Hopes of Basement Bonanza Drowned by Bad Modeling

A British independent bet its future on proving that fractured basement formations could produce large amounts of oil and gas. Based on its first two wells, the proposition that these highly fractured layers of awful-quality reservoir rock can produce billions of barrels of oil is looking very unlikely, but there might be something of value down there. Last April, Hurricane Energy predicted those two development wells could easily produce 17,000 B/D of oil from rock it said held “half a billion barrels of oil.” Now Hurricane’s ambitious plans and its identity as “basement reservoir specialists” are in tatters. The initial wells were productive but much of what was coming out of the lower one - 205/21a-7z - was water. After 8 months of production the water cut reached 46% from a well that was supposed to be hundreds of meters above the boundary between the oil and water aquifer. That was not the only evidence suggesting there was something wrong with the plan to develop discoveries in the Lancaster field along Rona Ridge in the West of Shetland area. On 8 June, Hurricane’s founder and Chief Executive Officer Robert Trice, a geologist with a keen interest in fractured basement rock, resigned, and the company launched a review of the technical work underlying the plan. Experts were added to the subsurface team, which then made major changes. The most significant change pushed up the depth of the contact point between the oil and water levels by around 300 m, within 1 m below the toe of the lower well. In other words, three-quarters of the reservoir in the original plan was under water. The presentation by Beverley Smith, the company’s interim chief executive officer, was a reminder of how a long-term production test can change a reservoir model, even one based on years of work and the drilling of multiple wells. “Let me start by reminding everyone that we are dealing with a unique and challenging reservoir that was always subject to great uncertainty and where data acquisition has long been problematic,” Smith said. Lowered Expectations Hurricane’s remaining Lancaster well (205/21a-6) is producing more than 12,000 B/D, providing critical cash flow for the company, whose future looks altogether different than it did in the days when it predicted its discoveries could potentially produce 2.6 billion bbl of oil, making it the largest undeveloped resource base in the UK Continental Shelf (UKCS).