Ithaca Energy’s chairman says the company could sanction the West of Shetland project on its own but would prefer to bring in partners ahead of any major decisions.
The company published its year-to-date results on Wednesday, outlining plans to invest across the portfolio and in key projects such as Rosebank, Cambo and Fotla as part of its so-called “buy, build and boost” strategy.
Ithaca (LON:ITH) is actively seeking partners to farm-in to the Cambo field while it awaits the completion of Shell’s formal exit from the licence. Conclusion of this process will enable it to take “full control” of any final investment decision (FID) timeline and work programme, it said.
Speaking during an analysts call accompanying the results executive chairman Gilad Myerson said Ithaca could approve the project on its own, but that this was not its preferred strategy.
“Can we sanction Cambo at 100%? Yes we can, theoretically.
“Do we want to? No we don’t.”
“I think that projects need to be done with partners, so we are looking to find a partner or multiple partners to come in and we are having multiple discussions.”
He noted there were two options to progress this: find partners first and then sanction the development, or reach FID and bring a farm-in partner on further down the line.
“Currently our base case is we want to find a partner first and then go ahead and sanction, he added.
“Shell and Siccar Point were willing to sanction in 2021, we were willing to sanction in 2022 and therefore from a development standpoint it is really mature and is ready for sanctioning.”
© Ithaca EnergyIthaca on Cambo licence extension discussions
CEO Alan Bruce reaffirmed that the first step in this process would be to complete the full licence acquisition from Shell – a process he said was being worked through with the North Sea Transition Authority now.
That should complete in the coming months, but the operator faces a looming deadline to submit a field development plan (FDP) before the current two-year licence for the field expires on 31 March 2024 – though a potential extension is in the works.
It would mark the second FDP deadline extension at the field after former holders Siccar Point Energy and Shell were granted a two-year reprieve in early 2022, despite the latter’s decision not to move the development forward.
Mr Bruce said all technical work on the FDP had already been completed, with “commercial issues” being the only outstanding component.
“We’re also working with the regular on a potential extension to that milestone around field development approval given the challenges around getting the partnership group aligned. We’ll work on that over the course of the next several months,” he added.
Support from the top
Asked whether the company had any reservations over the current political environment or an impending general election, Mr Myerson pointed to a constructive meeting between the sector and No.10 in recent weeks.
“That was really a call to action from industry – we’ll be asked as an industry what need to happen for us to increase production and increase energy security for the UK, so we take that as a very strong message coming from No.10 and the Secretary of State,” he said.
“There is an unknown around the election next year and who will come in.
“The mood music has changed significantly over the last couple of years, and we believe that any government that comes in will be supportive of developing large-scale fields specifically for energy security in the UK, and therefore we aren’t that concerned about it.”
Further momentum for the company is offered by the 33rd Licensing Round, in which Ithaca secured several new opportunities including near the Greater Britannia Area.
Mr Bruce said the company’s exploration focus would be “leveraging assets that we have and maximising value from those.”
“Beyond that it’s a really targeted approach. We have an exploration opportunity near Captain that we’re keen to progress and some opportunities west of Shetland that we’re evaluating,” he added.
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