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UK's 'biggest' onshore gas field discovered near Hull

A drill rig at West Newton near Hull
Reabold, Rathlin and Union Jack have made a promising discovery

A trio of energy companies have struck gold after discovering what could potentially be the country’s largest onshore gas field near Hull.

Reabold Resources, Union Jack Oil and Rathlin Energy said initial analysis of a well drilled in the ground in West Newton, just a few miles north east of Hull, indicated the site could house some 189bn cubic feet of gas - roughly enough energy to power 3.4 million homes for an entire year.

If correct, it would dwarf the UK’s biggest onshore gas field at Saltfleetby in Lincolnshire, which was home to 73 billion cubic feet. It would be the biggest land-based hydrocarbon discovery in the UK since 1973.

“First indications look as good or better than we had before so we are very confident on the size, if not larger,” said Stephen Williams, co-chief executive of Reabold.

The news sent shares in Reabold and Union Jack Energy up by 35pc and 37pc respectively.

Rathlin Energy drilled the initial well at West Newton in 2014, but struggled to get enough money to drill a second one. At the time, the oil price had collapsed and there was no interest among investors to put capital into gas projects.

Reabold, which was formed 18 months ago specifically to back these sorts of projects, invested £3m in Rathlin, giving it a 36pc stake in the company and a 25pc share of the gas project. Union Jack Oil, another oil and gas explorer with a similar strategy, has a 16.7pc interest in the project at West Newton.

The flow rate of the well, which measures how fast the gas moves from the rock to the surface, will be tested over the next three months, offering final proof that the project is viable.

“This looks a cracking result for the partners which should have their share prices flying this morning,” said analysts at Cantor Fitzgerald.

The plan is to drill additional wells, move towards production and sell off the asset to the highest bidder.

“There will be industry interest in this project given the scale and that it is geologically attractive so we will be engaging other parties that want to take asset forward,” said Mr Williams. “All options for future development are on the table.”

There are also indications of “significant liquids” in the well, which analysts reckon could be oil.

West Newton is well positioned in terms of gas because there is a lot of infrastructure in the area already, including major pipelines and a North Sea gas import terminal.

The well is 2,061 metres deep, going through several layers of rock

Unlike most onshore gas fields in the UK, which tend to be made up of sandstone rock, the West Newton discovery is in carbonate.

“Some operators are put off carbonate as they tend to be unpredictable, but when they work they tend to be extremely effective,” said Mr Williams “It’s the quality of rock that typically determines the rate of economic return on capital deployed on these projects.”

The return on investment for Reabold, Rathlin and Union Jack could be massive. Mr Williams is eyeing “extremely high rates of return”.

“It is interesting it has taken a somewhat unconventional group of companies to find this, the largest onshore gas field in the UK,” said Mr Williams. “That is a characteristic of the industry that the larger companies tend to move in sync and very attractive projects can be left behind, so it takes a slightly different perspective.”