ATTEMPTS by gas firm Centrica to reduce its exposure to volatile wholesale prices continued yesterday with a £22million UK North Sea acquisition.
The Scottish Gas owner has bought an additional 67% stake in the undeveloped York gas fields in the southern North Sea, adjacent to its Rough gas-storage facility, which it acquired in 2003.
Chief executive Sam Laidlaw said the deal with energy firm Hess was in line with the company’s strategic priority to reduce exposure to movements in gas prices through the purchase of additional upstream assets. He said it also increased the level of gas reserves available to supply UK customers, adding: “This deal underlines our commitment to invest in new energy supplies from the North Sea at a time when existing North Sea production is in decline.”
The acquisition takes Centrica’s interest in the fields to 90%. After further capital investment of about £220million, Centrica expects to recognise 107billion cubic feet (bcf) of reserves from its enlarged stake, of which 79bcf is directly attributable to yesterday’s deal.
Production costs on the fields are expected to be lower than the average across Centrica’s other joint-venture fields because of the proximity to Rough infrastructure.
First gas flows are expected as early as 2011, with Centrica planning to export production through its Easington terminal, on Humberside.
Centrica said York represented the largest known undeveloped gas reserve in the southern North Sea. It added that it comprised a main south reservoir and a separate east reservoir, both capable of being developed.
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