April 24 ,2015 | by Hari Sri

Exploring the potential impact of the Gatwick oil find

Potential impact of the Gatwick oil

Areas local to Gatwick airport could benefit from the largest oil find in the last 30 years.

After a well was drilled in the vicinity of Gatwick airport last year, analysis has revealed that there may be up to 100 billion barrels of oil in the local area of Horse Hill, according to exploration firm UK Oil & Gas Investments (UKOG).

If such claims hold up, it would likely be the largest onshore oil find in the last 30 years with the possibility of producing significant amounts of oil every day, according to UKOG, who describe the field as a “world class potential resource”.

“Based on what we’ve found here, we’re looking at between 50 and 100 billion barrels of oil in place in the ground,” said Stephen Sanderson, Chief Executive of UKOG.

Although the firm does admit that only around three to 15 per cent of the field’s reserves could be recovered, it still represents an impressive reserve of an expensive commodity in Horse Hill.

The announcement received a great deal of attention from both the media and the public. Some have been expounding on the potential benefits the find could create, while others are focusing on the possible detrimental effects from ramping up oil production in the area.

But what changes could really occur if the Horse Hill oil field goes ahead?

 

Impacts to local communities

There could be many changes in the pipeline for communities in the area, with some of the foremost being an anticipated surge in new jobs and influx of new wealth. In fact, it’s already caught the attention of Peter Lamb, the leader of Crawley Borough Council, who predicted that Crawley could see huge benefits on the back of the find.

"The site is only just north of the boundary between Crawley and Horley, so if we are talking about a huge deposit of oil I imagine it would go both sides of the border and would cover a fair amount of the Gatwick airport area,” he said.

“In terms of the benefits to a local authority, it would be based around local businesses being set up and providing employment and paying business rates."

However, despite the potential flood of investment and capital, there is a significant proportion of the local community firmly against any drilling in the area. Last year, around 80 people protested at Horse Hill with around 12 of those staying on site for three months while test drilling was in operation.

Furthermore, back in August 2013, around 1,000 people joined a six-day anti-fracking protest in Balcombe, West Sussex. The evidence illustrates that oil is far from popular in the public perception.

 

Is 100 billion barrels realistic?

It turns out that the initial optimistic forecasts may have been overblown, as UKOG conceded that extrapolating the findings of a 55 square mile well in the 3,500 square mile Weald Basin does not properly assess the potential of the whole.

“Estimates for 100 billion barrels of oil are very misleading. Rarely are formations that homologous where a single discovery can be extrapolated over a very wide area,” said Matthew Jurecky, head of oil and gas research and consulting at GlobalData.

Despite the backtracking from UKOG, research is suggesting that there is more oil in the Weald Basin than the conservative central estimate of 4.4 billion barrels of oil from the British Geological Survey report last year.

Professor Alastair Fraser, of Imperial College, studied a third of the Weald and estimated resources of 13 billion barrels. "So if I scaled that up, we are coming up to numbers of 40 billion barrels," he said in a BBC article.

"Now that's getting significant. That's a resource. That's what's there in the ground. We've still got to get it out," he added.

Getting to it is another contentious issue, as it may involve fracking - the high-pressure pumping of water, sand and chemicals into rocks to fracture them and access the oil and gas trapped within. However, UKOG has stressed that this process will not be necessary.

The impacts will be largely limited to the local areas, as the overall oil market and financial impact will be negligible, according to analysts. Markets will not see cheaper oil come surging in and the biggest global oil producers won’t even notice additional oil being pumped out of southeast England.

Britain’s economy could gain a slight boost, but it is communities in the neighbouring areas that stand to gain the most.

Hari Sri

Hari is the LSBF Blog's News Editor. He manages the editorial content on the blog and writes about current affairs, SME, entrepreneurship, energy, education and emerging market news.

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