Dana Petroleum, of Aberdeen, intends to withdraw from a North Sea gas project which had been earmarked for an investment decision in the near term, it can be revealed.
Licence partner Parkmead Group is expected to take over as operator of the Platypus project in the coming months, subject to regulatory approvals, according to a letter circulating among supply chain firms.
An industry source said the decision to pull out meant Dana’s reputation with frustrated service companies who were tendering for Platypus contracts would be badly damaged.
The letter indicated that Parkmead and CalEnergy Resources, the other licence partner, hope to press ahead with the project, but the development plan is expected to be revised.
Dana, a wholly-owned subsidiary of Korea National Oil Corporation, currently has a 59% stake in the licence, which it intends to relinquish.
The Oil and Gas Authority (OGA) can take up to three months to process relinquishment requests.
London-listed Parkmead Group, which is headquartered in the Granite City, has a 15% working interest and CalEnergy, a subsidiary of US firm Berkshire Hathaway Energy, has 26%.
Parkmead and CalEnergy intend to assume Dana’s equity, the letter added.
It is unclear whether they will look to attract another partner to help cover the development costs.
Platypus is thought to hold mid-case recoverable reserves of 105 billion cubic feet of gas.
Partners handed in a draft field development plan and environmental statement for the project in October 2019.
They intended to develop Platypus as a two-well, subsea tie-back to the Perenco-operated Cleeton platform in the southern North Sea.
They initially hoped to reach a final investment decision (FID) in the second quarter of 2020.
But last year’s Covid-19 outbreak and slump in gas prices led to delays.
The OGA granted a 12-month licence extension in June 2020, giving partners breathing room to reassess the project.
In an update published in August on the OGA’s Project Pathfinder portal, Dana said it would “re-engage” with suppliers before the end of September 2020 to “understand the viability of sanctioning” Platypus in mid-2021.
The source said Platypus had always been challenged economically and that Dana’s owners were prioritising investment in other areas.
The company has a 50% stake in the Premier-Oil-operated Tolmount project in the southern North Sea, which is due to come on stream in the second quarter of this year.
And analysts expect an FID to be made on the Tolmount East development project in 2021.
Tolmount East, announced as a discovery in October 2019, would be developed as a tieback to the platform on the main Tolmount field.
In addition, Dana has been planning a life-extension project on the Triton area, according to Tailwind Energy.
London-headquartered Tailwind has stakes in several fields which produce via the Triton vessel, in the central North Sea.
A spokesman for Dana said: “As result of a recent review of the Platypus project and after careful consideration, Dana has decided to withdraw from the development and the P1242 licence.
“Our project partners and companies who have tendered for project work have been fully appraised of the situation.
“Dana will work closely together with the OGA and joint venture partners to make this a smooth transition.”
Dana also raised eyebrows in August 2018 when it sold its entire stake in the Arran project in the central North Sea to RockRose Energy.
Shell, which took over from Dana as operator, sanctioned the project two months later and is tying Arran back to its Shearwater platform.
Dana said in a set of full-year accounts that the risk profile for that project was “not supportable”.
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