Speculation of an oil boom around Gatwick airport is back on the City’s agenda after an independent report reinforced optimism that a small prospector had made a major find.
The report by a major oil services group, Schlumberger, gave new flight on Friday to the shares of UK Oil and Gas (UKOG), the independent driller that announced in April it had made a strike of “national significance”.
Those early claims based on 158m barrels per square mile excited oil investors but were derided as hype by the industry’s critics, who argued no one could tell how much, if any, oil could be extracted. However, Schlumberger’s report has added to the expectation by suggesting there could be 270m barrels of oil per square mile at Horse Hill, in the Weald basin near Gatwick airport.
Stephen Sanderson, UKOG’s chief executive, was upbeat but careful not to play up the Schlumberger findings, saying they still gave no indication of recoverable reserves.
“This independent technical viewpoint adds further weight to the potential significance of the HH-1 well and the potential of the Horse Hill licences,” he said.
UKOG shares, which had been suspended prior to the announcement after soaring in intraday trading on Wednesday, rose by 8% at one stage after the new assessment.
Schlumberger said it planned to make a wider assessment of the Weald basin, which covers 2,124 square miles (5,500 sq km), and would provide further analysis about an area drilled unsuccessfully by others in the 60s.
The British Geological Survey estimated last year there could be 4.4bn barrels of shale oil in the Weald basin but warned it was difficult to know how much could be commercially extracted.
Meanwhile environmentalists argued that local people would be concerned about pollution.
“Today’s announcement isn’t something to celebrate,” said Brenda Pollock, of Friends of the Earth. “Oil extraction is deeply unpopular. Local people are rightly concerned about more lorries, air and water pollution, noisy drilling and disruption to village life.”
Most of the opposition to onshore oil and gas extraction has centred on fracking – where fossil fuels are released from rock formations when a mixture of sand, water and chemicals is pumped into them – but UKOG has said it will not need to deploy the technique near Gatwick.
David Lenigas, chairman of UKOG, told the BBC: “Fracking is not our agenda: there is plenty of conventional oil in the Horse Hill well to not even look past that.”
The government is keen to support an onshore oil and gas search even though Greenpeace and others argue that the world has already got more reserves than it can safely burn without accelerating global warming.
