UK Oil & Gas plc has targeted 2026 to produce and sell gas from its 100% owned PEDL234 licence – Loxley – in Surrey.
TIMETABLE
The news follows publication of a competent persons report (CPR) for “one of the UK’s largest onshore gas discoveries” at 31 billion cubic feet 2C recoverable gas within the licence.
The CPR conducted by energy consultants RPS Group also noted up to £124 million net to the company base on mid-case 2C post-tax net present value.
UKOG already has planning approval for the Loxley-1 appraisal programme which is scheduled for 2024 before gas production and sales in 2026.
The company is also considering a farm-out option for the licence, which lies nine miles south of Guildford.
The proposals previously underwent planning refusals and appeals through the local authority, Planning Inspectorate, Government and High Court.
FUTURE FUNDING
Chief executive Stephen Sanderson today said that Loxley’s “potential commercial robustness” allowed UKOG to plan funding a future development by normal conventional oil and gas debt funding.
“The option of a farm-out, where UKOG’s costs are carried by a new partner, remains a further viable funding option.”
He added that the company still planned to sell future Loxley gas for reforming into low-carbon blue hydrogen.
UKOG is also investigating using Loxley to store around 1 billion cubic metres of hydrogen once it is depleted of natural gas by around 2036.