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Hartshead Resources NL advances Concept Select program over Phase I gas fields in UK Southern Gas Basin

“This progress, coupled with a strong gas price forecast, is the best possible start we could have aimed for with our Phase I gas development planning,” says CEO.

Hartshead Resources NL (ASX:HHR) (FRA:P6V0) has made strong progress on its Phase I Concept Select work program in the UK Southern Gas Basin.

The work schedule is taking place across Hartshead’s Phase I assets — the Viking Wx and Victoria gas fields — within its wholly-owned and operated production seaward licence in the Southern Gas Basin.

So far, work at the gas fields has included key development planning tasks, such as subsurface interpretation and modelling and frac modelling and design, as well as development well, production facility and commercial gas transportation planning.

The Viking and Victoria fields host a combined 217 billion cubic feet in audited 2C contingent gas resources and are historical producing gas fields.

With development activities underway at the Phase I fields, Hartshead intends to define a development concept and gas export route next year, make a final investment decision in 2023 and achieve first gas in 2024.

“Best possible start”

Hartshead Resources CEO Chris Lewis said: “Progress is on track with the subsurface, development drilling and production facilities aspects of the Concept Select work.

“It is also very encouraging that we are now engaged in discussions with multiple third-party infrastructure owners to secure an export route to monetise our gas resources.

“This progress, coupled with a strong gas price forecast, is the best possible start we could have aimed for with our Phase I gas development planning.”

Developing assets in UK Southern Gas Basin

Hartshead’s Concept Select work program covers development activities across two Phase I gas fields within the company’s wholly-owned and operated P2607 licence, spanning 729.5 square kilometres.

Specifically, the licence comprises five blocks in Quads 48 and 49 on the United Kingdom Continental Shelf within the Southern Gas Basin.

It contains multiple gas fields, some of which have been only partially developed, and several exploration prospects. These are divided into three phases for workstreams and operations across the licence.

Subsurface interpretation and modelling

The geophysical re-mapping of the Victoria and Viking Wx gas fields, based on the interpretation of existing 3D seismic datasets, has now been completed by Xodus Group.

Building of geo-cellular static field models of each field has commenced, which combines the new mapping with the recently updated petrophysical well log interpretations.

This will be used to construct full-field dynamic reservoir simulation models, which will then be history matched to the historical gas production from the fields.

The reservoir simulation models will be used to generate production profiles and updated resource outputs for the Concept Select, third party infrastructure hosts and engineers for the optimisation of production well frac design.

Frac modelling and design

So far, Fenix Consulting Delft has analysed three historically fracced production wells in the Victoria and Viking Wx fields.

The analysis has provided information on the well’s fracture characteristics, such as near-wellbore permeabilities, fracture dimensions and proppant concentrations achieved during the previous operations.

The results from this review will help design and optimise new fracs in planned future development wells on the Phase I fields.

Development well planning

A review of the potential development well trajectories for the Victoria and Viking Wx fields from one or multiple well centres has been completed by Fraser Well Management (FWM).

FWM are now developing well designs and costings for drilling from single and dual well centres, which are capable of reaching the furthest extents of the Victoria and Viking Wx fields, while simultaneously allowing optimal levels of well fracturing to be achieved.

Production facilities planning

Currently, Hartshead’s Greenfield Concept Select study is underway as part of the Petrofac contract. This is interfacing with subsurface, well and frac engineering and HSEQ.

So far, Petrofac has completed capital cost estimations for myriad potential development concepts, while operating expense estimations are underway.

Support is also being provided to progress the tie-in and offtake options with third-party infrastructure hosts.

Commercial gas transportation

Finally, discussions are underway with some potential third party infrastructure hosts, where possible export routes for gas from the Victoria and Viking Wx fields have been identified.

A series of workshops are planned with the potential host operators to commence feasibility studies for the tie-in of Hartshead’s facilities and gas offtake.

The feasibility studies will commence once Hartshead’ terms of reference for the tie-ins have been established. These will be evaluated before the company enters an indicative commercial agreement.

UK gas market update and forecast

Today’s work program update was released in tandem with a review of the UK’s gas market, with the UK Domestic and European gas markets continuing to support a robust UK gas price.

Over the last six months, the UK’s gas pricing has increased more than 80%, with the current spot price sitting at 85 pence per therm.

Even more significantly, the near-term gas price has increased 105% since the Hartshead projects were acquired in February this year. Near-term natural gas futures are around 100 pence per therm, compared to 47.5 pence per therm around the time of the buy.

The UK gas futures curve also points to a long term price above 45 pence per therm.

Hartshead’s own economic evaluation of the Phase I development has used a gas price assumption of 45 p/therm which demonstrates robust project economics.

Read More: Hartshead Resources NL advances Concept Select program over Phase I gas fields in UK Southern Gas Basin

2021-07-14 22:13:00

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