As part of our 'at-a-glance' guide to company global operational activity, we feature Orcadian Energy.

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ORCADIAN ENERGY

Orcadian Energy was established in early 2014, as The Steam Oil Production Company, by petroleum engineers and geologists. The company has four licences, three of which lie 150km due East of Aberdeen and just West of the Gannet field and the Anasuria and Triton FPSOs, in an area known as the Western Platform. These licences are rich in resources and highly prospective, sixteen of seventeen wells (and sidetracks) drilled on these blocks have encountered oil.

Orcadian has focussed on viscous oil development opportunities in the Central North Sea. The company know the UKCS well and the OGA is a consistent and reliable regulator. Water depths in their core acreage are relatively shallow at c. 80-90 metres and the reservoirs are also not very deep at only c. 800 metres, so wells can be drilled on wellhead platforms, with dry trees, from a typical North Sea jack-up rig. These conditions combine to minimise well cost thus enabling tight development well spacings, which are the key to a successful and profitable polymer flood approach.

Pilot is very well appraised with high quality modern 3D seismic and seven reservoir penetrations. The field has 79mmbbls of proven plus probable reserves, based upon the low salinity polymer flood development plan described in the concept select report submitted to the OGA in September of 2020. Orcadian updated the Concept Select Report during 2021 and submitted a CSR Addendum on 1st July 2021. The selected concept calls for an FPSO and two wellhead platforms from which over thirty wells will be drilled, with some of the energy required coming from a floating wind turbine. This results in expected Scope 1 and Scope 2 emissions being as low as 2.6kgCO2e/bbl which is an eighth of the 2018 North Sea average.

Delivering a fully financed project is the next step and Orcadian will seek farm-in partners in parallel with a process to structure a contractor alliance to deliver the project with a minimised equity requirement.

In July 2021, Orcadian announced the admission of its entire issued and to be issued ordinary share capital to trading on the AIM Market of the London Stock Exchange.
 

OPERATIONS

P2244 - Block 21/27a
Orcadian Energy (CNS) Ltd, 100% and Operator

The key asset on the licence is the Pilot field which has proven plus probable reserves of 79 mmbbls, in Eocene Tay sands. Pilot is very well appraised with 5 wells and 2 sidetracks and is development ready. The low salinity polymer flood scheme has an after tax NPV10 of $640 million at $60/bbl real.

Orcadian was awarded the P2244 licence in 2014 in the 28th licensing round. The licence is currently in the second term and contains the Pilot Main, Pilot South and Harbour discoveries. Pilot was discovered by Fina in 1989 after a successful well on the Harbour field which proved up mobile oil in the Eocene Tay sands.

These Tay sands have excellent reservoir properties with very good porosity and very high permeabilities.

Orcadian submitted a concept select report to the OGA in September 2020 and since then the company have completed a polymer coreflood work programme, a polymer flood risk analysis, and emissions reduction studies. As part of that process Orcadian decided to include a floating wind turbine in the proposed development concept. The cost of this has been more than offset by the elimination of a gas import pipeline and the cost of the gas they would have purchased. Orcadian submitted a CSR Addendum to the OGA on the 1st July 2021.

The oil is viscous with API gravities ranging from 12º to 17º and reservoir viscosities which range from approximately 100 cP (like olive oil) to 1200 cP (like engine oil). A horizontal appraisal well in the most viscous region produced about 1,800 bopd. Whilst the oil is viscous, when compared to typical light oils in the North Sea, it is well within the limits where polymer flooding is considered to be effective.

Sproule has audited the company's interpretation of the reservoir and the development scheme that have been proposed, and has endorsed Orcadian's estimate that Pilot has 263 mmbbls of oil in place with proven plus probable reserves of 79 mmbbls based upon a low salinity polymer flood. The Pilot and Harbour fields have almost 15 mmbbls of additional technical or unaudited contingent resources which provide additional unrisked upside potential beyond the 3P estimate of 111 mmbbls.

P2482 - Blocks 28/2a & 28/3a
Orcadian Energy (CNS) Ltd, 100% and Licence Administrator

The Elke and Narwhal fields would be developed in tandem using a pair of wellhead platforms tied back to the Pilot FPSO. Together they would recover 53 mmbbls of  2C contingent resources (development on hold).  The NPV10 of this combined development is $458 million at $60/bbl.

Orcadian was awarded the P2482 licence in 2019 in the 31st licensing round. The licence is currently in phase A of the initial term and contains the Elke and Narwhal Fields. The Narwhal field was discovered by well 28/2-1, which was drilled by Arco in 1993, and Elke was discovered by well 28/3-1B, drilled by Murphy in 2000.

The Narwhal discovery well encountered viscous oil in an Eocene Tay sandstone and a sample of 14° API oil was recovered. This interval was also logged and cored. The Narwhal field has an estimated oil in place of around 26 mmbbls and a technical contingent resource of 9 mmbbls.

The Elke field is also a Tay sandstone reservoir but of a slightly different age to that encountered in the Narwhal well. The API gravity of the oil samples ranges from 12° to 15° and the reservoir oil viscosity is most likely to lie towards the lower end of a range from 300 to 800 cP. The Elke field has an oil in place of 130 mmbbls with significant appraisal upside, the technical contingent resource amounts to 45.5 mmbbls.  Successful appraisal of an updip 3C area would increase this technical resource by 22 mmbbls.     

There are a number of low risk Tay sand prospects within the licence area with an estimated prospective recoverable resource of about 61 mmbbls with geological chances of success which range from 64% to 87%; as well as a Jurassic and a Palaeocene prospect which together have another 59 mmbbls of prospective recoverable resource, though these are riskier prospects with 18-19% geological chance of success.

P2320 - Blocks 21/22a, 21/26a, 21/27b & 21/28a
Orcadian Energy (CNS) Ltd, 100% and Licence Administrator

The Bowhead prospect is an analogue to the Pilot discovery and exhibits a remarkably similar seismic response to that seen on Pilot. Sproule has audited the prospect and estimated that recoverable prospective resources are 43 mmbbls with a geological chance of success of 49%. Orcadian will be working to derisk this prospect when they acquire new seismic and would hope to be able to commit to drilling an exploration well on this exciting prospect early in 2022.

Orcadian was awarded the P2320 licence in 2017 in the 29th licensing round. The licence is currently in phase A of the initial term and contains the Blakeney, Feugh, Dandy & Crinan Fields as well as the Bowhead prospect and possible extensions of the Pilot field in the form of channels running in from the West.

The Blakeney field was discovered by Wintershall in 2010, by the 21/27b-7 well and is the main discovery in the licence. It contains about 90 mmbbls of moderately viscous oil in place (c. 14.5º API) of which about 25 mmbbls can be recovered and are categorised as 2C Contingent Resources (Development on hold). Development of Blakeney would be undertaken using a dedicated wellhead platform tied back to the Pilot FPSO. The recovery mechanism would be a low salinity polymer flood which results in an after tax NPV10 of $6m at $60/bbl real. Orcadian see scope for optimising this scheme in due course.

There are also four west-east oriented incised feeder channels, mapped from seismic, connected to the Pilot accumulation, correspondingly named North, Central, South and Far South. Although these channels could be in communication to the Pilot accumulation, they were assessed as undiscovered prospects. Sproule has assigned a total of 29 mmbbls of recoverable prospective resources to the four channels which have geological chances of success ranging from 20% to 50%.

The Feugh field was discovered by Mobil in 1972 with the 21/28-1 well. Feugh has a gas cap with a very bright response on seismic. Previous operators have considered Feugh to be a small gas pool, however, petrophysical analysis indicates that Feugh has a 25 feet oil leg beneath a thin gas cap, and in this scenario the oil in place would be approximately 30 mmbbls. There was no oil sample captured when Feugh was drilled but Orcadian expect the oil to be moderately viscous and of similar quality to that in Blakeney and Pilot. The company estimate 6 mmbbls might be recovered from Feugh, but this estimate has not been audited.

The Dandy & Crinan discoveries lie downdip of Feugh and contain both gas and an oil, which is lighter (c. 20º API)  and less viscous, than that encountered in the rest of Orcadian’s acreage. Crinan (which extends into 21/28b, operated by Carrick Resources) was discovered by Mobil in 1987 and in 1990 the 21/28a-6 well discovered oil and gas in what is now referred to as the Dandy South field. Wells 21/28a-8 and 21/28a-8Z were drilled by Monument, in 1998, to appraise the Dandy discovery and established that the area appraised by these wells comprised a separate compartment known as Dandy North. Together there are approximately 27 mmbbls of oil in place and 20 bcf of gas in place in these three small discoveries. Orcadian estimate 3 mmbbls might be recovered from Dandy and their share of Crinan, but this estimate has not been audited.

Finally the Titchwell prospect, which lies to the North of Bowhead, is less clearly defined on seismic but would be significantly de-risked by a successful Bowhead well.

In August 2021, Orcadian announced that the company has licensed a 3D seismic dataset, covering the Pilot and Blakeney discoveries and the Bowhead prospect within block 21/27, from TGS. The 
dataset received was shot during 2011 and 2012 and was reprocessed to focus on the Tay discoveries and prospects during 2018 and 2019.

Orcadian has engaged Axis to interpret the seismic survey and evaluate the Bowhead prospect on the new dataset. This interpretation will enable the company to update both its estimate of recoverable prospective resources, and the geological chance of success of the Bowhead prospect. This work is expected to be completed during 4Q 2021.

P2516 - Blocks 14/20g & 15/16g
Pharis 50%, Parkmead 50% & Licence Administrator

Orcadian was awarded the P2516 licence in 2020 in the 32nd licensing round. The licence is currently in phase A of the initial term and contains the Fynn – Beauly and Fynn – Andrew discoveries. Texaco discovered the Fynn fields in 1978 when they drilled well 14/20-9.

Fynn – Beauly is a very large viscous oil discovery, updip from the Lowlander oil field. The entire discovery extends across a number of blocks and is estimated to contain oil in place of between 602 and 1343 mmbbls. Blocks 14/20g & 15/16g contain a section of the discovery to the south, with oil in place of between 77 and 202 mmbbls.

The second discovery, Fynn – Andrew, is wholly contained on the blocks and holds 50 million barrels of oil in place on a P50 basis. There is also an oil prospect in the Piper Formation on the licence. Orcadian management estimate that the net 2C technical contingent resource on these discoveries totals about 29 mmbbls.

LEADERSHIP / CONTACT

Stephen Brown Chief Executive Officer
Alan Hume Chief Financial Officer
Greg Harding Technical Director
Joe Darby Non-Executive Chairman
Christian Wilms Non-Executive Director
Tim Feather Non-Executive Director

Orcadian Energy PLC
6th Floor, 60 Gracechurch Street, London, EC3V 0HR, UK

Tel: 020 3603 1941   l   info@orcadian.energy

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