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Final Licence Relinquishment report

P1934

UKCS Blocks 210/7, 12 & 13

Date 22.12.2015

P1934 Relinquishment report

1 Licence Information 1

2 Licence Synopsis 1

3 Work Programme Summary 3

4 Exploration Activity 5

5 Resource and Risk Summary 11

6 Conclusions 12

7 Clearance 12

List of figures

2.1 Location map P1934 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 3.1 Comparison of seismic data quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 4.1 Well and Seismic Database . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 4.2 Seismic section and geomodel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 4.3 Reservoir depositional setting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 4.4 Channel features on the East Shetland High . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 4.5 BCU map with present day temperature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 4.6 Drainage patterns for hydrocarbon migration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

List of tables

5.1 K e y p a r a m e t e r s f o r r e s o u r c e c a l c u l a t i o n s . * T h e r e s e r v o i r i s a s s u m e d t o b . . . . 11 5.2 R e s o u r c e a n d R i s k S u m m a r y . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

1 Licence InformationLicence Number: P1934

Block Numbers: 210/7, 12 & 13

Area: 588 km2

Licence Round: 27th

Awarded: 1st January 2013

Drill\Drop: 1st January 2019

End of Initial Term: 31st December 2018

Licence Type: Frontier

Initial license holders: Norwegian Energy Company UK Limited (Operator) 100%

No later changes

All permissions to publish have been obtained.


1 Licence Information Page 1

2 Licence SynopsisLicence P1934, blocks 210/7, 12 and 210/13 was awarded as a Frontier licence in the 27th UKCS licensing round to Norwegian Energy Company UK Limited (Noreco).

The licence is located,Figure 2.1, in the South Western end of the Magnus Basin on the northern edge of the East Shetland High.

Structural elementsStructural elementsStructural elementsStructural elements

Confined basin

• Only reasonable sediment input is from ESH

Underexplored

• Exploration has been focussed on marginal

fault blocks and flanking highs

• 5-6 wells drilled in the basin all targeting

Jurassic and older sediments, mostly on

marginal high and fault blocks (210/13-1,

210/10-1, 210/15b-4, 211/7a-4, 210/14-1, 2)

Thick Cretaceous basin fill

Cenozoic covers basin and flanking

highs

Ref.: pres-external 5

Figure 2.1 Location map P1934

The primary reservoir target, the Ida lead was Paleocene deep marine sandstones, with gas, in a stratigraphic trap. The work programme to obtain 650 km of 2D long offset seismic and reprocess 600 km of existing 2D data was completed. Further work including a basin modelling study and a study of the Upper Jurassic structural framework was also completed. The additional 2D seismic lines together with the angle stacks from the reprocessing were useful for observation of channel like features within the Paleocene but were too few for definition of a prospect. 3D seismic data is required.

Resource potential is estimated at 382 - 908 - 1616 bcf of gas for Ida lead

Volume potential (showing P90 - P50 - P10) have been calculated for the Ida lead based on a large stratigraphic trap, assuming one large connected prospect. This is probably unrealistic and 3D seismic data is required to further delineate the volumes and risk.


Page 2 2 Licence Synopsis

3 Work Programme SummaryInitial work programme:

Start date 1st January 2013 Obtain 650 km of Long offset 2D seismic data

Reprocess 600 km 2D seismic Carry out Basin modelling studies drill or drop within 6 years

Obtain 650 km of 2D long offset seismic data

Noreco acquired the TGS non-proprietary 2D long offset survey data from the NSR-06,07,08,09 and 10 surveys, covering 650 km. Noreco also purchased 1104 km of the CFI_NSR_MAG13RE reprocessed seismic data. This dataset includes angle stacks in addition to the full stack data and also access to the gathers. The data is of good quality, Figure 3.1 and naturally gives a much better basis for both spacial definition and AVO-type analysis than the existing dataset 2D seismic data sets. The lower figure shows enhanced continuity and significantly better fault definition.

Ref.: 137350-v1 13

NSR10-41189 original

NSR10-41189 reprocessed

Figure 3.1 Comparison of seismic data quality. Seismic courtesy of TGS


3 Work Programme Summary Page 3

Further work

Analysis of the angle stack volumes were used for reconnaissance AVO.

A basin modelling study was carried out using all the available wells in the area.


Page 4 3 Work Programme Summary

4 Exploration ActivityThe exploration activity within the license and surrounding area has focused on developing a new play model for Tertiary reservoir sequences. In particular the Paleocene which is a play not proven in this area. The Palaeocene has been a secondary target in several older exploration wells drilled within the Magnus basin but no discovery has been made. However, well 211/7a-2 encountered a 10 m oil-bearing sand of good reservoir quality, thereby demonstrating that reservoir quality sands of this age have the potential to be present.

Database

The database at the end of the licence period is shown in Figure 4.1. A number of 2D seismic surveys were available. These were phase matched, filtered and smoothed.

The well database including all released wells and proprietary wells in Norway is also shown. The most important well is 210/13-1 which provides a direct tie to the 2D seismic database. The well has some poorly developed sandstones in the Lista Formation (Heimdal sandstone member equivalent.)

Noreco acquired the TGS non-proprietary 2D long offset survey data from the NSR-06,07,08,09 and 10 surveys, covering 650 km. Noreco also purchased 1104 km of the CFI_NSR_MAG13RE reprocessed seismic data. This dataset includes angle stacks in addition to the full stack data and also access to the gathers. The data is of good quality and naturally gives a much better basis for both spacial definition and AVO-type analysis than the existing dataset 2D seismic data sets.


4 Exploration Activity Page 5

Ref.: pres-confidential 15

210/19-1210/19-2

210/19-3

210/19-4B

210/20-1

210/20-3

210/5-1

210/4-1

210/10-1

210/13-1

210/14-1210/14-2

210/15a-3

345000 350000 355000 360000 365000 370000 375000 380000 385000

345000 350000 355000 360000 365000 370000 375000 380000 385000

6805

000

6810

000

6815

000

6820

000

6825

000

6830

000

6835

000

6840

000

6845

000

6850

000

6855

000

6860

000

6865

000

68050006810000

68150006820000

68250006830000

68350006840000

68450006850000

68550006860000

6865000

0 2500 5000 7500 10000 12500m

1:300000

Figure 4.1 Well and Seismic Database. Red polygon is the Ida lead outline.


Page 6 4 Exploration Activity

Prospectivity Update

The play concept for the Ida lead is; deep marine sandy turbidites of Paleocene age with stratigraphic trapping in the updip and lateral directions. The additional 2D seismic has helped with defining the updip pinchout of the sequences within the Paleocene but is too sparse to help with reservoir presence and quality. The seismic stratigraphy and the prospective level are illustrated in Figure 4.2.

UKCS 27th Licensing Round

Blocks 210/7, 210/12 & 210/13

June 2012 Figure 4

Figure 4.2 Seismic section and geomodel. Seismic courtesy of TGS



The reservoir unit is thought to represent an Intra Palaeocene sand-dominated shoreface depositional system fringing the then exposed basement rocks of the East Shetland High. A palaeogeographic map is shown in Figure 4.3. Sedimentary environments within such a system are also detailed.

Figure 4.3 Reservoir depositional setting

This interpretation is based on strong seismic amplitudes on top of a forward stepping seismic amplitude pattern upflank of well 210/13-1. Channelised features may also be recognised on the seismic cross section in Figure 4.4. The shallow marine sandstone wedge pinches out updip onto the margins of the East Shetland High, and grades downdip into shales of a mud-dominated offshore environment

Ref.: 137350-v1 3

Figure 4.4 Channel features on the East Shetland High. Note the high amplitude anomolies within the Paleocene sequence. Seismic example courtesy of TGS



The main target reservoir sequence is the Heimdal sandstone member within the Lista Fm. The nearest well, 210/13-1, encountered primarily silt and mudstones but some sandstone stringers described as fine to course grained which give positive indications of sand in the system. The most likely sediment source is the East Shetland High, to the south, with sediments being deposited in a restricted basin setting. Reservoir quality at these relatively shallow depths is likely to be very good in the best facies.

Seal is dependent on stratigraphic pinchout in both updip and lateral directions which is difficult to control on 2D seismic data.

Top seal is assumed to be some 500-800m of Palaeogene shales with lateral seal provided by the basement rocks of the East Shetland High and base seal is provided by basement rocks of the East Shetland High and Upper Cretaceous shales.

Petroleum systems

The Ida lead is assumed to be sourced from the Upper Jurassic Kimmeridge shale in the Magnus Basin. Upper Jurassic clay successions have been found in wells in the basin, but its quality as a source rock is not proven. Oil and gas shows in the basin, and the presence of oil filled sands in 211/7a-2 demonstrate that an active source is present.

Regional modelling of present and past temperatures indicates that, the shale is immature at present-day burial depths in the area of the defined lead. Down-flank it is oil mature, and within the main Magnus Basin depocenter it is mature for gas generation as illustrated in Figure 4.5. The large thickness of Cretaceous sediment within the main Magnus Basin depocenter has led to oil generation from potential Upper Jurassic Kimmeridge shales starting in Late Cretaceous times and becoming more and more gas mature throughout Palaeogene and Neogene. Gas is, therefore, considered the most likely hydrocarbon type.

Temp gradient = 38°C/kmAverage surface temp = 6°C

Figure 4.5 BCU map with present day temperature. Immature - Dark green, Oil mature-Light green to orange, Gas mature -red



As part of the basin modelling study an analysis of the drainage patterns are shown in Figure 4.6. Three surfaces are modelled: Top Balder, Base Cretaceous and Top Cretaceous. With the current understanding of reservoir distribution none of the maps show positive migration for Ida.

Basin modelling study – drainage pattern• At three levels

• Dark red polygon is BCU depth at 4000 m

• Black polygon id Ida outline

Figure 4.6 Drainage patterns for hydrocarbon migration



5 Resource and Risk SummaryResource estimates

The resource estimates have been calculated using the GeoXTM probabilistic modelling software package. A wedge-shaped model has been used to reflect the reservoir thickness distribution, with a 0 mminimum thickness at the pinch-out and 40 m at the down-dip limit. A mode thickness of 100 m is used. All input parameters in the table below are reported as minimum, most likely and maximum cases.

Table 5.1: Key parameters for resource calculations. *The reservoir is assumed to be a wedge model, therefore no maximum thickness. Gas in place numbers reported reflect associated gas.

Min Most likely Max

Total area (km2) 46 75 108

Height of closure (m) 100 250 400

Net reservoir (m) 14 22 30

Thickness (crest-mid-base) (m)* 0 100-40

Gross Rock Volume (km2/m) 2090 4632 7095

Net to gross % 30 40 50

Porosity % 25 30 35

Hydrocarbon saturation % 50 75 80

Gas expansion factor 110 115 120

Recovery factor % (gas) 60 70 75

Gas in place bcf 532 1283 2273

Gas reserves bcf 382 908 1616

Risk parameters

The reservoir risk is set to 0.7 based on the seismic evidence of channel-like features and the structural location. Lack of well penetration of the actual reservoir adds to the risk.

The trap risk is set to 0.5 due to relatively thin section of top seal comprising silts and clays, and the lateral seal in 3 directions as well as the base seal required to be the basement rocks of the East Shetland High and or the Upper Cretaceous mud rich sequences.

Mature source rocks are considered to be proven in the Magnus Basin based on the shows in some wells along the eastern and western margin of the Magnus Basin. However, some wells penetrated possible Kimmeridge Clay Formation, but none of these have confirmed any "hot shale" presence. Migration along Early Cretaceous fault zones may lead to focused charge point and is dependent of any porosity as the fault zone diminishes in lateral extent upwards. The basin modelling study indicates that there could be a drainage/charge capacity risk. Charge and migration risk is set to 0.5

The shallow burial depth may cause issues with hydrocarbon preservation due to the low pressure and temperature. The retention risk is set to 0.5.


5 Resource and Risk Summary Page 11

Risk summary

The overall chance of success for the Ida lead is 9% which is high risk. Resource potential, however is large. 3D seismic data is required to map out the sequences and amplitude anomalies which may be expected at these reservoir depths.

The resource and risk is summarised in Table 5.2.

Table 5.2 Resource and Risk Summary

Resource and Risk Summary

Prospect

Lead Discovery

Name

P L D

Stratigraphic

level

Unrisked recoverable resources Geological Chance of Success %

Risked P50

MMboe Oil MMbbls Gas BCF

Low Central High Low Central High

Ida P Paleocene 382 908 1616 9 15


Page 12 5 Resource and Risk Summary

6 ConclusionsIt has not been possible to lower the risk on Ida within the current work programme. Chance of reservoir presence has increased but migration and charge capacity have decreased. 3D seismic is required to further evaluate the area.

7 ClearanceNorwegian Energy Company UK Limited (Noreco UK) confirm that DECC is free to publish this report and that all third part ownership rights (on any contained data and/or interpretations) have been considered and appropriately cleared for publication purposes.

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