Shell’s North Sea gas discovery now expected to be at lower end of pre-drill forecast

A further insight into the preliminary findings related to a recent gas discovery, made by the UK-headquartered energy giant Shell in the North Sea, indicates recoverable resources level may be at the lower end of pre-drill estimates.

After becoming the operator of the P2437 license, following a positive well investment decision for the Selene exploration well in July 2022 and the approval from the North Sea Transition Authority (NSTA), Shell greenlighted the 2024 work program and budget.

The UK player also hired a jack-up rig from Valaris for a two-well drilling campaign, after the geotechnical site investigation works on the preferred surface location for the well site were completed. Once the Valaris 123 jack-up rig completed its journey from the Central North Sea to the Selene well in the Southern North Sea, the firm began drilling operations.

The exploration well 48/8b-3 was anticipated to take approximately 90 days to be completed. Shell’s partner, Deltic Energy, confirmed in October 2024 that operations were still ongoing on the high-impact Selene exploration well, which reached its total target depth of 3,540 meters on October 17, 2024, and encountered a 160-meter thick section of Leman Sandstone with gas present throughout.

Based on Deltic’s most recent update, the top of the Leman Sandstone was encountered approximately 70 meters deep to prognosis with elevated mud gas readings, confirming the presence of gas, observed throughout the reservoir interval and into the underlying Carboniferous basement.

Furthermore, the subsequent wireline logging and fluid sampling have confirmed the presence of a live gas column above a gas-water contact at about 3,370 meters, which is in the middle of the B-Sand, the key producing interval within the overall Leman Sandstone section. The updated post-well structural maps of the Selene prospect point towards a maximum gas column of about 100 meters.

Based on Deltic’s data, the initial indications point toward a high-quality dry gas, typical of production from adjacent fields, with no reported H₂S. The preliminary information available from the well site enabled the firm to update its volumetric model of the Selene discovery, predicting it contains gross P50 estimated ultimate recoverable (EUR) resources of 131 bcf, with a P90-P10 range of 95 to 176 bcf, which is said to be at the lower end of pre-drill estimates.

However, Deltic highlights that the bulk of the recoverable resources are concentrated in the higher quality B-Sand up-dip from the 48/8b-3Z well location, which should support a simpler and cheaper development option with greater gas production per well than was envisaged pre-discovery.

Furthermore, the combination of a deeper structural crest and a shallower gas-water contact has resulted in reduced gas column heights across the structure. The base of the B-Sand and most of the underlying C-Sand are now believed to be in the water leg across the southeastern part of the structure, with the deeper gas readings from the well now interpreted as residual gas rather than a live gas column.

Deltic claims that the well confirmed the B-Sand reservoir properties at the well location were towards the high end of the ranges predicted pre-drill, as they showed 53 meters thick compared to pre-drill P50 of 47 meters with an average porosity of 12.1% up from 11% P50 pre-drill and a gas saturation in-line with pre-drill expectations.

As a result, the company outlines that these improved reservoir characteristics are supported by a downhole test, which recovered gas samples, and indicated permeabilities in the range of 1 to 5mD above the gas-water contact, supporting the use of what Deltic has described as more favorable recovery factors for the B-Sand in the updated volumetric model.

Andrew Nunn, CEO of Deltic, commented: “Subsurface expertise lies at the heart of the Deltic equity story and remains central to the strategic approach we recently laid out for the company. In this context, the outcome of the Selene well is a good result overall and extends Deltic’s exploration success record to two from two.

“Although we are predicting recoverable volumes at the lower end of pre-drill estimates, the improved quality of the B-Sand and increased resource concentration should support a simpler development with enhanced economics due to reduced CAPEX and OPEX requirements.”

While explaining that the well was not designed to accommodate a conventional surface flow test, the firm underlined that all of the reservoir data required to support a potential future development plan and investment decision was acquired through the well.

Therefore, once the rig demobilizes, which is expected towards the end of next week, there will be a period of detailed analysis of wireline data, core samples, fluid samples, and pressure testing data which will further refine the geological model, volumetric estimates and the proposed development plan.

Given the results of the well and the data collected, Deltic believes that the JV should be well placed to progress towards field development planning and a final investment decision on a future development without requiring a further appraisal well. The firm also plans to re-evaluate the Endymion prospect, on the north-eastern corner of the block, which is another low-risk Leman Sandstone opportunity that could be tied into any future Selene development.

“We are looking forward to engaging with Shell and Dana as we work through the customary post-well analysis and preparation of a plan which will move the Selene discovery towards development over the coming year. We continue to believe that the asset can create material value for our shareholders,” Nunn added.