North Sea energy company Nautical Petroleum said today its Kraken field was commercially viable after “exceptional” test results.
The firm said it aimed to sanction the heavy oil project, which could cost up to £1billion, next year.
Nautical said Kraken was a high-quality reservoir holding around 160million barrels of recoverable oil, and also said that during the appraisal test it found a deeper prospect near the development of a similar quality.
The firm plans to drill the new project, which it named Ketos, in 2012.
Nautical owns a 50% stake in Kraken and is operator. First Oil and Gas has a 30% interest, while the remaining 20% is held by Canamens Energy North Sea.
Nautical chief executive Steve Jenkins said the company had set 2015 as a target for first oil.
He said the company would decide on how to produce from the field in the first quarter of next year, but said Nautical was already in talks with floating production vessel (FPSO) suppliers and operators.
He said: “It is a brilliant reservoir and we are very pleased with some exceptional test results which have good implications for developing the field.
“It is a very big resource and now we have done a flow test it takes away another doubt. This will create a lot of confidence.”
Mr Jenkins said Nautical’s horizontal appraisal well at Kraken, which was drilled by Awilco’s WilHunter, was capable of producing 8,000 barrels of oil per day.
“These results augur very well for the longer horizontal sections we plan to drill in the development wells,” he said.
Mr Jenkins added he expected project sanction and approval to go ahead in the third quarter of next year.
He said that Nautical had also carried out seismic surveys at Ketos and would assess the results before drilling commenced next year.
“Hopefully the seismic tests will prove it and we will start drilling,” he said.
“It is a nice add-on to have, but right now we are very focused on getting Kraken sanctioned.”
In a report, industry analyst Evolution Securities said: “Nautical should be congratulated for operating the Kraken project since 2005 through exploration and appraisal and now has established commercial flow rates for this substantial heavy oil field.”