One of the themes of 21st Century oil and gas exploration has been how the sector can get at hydrocarbon reserves that are deemed uneconomical using traditional equipment and methods. Major players like Royal Dutch Shell plc think they have the answer to exploiting what have long been regarded as “stranded” gas reserves via the Prelude FLNG project. But small oil and gas companies can be innovative too.

Enegi Oil plc is a small exploration and production company, which had been focused on a variety of onshore and offshore exploration projects in Canada and Ireland for several years. However, the firm had operational problems with assets it had acquired in Newfoundland that “precipitated considerable soul-searching,” Enegi CEO Alan Minty said, about what small-cap oil and gas firms should be doing.

“They’ve got to try and avoid risk concentration. If you've got one major exploration asset and you get it wrong you've got to go back to the market to get more funding, you've lost credibility and you're still living with the fundamental uncertainty of that type of asset," Minty told Rigzone in a recent interview.

So Enegi began talking to an engineering firm called Advanced Buoy Technology (ABT) to explore its concept for using a floating buoy to extract oil and gas from an offshore reservoir. And in March 2012 the company entered into a strategic partnership with ABT to apply for offshore licenses in the UK North Sea under the 27th Seaward Licensing Round.

The idea was to use ABT’s expertise in buoy technology to come up with a way of commercializing hydrocarbon assets in the North Sea that were too small to be exploited by traditional means, such as by installing an oil platform or using an FPSO (floating production, storage and offloading) vessel. At the time, Enegi pointed to research from Wood Mackenzie that estimated there were some 287 discovered fields in the UK North Sea, containing approximately 2.2 billion barrels of oil and 9 trillion cubic feet of gas, that were considered non-commercial. ABT and Enegi also identified 58 discovered fields in the UK North Sea that were technically suitable for development using buoy technology.

Since then, Enegi has managed to find more fields, according to Minty.

"We've trawled through several databases and we've identified slightly under 600 marginal fields that are suitable for this technology, with about a third of those in the North Sea," he said.

In October of last year, Enegi and its partner were successful in securing two North Sea licenses from the UK Department of Energy and Climate Change in the 27th licensing round. These contained the Phoenix discovery and the Malvolio prospect, both of which contain clear indications of hydrocarbons after previous exploration and appraisal drilling. These licenses were not developed due to limiting economics, but Enegi and ABT believe they can make them economic through their buoy technology.

Enegi believes the buoy system can be used on fields with between 10 and 30 million barrels of recoverable oil. For example, the Phoenix discovery, which has shown a 30-foot oil column, is estimated to contain some 15 million barrels.

ABT’s buoy system uses a group of proven technologies and consists of an unmanned buoy that sits just below the surface of the water. It houses production and processing equipment to produce oil from a reservoir before storing it in a seabed storage facility. A tanker periodically comes along to take the oil away.

The ABT system works in water depths of between 200 feet and 2,000 feet with an oil production rate of between 1,000 and 20,000 barrels per day.

“The beauty of the buoy, of course, is that it can be removed very easily; it can be moved to other locations. It’s got a 20-year life and it can be used on two, three, maybe even four projects,” Minty said. “So it’s a very, very flexible approach, although we recognize that it’s not a panacea for all marginal fields.”

Minty expects the ABT buoy system to help Enegi win partnerships with other exploration companies and gain stakes in several more fields, rather than license the technology out to other exploration and production companies.

“We're now discussing with a number of people about how to apply this technology and how to structure the right deals. We're not interested in trying to sell the technology to anyone,” he said. “We're interested in a business model where we're involved in the development of the project itself. That's how we can make the economics work."

And the first development using the ABT buoy system could take place within months.

“We are confident enough to expect that we will have a number of projects moving forward within six months,” Minty said. “It may even be sooner than that.”