Point of Ayr

IGas Energy’s Point of Ayr licence has potential for CBM, shale and conventional gas production. This makes it a particularly interesting resource for IGas. In 2009, an independent report by Equipoise Solutions put the conventional gas potential at up to 37 bcf unrisked within the licence area. Several potential sites for drilling have been identified onshore in the area.

Onshore, the acreage comprises PEDL 107, which lies to the west of the Dee estuary, approximately 15 miles west-south-west of the City of Liverpool and immediately to the east of the town of Prestatyn within the county of Flintshire. Westphalian A and B age strata are present in the east of this licence, where they have been extensively mined within the abandoned Point of Ayr and Mostyn collieries. PEDL 107 has limited potential for CBM as a result. Offshore, the acreage comprises SPPL 1481. This is contiguous with the onshore licence, and includes offshore blocks 110/18 (part), 110/19 (part) and 110/23 (part). The Westphalian A and B strata mined in PEDL 107 are proven in Block 110/19 (part) by a series of exploration boreholes. 2D seismic lines from a number of sources cover this area and support the presence of coal away from borehole penetrations. As a consequence, IGas sees potential for CBM within the offshore blocks. Collectively, these licences are referred to as Point of Ayr.

Geologically, the area under licence is formed by strata of Carboniferous and Permo-Triassic age, deformed as an upthrown anticlinal structure, plunging northwards. For the most part, the onshore outcrop (within PEDL 107) is composed of strata older than the Westphalian coal measures. Mining in the area focussed on Westphalian coals, which, from the available borehole data, are at depths of approximately 650 feet to 2,300 feet below datum. Areas of the licence have been extensively mined and are not prospective for CBM as a result.

PEDL 107 is now in its second term and there are no outstanding licence commitments.

SPPL 1481 was acquired by IGas Energy as part of the 24th UK Offshore Licensing Round and carries a contingent obligation to drill one well before March 2011. The first term of this licence expires on 31 March 2011, when a 50 per cent relinquishment may be required.

IGas Energy has already taken a preliminary look at the shale potential of the Point of Ayr acreage. Initial indications are that the shale extends over the whole acreage and has an expected average thickness of over 800 feet. In 2010, Equipoise Solutions Ltd (acting on behalf of IGas Energy) undertook an independent review of the shale gas potential of Holywell shale within the Point of Ayr license. Estimates of GIIP aggregated over all of these interests indicate a low net total of 31 bcf shale gas, a middle net total of 412 bcf shale gas and a high net total of 1,945 bcf shale gas. These values assume that the Holywell shale is normally pressured. IGas intends to conduct a focussed programme of activity which will enable the Company to understand better the shale potential that is both contained within its acreage and complementary to its primary objective of commercial CBM delivery. The shale related activity would include 1) data acquisition (core/log data etc.); 2) core analysis (geochemistry/geomechanical); and 3) sponsorship of an M.Sc at a major UK University to further study the Holywell shale.