The cost of developing the Barryroe oil find 50km off the Cork cost will be hundreds of millions less and produce thousands more barrels of oil a day due to horizontal drilling.
It is estimated that the cost of producing oil commercially off the coast of Cork could be €650 million less than initially thought as Providence may only require four wells to be drilled instead of 30.
The economic threshold for making Barryroe viable had been 1,800 barrels of oil per day, but the latest figures from Providence show the find could produce 12,500 barrels from just a single horizontal well. Providence Resources, which owns an 80% stake in the Barryroe oil find, released an analysis carried out by its reservoir engineers on data acquired by oilfield services company Schlumberger.
According to the wellbore modelling software system that is used to determine the potential initial production capacity of oil finds, the Barryroe field is set to be a hugely valuable commercial find.
Technical director, John O’Sullivan said: “We had anticipated we were dealing with a high productivity oil system both in terms of oil mobility and reservoir development. These figures confirm the magnitude of that productivity potential and clearly demonstrate the Barryroe basal sands could potentially deliver oil at significantly higher production rates than was previously modelled,” he said.
The forecasts produced by the modelling software found using a horizontal well and a standard production well, with out the use of any pumps, would deliver recoverable oil and gas of about 14,300 barrels a day (made up of 12,500 barrels per day and 11 million cubic feet of gas per day).
“Horizontal wells are more expensive but the addition output is more than offset by the return of nearly an extra $1m a day in returns,” said Mr O’Sullivan. With the gas infrastructure that is already in place at the Kinsale head, Providence will be able to monetise the gas find, but Mr O’Sullivan said that oil was the main driver of the project.
An analyst with Davy stockbroker, Job Langbroek said because the wells were more productive the cost of making the find commercially viable could be €500m less than what analysts had originally reckoned.
“The results are important in that a much lower well stock is now possible. For instance, to achieve an output rate of 50,000 barrels per day would now require only four wells; based on pre-drill production analysis, nearly 30 wells were required. Such an outcome has obvious capital benefits. With development wells in this analysis slated at around €20m each, the savings are self-evident,” he said.
Despite the good news that continues to flow out of the ground in Barryroe, Providence said as of yet they have no final development plan in place to capitalise on the find.
The final development plan has yet to be agreed with much more work ongoing such as reservoir remapping to update the oil in place figure and evaluation of optimised field development concepts, said Mr O’Sullivan.
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