Pentex discovers biggest onshore oil field for 20 years in UK

Aug 13, 2003 02:00 AM

A Scots-led oil exploration group is celebrating what it described as probably the most significant onshore discovery of oil in the UK for two decades. Jeff Graham, the managing director of Pentex Oil UK, said the company had found the equivalent of more than 100 mm barrels of oil on farmland at Avington, near Winchester, Hampshire. The privately owned company, which has offshore interests in the Balmoral Field in the North Sea and operates wells in Hampshire and the East Midlands, said the find is 30 % larger than its biggest existing UK reserve, which is about 15 miles away at Stockbridge.
"We had seismic data telling us what was beneath the surface, but until you drill down you don't know for sure," said Mr Graham. "It's always a gamble and can cost £ 1 mm just to drill the well, so it's a costly gamble. "We began drilling and it looks like there are 100 mm barrels in place. If we can recover just 10 % of that, then it significantly increases our reserve base and the value of our company."

Pentex secured a licence from the Department of Trade and Industry in 1999 to explore the land, but the oil was found only last weekend and the firm will continue drilling tests. The preliminary explorations are encouraging, and Pentex hopes to produce oil commercially if further tests are positive, within a year's time.
"The discovery provides a major stimulus to the UK onshore oil and gas business," Mr Graham said. "It's probably the most significant onshore discovery in the UK for the past 20 years, and we're looking at other offshore acquisitions in the North Sea."

Pentex Oil UK, which is registered in Edinburgh, already produces the equivalent of 2,500 bpd of oil from four onshore wells at Stockbridge and 60 in the East Midlands. Although the firm is not keen to be publicly excited about the potential financial gain that the oil find could bring, Harry Crichton, the chairman and petroleum engineer leading the drilling, said the oil price of $ 30 a barrel would mean a multi-million-dollar windfall if they recovered just 10 % of the 100 mm barrels available.
He said: "We are hoping to finish the drilling by the end of, and we will then apply to the DTI for an extended well test. This allows us a further three to six months, and during that time, if all goes well, we will put forward a fuel development plan, environmental permissions, etc, and then start permanent production. In six months to a year, we would hope to be up and running." If the tests are positive, Pentex's new oil find would be tankered to BP's refinery at Hamble, near Southampton.

Mr Graham said Pentex had operated in Hampshire for ten years and all its sites are well-concealed, with tankers using approved road routes. The company holds 50 % of the DTI block -- the area companies are licensed to explore -- with the remainder held by Egdon-Resources, Sterling-Resources, YCI and Northern Petroleum.
Derek Musgrove, the managing director of Northern Petroleum, said: "We could not be more pleased. This discovery is of major importance to Northern Petroleum. It has proved our recently developed techniques to re-evaluate results of past exploration in the Weald Basin, which took place in the period 1982 to 1990, which we consider were unrecognised oil discoveries. "A great start, but the real significance is that there could be so much more to come."

Pentex Oil UK claims to be the UK's third-largest onshore supplier of oil, behind Star Energy and market leader BP. The firm is supported by the Bank of Scotland and is owned by Mr Graham and Russell Jordan, his business partner.
Last year, the pair led a £ 22 mm management buyout of the Pentex Energy Group of companies from the London-based Sibir Energy.

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