Independent Oil and Gas (IOG) has snapped-up a disused pipeline in the Southern North Sea (SNS).
Chief executive Mark Routh dubbed the pipeline the “cornerstone” of his company’s holdings.
He said: “This pipeline will be the cornerstone of our Southern North Sea portfolio which, subject to remediation, will enable us to deliver our approximately 0.5 trillion cubic feet of gas resources to the UK market.
“During a period of relatively low gas prices we have bought, at very attractive prices, quality assets which were considered effectively stranded. Subject to completion of the acquisition, full ownership and control of the export route creates significant value for the company, especially given the recovery in UK gas prices. Owning our gas portfolio and export infrastructure 100% will enable us to accelerate both the development planning and funding processes.”
Under the terms of the Sale and Purchase Agreement, IOG would also acquire the associated onshore reception facilities. IOG plans to use this pipeline as the main export route for all of its SNS gas assets.
The firm will then commission pigging inspection to ensure pipeline integrity.
A company spokesperson added: “The company then intends to re-commission it to enable evacuation of the gas from both the Company’s Blythe hub and Vulcan Satellites hub. This will require the installation of inter-field pipelines and tie-in points as is normal for any gas field development. With 300,000 million cubic feet per day (“MMcfd”) capacity, the pipeline could also accommodate export of the newly enlarged resources in the Harvey discovery, subject to further appraisal.
“This acquisition is of great strategic importance as it provides an export route for the Company’s SNS gas development portfolio which IOG has acquired at low cost, mainly due to concerns over the ability to export the gas. Ownership and recommissioning of this pipeline will solve this issue, providing a direct export route for the Company’s gas assets into the UK market. By owning the gas assets and the export route 100%, IOG will benefit from clear control over the entire process from field to market. There may also be potential for third parties to use the pipeline in which case IOG would benefit from tariff income.”
The pipeline and the terminal has capacity to receive in excess of 400 bcf of gas at rates up to 200 MMcfd for more than 20 years.
The firm also gave an update on its Skipper appraisal well, which cost £10million to drill.
The oil has a high density of approximately 11 °API, a high viscosity and a high Total Acid Number.
However, the firm added Skipper oil is mobile in the very high permeability reservoir and is also mobile at ambient conditions thanks to its very low wax content.
Further technical and commercial evaluation is being carried out.
Mr Routh added: “The update on the Skipper crude quality has confirmed the earlier results and has provided us with some new data. The oil qualities are likely to be challenging, however given the oil’s mobility in the reservoir we continue to explore the potential extraction and marketing options to deliver value from the asset.
“We look forward to providing further updates on our portfolio in due course.”
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