formation (note: it doesn’t have to be a reservoir because the formation breaks down).

So at some point during the kill process – either (most likely) when initially shutting the Well in, or when starting to circulate out, this weaker formation broke down.

At that point, you cannot perform a conventional well kill, as the well is flowing from the higher pressure formation into the lower pressure formation higher up.

Ah, TH 2, his post as fact free as usual.

Which isn't a surprise if he's the same TH2 that posts on the BBC HYS boards occasionally...

£$%% new keyboard!!!!

As I was saying....

UKOG clearly don't have the funds to decom HH & BB, and never will have, so it's the local taxpayer (and I'm one of them...) who will be saddled with the cost.

And the cost is liable to be a lot more if the Council has to do it, as they won't have the necessary experience and you can guarantee that the Service Co's will put their prices up when they know it's a Council footing the bill!

But it's not just UKOG, I fear it's going to be a common problem now that the Majors have left the Onshore arena and it's in the hands of the small, tertiary Companies who now dominate.

Or even worse, it's someone like CeraPhi (remember them? Were supposedly partnering with UKOG on BB to provide heating for Tea production..). They took over the Kirby Misperton / Malton / Pickering fields in Yorkshire from 3rd Energy.

These are old Wells and undoubtedly have numerous integrity problems given their age and that the gas production stream contains H2S.

I estimate that they are looking at at least £30 Million in Decommissioning costs, which CeraPhi don't have and the proposed low energy Geothermal project (if it even goes ahead) won't produce enough surplus cash to cover.

Anyone on the board live in that area? You need to write to your MP, Council leader and Council Environmental Officer and let them know!

Mirasol,

Onshore the responsibility of monitoring the financial health of an Operator comes under the Mineral Planning Authority, not the NSTA.

The NTSA approve proposed work programs and look at the cost estimates for those work programs, but not the overall financial health of the Operator involved.

The MPA is nearly always the Council who approved the development in the first place.

The problem is that most of them are completely unaware that it is their responsibility and even if they were, have no clue about the costs involved.

If they are aware, they would likely be relying on statements made in the Company accounts - which in the case of UKOG we know the cost included were wholly inadequate for the work required.

I fear that the taxpayer in Surrey and West Sussex are going to be saddled with the cost of decomissioning BB & HH, as

Hmmmm.

Four posts since my last one - Ovets and three green boxes.

Clearly touched a nerve with the Norwegian Cave Dwelling Ogre.....