SUSSEX could be transformed into a major oil-producing region following the discovery of billions of barrels worth of black gold at a site near Gatwick.

Following the release of a report produced for UK Oil and Gas Investments (UKOG) yesterday, the company estimated there were between 50 and 100 billion barrels of oil at the Horse Hill-1 well, north of Gatwick near Horley.

The amount is larger than that contained in the North Sea and significantly more than previously thought.

The company said it could extract only a fraction of that oil, but could nonetheless be producing up to nearly one-third of the UK’s oil by 2030 from the Weald Basin.

However, one expert told The Argus he has serious concerns about the claim.

Professor Jim Watson, professor of energy policy at the University of Sussex and research director at the UK Energy Research Centre, said the prediction was “speculative” and doubted whether it could happen.

He said: “Until further exploration is carried out, it is not clear whether the recovery rates quoted (the company has said that 5% to 15% of the oil in place could be produced) will be achieved.

“The report suggests that they have arrived at this percentage range by comparing the Gatwick site with other sites abroad – but such comparisons should be handled with care, and are subject to confirmation once further exploration and testing has been carried out.

“It is not possible to provide a better estimate, but I tend to be sceptical when companies make such claims purely because they have a commercial interest in showing that the potential resource is large.”

With oil prices currently low, prof Watson said new production was more economically difficult, while the extent of possible public opposition and ease of gaining permits could also affect when and whether the project got off the ground.

Environmental campaigners raised concerns about the discovery and have said they are taking the company’s claim that it does not expect to have to frack to get at the oil with a “pinch of salt”.

They also expressed concerns about the environmental impact on the area, which spans Sussex, Surrey, Kent, and Hampshire.

The report was produced for UKOG by reservoir intelligence company Nutech.

Following its release, UKOG’s chief executive Stephen Sanderson said the reserves were a “significant discovery”.

Adding more work was needed to determine its full potential, he told the BBC: “Based on what we’ve found here, we’re looking at between 50 and 100 billion barrels of oil in place in the ground. We think we’ve found a very significant discovery here, probably the largest [onshore in the UK] in the last 30 years, and we think it has national significance.

“We believe we can recover between 5% and 15% of the oil in the ground, which by 2030 could mean that we produce 10% to 30% of the UK’s oil demand from within the Weald area.”

He said the extent of oil resources in the area – which has been explored before – had only been realised now after drilling the deepest well in the Weald Basin in 30 years.

He added: “This has provided new cutting-edge data and interpretations to comprehensively change the understanding of the area's potential oil resources.”

UKOG has an interest of just over a fifth in the Horse Hill site. Shares in the company initially more than quadrupled in value on the announcement yesterday.

It has a 30% direct interest in operator Horse Hill Developments Ltd (HHDL) and a 1.32% interest via its holdings in another company, Angus Energy. HHDL owns a 65% interest in the licence for the well.

Keith Taylor, Green MEP for the South-East, said: “Do we want to hundreds of wells in the Weald brining up oil which actually makes the problem worse, or do we want to invest in our renewable energies which may make things better and keep the lights on?”

Sir Nicholas Soames, Conservative party candidate for Mid-Sussex, said the discovery was “a great blessing” for the country.

He added: “The first think I would say is that I think it is wonderful for Britain that we have found all this oil, it will have a tremendous impact at a time of great difficulty with energy provision. But talk to anyone in the oil industry and the first thing they will say is, any one can find oil, the difficulty is in getting it out of the ground.”

More than 40 billion barrels

MORE than 40 billion barrels of oil have been extracted from the North Sea since the first licences were introduced in 1964 It is expected it will remain active for between 30 to 40 more years until its fields deplete.

Experts have said that production there peaked at around 2.9 million barrels per day but it will be just half a million barrels in 2035.

UKOG has said the site in Sussex could have between 50 and 100 billion barrels of oil in total – potentially bigger than the North Sea.

Economic factors

PRODUCING billions of barrels of oil from this one site could provide jobs, affect other regeneration plans and even impact energy prices.

UKOG’s chairman, David Leginas, tweeted that the discovery had the potential to create thousands of jobs.

If so, it is likely it would be a huge boost for workers affected by declining production in the North Sea.

Professor Watson said the impact on consumer prices might not be particularly big, even if the prediction of meeting between 10% and 30% of the UK’s energy demand was reached. He said: “Oil is a globally traded commodity, and domestic production within the UK will be the same price for consumers as imported oil.

“It is very hard to say what oil would be replaced – though over this timescale, it is likely that UK production from the North Sea will continue to decline.”

Sir Nicholas Soames, Conservative candidate for Mid Sussex, questioned what impact any potential development could have on a proposed second runway at Gatwick.

The proposed expansion is set to create around 120,000 jobs.

A Gatwick spokesman said he did not believe the oil site would have any impact on the plans.

He said: “The site of the current oil find is someway away from the airport’s existing operations: it is not within the Gatwick Airport boundary, nor is it within the boundary of land safeguarded for a new runway.

“In fact, the oil site sits to the north of Gatwick while a second runway would be built to the south of the airport so we believe this would have no impact on our runway expansion plans.”

Environmental factors

FROM global climate change to local noise pollution, the environmental impact of extracting such a huge amount of oil is potentially vast.

Brenda Pollack, Friends of the Earth South-East campaigner, said the site could pose a “huge issue” for local people, with potentially large numbers of wells and lorries going back and forth transporting oil and other equipment, among other problems. UKOG has said it does not think it will need to use fracking, the highly controversial technique that involves blasting water at rock, at the site. The report produced by Nutech said the area “shows good evidence of natural fracturing”.

Ms Pollack said she was taking the claims about fracking with a “huge pinch of salt” and that climate change was another concern.

She said: “With climate change levels we should not be burning any more fossil fuels.”

Professor Jim Watson, professor of energy policy at the University of Sussex and Research Director at the UK Energy Research Centre, echoed that thought.

He said: “The main constraint that is often absent from such stories is climate change. Because of climate change, we will need to limit the amount of fossil fuels we extract and burn.

“If the UK develops this new oil resource, it implies that another country will need to leave more of its oil in the ground if we are to limit climate change and avoid some of the worst impacts on our environment and our economy.”

Ms Pollack added: “The prospect of dirty oil extraction in southern England will greatly alarm local communities and put fracking firmly on the region’s election agenda.”

What next?

UKOG chief executive Stephen Sanderson said more tests are needed to find out whether the oil is worth extracting before anything else will happen.

That could depend on factors including the unstable price of oil, how easy it is to get the oil out of the ground and the extent of opposition – which, judging on past experience and campaigners’ reaction, could be strong.

Even if they do decide they want to go ahead, developers will have to jump through considerable regulatory hoops in order to get the project off the ground.

They will need to get planning permission from the local authorities as well as more licences and permission from several government agencies in order to extract the oil.

The company has said the site could be producing as much as 20 % to 30 % of the UK’s oil demand by 2030, suggesting it wants to get started very soon.