UK company IOG plc is considering potential solutions that will allow it to resume drilling operations on the Southwark field in the UK North Sea with a timeline expected to be set following a proper analysis of the seabed survey.
After a two-month hiatus caused by an issue, which was found on one of the legs of the Noble Corporation-owned Noble Hans Deul jack-up rig in October 2021, and following subsequent technical issues with an underwater Remotely Operated Vehicle (ROV) in December 2021, drilling operations started at the Southwark field in late December, resulting in the spudding of the first development well on 30 December 2021.
However, about 10 days into January, IOG reported further problems with drilling operations due to challenges with seabed conditions, which threatened to compromise rig stability.
As a result, the Noble Hans Deul rig was obliged to suspend drilling operations at Southwark as seabed conditions were causing excessive movement relative to the platform.
IOG informed on Tuesday that it has been working constructively together with its drilling contractors – assisted by technical experts experienced in similar situations – to urgently investigate a range of potential solutions.
Andrew Hockey, CEO of IOG, commented: “Working with our drilling contractors and expert consultants, we have also been proactively engineering several options to resume safe drilling operations at Southwark. The timeline is expected to become clearer once we have analysed newly acquired seabed survey data this week.”
The firm also confirmed that the rig was moved on 15 January to a safe location in the Elgood 500m zone, where routine inspections are underway with initial indications showing the rig remains fully serviceable.
Meanwhile, the data from a new Southwark seabed survey is now being analysed to inform relocation and remediation options. IOG also informed that the optimal plan would potentially enable the rig to safely resume Southwark drilling in the next four to six weeks, with scour protection applied after arrival.
The company explained in its latest update that this remains subject to further investigation and an alternative plan may be required with the next steps and timing likely to be clearer once survey data analysis is completed this week.
The IOG-operated Saturn Banks Project – Phase 1 – sanctioned in October 2019 – consists of Blythe, Elgood, and Southwark fields in the UK Southern North Sea. IOG holds 50 per cent and its partner CalEnergy Resources holds the other 50 per cent interest in this project.
Blythe & Elgood first gas expected in February
IOG’s Saturn Banks Project targets a gross peak production rate of 140 mmscf/d (24,000 Boe/d) from gross 2P gas reserves of 302 Bcfe and management estimated 2C gas contingent resources of 132 Bcfe, via an efficient hub strategy based on co-owned infrastructure.
Saturn Banks Reception Facilities (SBRF) construction and pre-commissioning works, which are controlled by Bacton Gas Terminal operator Perenco UK on behalf of IOG, were 93 per cent complete by Sunday, 23 January. IOG stated that its senior management is in continuous dialogue with their Perenco UK counterparts to expedite onshore completion as fast as possible.
While total personnel numbers are limited by the terminal operator’s safety limits and have also been affected by Covid-19 related absences, IOG explained that progress is being made and full readiness for commencement of back-gassing of the offshore pipeline system is targeted for mid-February with first gas from both Blythe and Elgood being expected approximately a week thereafter.
“Although it is very frustrating that it has been slower than planned, we are making every effort with the terminal operator Perenco to facilitate the fastest possible resolution. An expanded team is working days and nights aiming to be ready for back-gassing in mid-February, with first gas expected approximately a week later,” added Hockey.
The company claims that an important recent milestone was the handover of Blythe platform communications and Elgood subsea controls to the Bacton control room following successful testing of the integrated control and safety systems. The firm also added that the remaining work primarily consists of the final electrical and instrumentation, construction and pre-commissioning, and system leak testing, all of which are being executed on both day and night shifts.
“We will keep shareholders regularly updated through these important final steps in bringing Phase 1 onstream,” concluded Hockey.
Phase 1 capex to go 20-25 per cent over budget
IOG previously indicated that the gross outturn total Phase 1 capital expenditure was anticipated to exceed the original £305.5 million (over $411.2 million) field development plan (FDP) budget by up to 10 per cent. However, unplanned interruptions to the drilling campaign, additional requirements for offshore pre-operating activities, and the need for an expanded scope of subsea and pipeline installations over recent months have now increased the anticipated gross outturn total Phase 1 capital expenditure to up to 20-25 per cent over the FDP budget – once the Southwark wells have been completed – based on the company’s latest statement.
Despite the anticipated increase in capital expenditure, the firm’s revised project schedule shows no additional financing requirement is currently expected to be required to bring all three Phase 1 fields on stream. Although, IOG remarked that it recently signed a €5 million (over $5.6 million) working capital facility with a recognised international bank as a prudent additional measure.
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