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Highlands Natural Resources details Kansas nitrogen exploration plans

By securing access to lower cost supply of nitrogen, the AIM-quoted company could significantly improve the economics of its DT Ultravert well services technology
oil and gas operations
The programme will start with a well re-entry

Highlands Natural Resources Plc (LON:HNR) shares rose on Monday as the explorer updated investors on its project to explore for nitrogen gas resources, to support its DT Ultravert well services technology.

It plans to re-enter and re-complete a well in Kansas. The programme is expected to deliver data that will inform future phases of exploration and de-risk future activities from a safety perspective (the area is seen to be under high pressure).

READ: HNR looks to nitrogen exploration for DT Ultravert

“Our initial discussions with the State of Kansas for this exciting new Highlands project have gone very well, with the State recommending that we use the previously plugged wellbore,” said Robert Price, Highlands chief exective.

“This will deliver significant cost and time savings for Highlands, enabling us to put in place two test wells instead of one.

“We expect to encounter high pressure formations, so the existing well bore will assist with our health and safety planning and provide valuable information when we subsequently move on to drill our second well."

Operational plan

Highlands intends to re-enter the Barret 1-14. It will re-enter, wash down and re-complete the well.

The well will access the Cedar Hills formation, at a depth of around 2,150 feet.

Testing will assess gas flow rates and gas composition.

After that, the plan is to drill a new well at the Charlie-1 location, it will be drilled to a depth of 800 feet and will test the Carlile shale for reservoir characterisation.

Nitrogen supply can be an economics booster for DT Ultravert

HNR, last month, highlighted the early stage successes of the DT Ultravert technology but it noted that the profitable and large-scale commercialisation of the service may depend on the company’s ability to improve cost efficiency.

Nitrogen supply represents one of the largest cost inputs, it explained.

Price, in May, said: “We have been delighted by the early success of DT Ultravert and interest within the oil and gas industry for the solutions that it brings remains high.”

“It therefore makes sense for us to find methods to reduce the cost of application - not only does this make the technology more attractive but it provides us with the benefit of higher margins.”

Previewing the Kansas project, he added: “For relatively low cost, we can investigate the possibility of producing not only enough nitrogen for our own needs but also potentially even becoming a supplier in our own right, thereby creating another revenue stream for the company."

In early morning trading, HNR shares were 2.4% higher at 21.38p.

 -- Adds share price --

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