May 1, 2020

‘Welcome boost’ for UK offshore sector as gas project gains approval

'Welcome boost' for UK offshore sector as gas project gains approval

The Oil and Gas Authority (OGA) has given the nod for a southern North Sea gas project to go ahead.

London-listed Independent Oil and Gas (IOG) said the decision was a major milestone for the company and its partner CalEnergy Resources.

IOG farmed out 50% of the licences to CalEnergy in July, with the Australia-headquartered firm paying an initial £40m plus up to £125m for the first two phases of the project.

The partners made a final investment decision on phase one of their “core” project in October and were targeting first gas in July 2021.

The core project comprises the development of 410 billion cubic feet of gas reserves across six discovered southern North Sea gas fields.

Phase one involves the development of Southwark, Blythe and Elgood, and phase two covers Goddard, Nailsworth and Elland.

IOG said there was “no impact” to its schedule from the on-going industry and macroeconomic turbulence, but insisted the safety of staff and contractors was top priority.

The company expects to award contracts for platform fabrication, pipelay and subsea work and well management “shortly”.

Construction activities are ramping up to deliver the Southwark and Blythe platforms on schedule in the first half of 2021.

And the rig tender for the phase one drilling programme is progressing well.

IOG chief executive Andrew Hockey said the endorsement from the OGA was a “welcome boost” to the UK offshore industry and supply chain “given the current environment”.

Mr Hockey said: “This innovative low-carbon project, re-using previously decommissioned infrastructure to develop otherwise stranded domestic gas resources, is a definitive example of maximising economic recovery (MER), in line with UK government strategy.

“In such a turbulent and unpredictable environment, we remain as focused as ever on leveraging our core strengths: funded status, proven resource base, infrastructure ownership, excellent partner, low unit costs, low carbon footprint and experienced team with a clear value creation strategy.”

CalEnergy is a subsidiary of US firm Berkshire Hathaway Energy, which, in turn, is part of the huge Berkshire Hathaway investment firm led by US tycoon Warren Buffett.

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