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IOG sets Blythe, Vulcan FDP plans

Written by  Friday, 26 May 2017 11:08

Independent Oil and Gas (IOG) says it has a busy 12 months ahead, as the company prepares to submit the Blythe and Vulcan final development plans (FDP) in the Southern North Sea, with hopes of hitting first gas by 2019.

Image from IOG.

IOG submitted the draft Blythe FDP late last year. Blythe’s FDP, which includes incorporating Elgood discovery into the Blythe Hub, will be submitted in mid-2017. IOG anticipates approval by late this year, or early next year. The final investment decision (FID) is set for Q1 2019, with first gas to follow in Q2 2019.

Shortly after, IOG will submit the Vulcan Satellites FDP, in hopes of gaining approval in the same timeframe as Blythe.

“We have a busy work program over the coming 12 months and the newly strengthened management and operations team are focused on successfully delivering our gas hub strategy and creating value for all our stakeholder,” says Mark Routh, IOG CEO.

The Blythe gas discovery in the Rotliegendes Leman formation, straddles Blocks 48/22b and 48/23a in the Southern North Sea in license P1736. Blythe needs no further appraisal and has independently verified gross 2P reserves of 34.3 Bcf or 6.2 MMboe

The company says that its latest economic forecasts estimate that Blythe has an un-risked net present value (using a 10% discount rate) in the region of US$44.7 million (£35 million), with a life-of-field average breakeven gas price in the range of 24-25p/therm.

Last year, IOG undertook detailed new interpretations of 1990s 3D-seismic data of its licenses around the Blythe Hub area, which shows estimates of P50 probabilistic gas resources from 382 Bcf to 490 Bcf. In particular, IOG says that the P50 resources at Harvey increased to 113 Bcf, which were previously 16 Bcf; and the P50 resources at Elgood increased to 22 Bcf, previously 11 Bcf.

“The emergence of Harvey as a gas appraisal asset of very exciting potential, favorably positioned between the Blythe and Vulcan hubs, has clearly validated the investment in this work,” says IOG. “The Harvey structure has a previous gas discovery well. A further appraisal well may confirm it as the largest single asset in the group portfolio. This would significantly further enhance what is already a very attractive two-hub development. Moreover, the 3D-seismic reinterpretation work also enabled the most efficient allocation of our capital, by showing that there were better value options than completing the previously negotiated Cronx acquisition.”

Elgood

The Elgood discovery, in License P260 (Block 48/22c), lies immediately to the north-west of the Blythe license.

IOG’s plans for Elgood is for it to be developed as a subsea tie-back to the NUI platform at Blythe and first gas would come after Blythe in 2019.

“Elgood is a good quality Rotliegend Leman sandstone reservoir that tested gas at rates in excess of 17 MMcf/d when it was first drilled by Enterprise Oil in 1991. Gas was also tested from the Hauptdolomit interval 700ft above the Leman interval but at low rates without stimulation. The field was not progressed by Enterprise due to the understanding of its size and gas prices at that time. Based on the group’s latest recoverable volume numbers, however, and developed as a subsea tie-back to Blythe, the company estimates that Elgood has an un-risked net present value (using a 10% discount rate) in the region of £30 million ($38 million), with a life-of-field average breakeven gas price in the range of 16-17p/therm.”

IOG North Sea has 100% working interest in and is operator of License P2260.

Vulcan Satellites

The Vulcan Satellites comprise three fields; Vulcan East, Vulcan North West and Vulcan South, which hold independently estimated 2C resources of 77.4 Bcf, 131.3 Bcf and 112.0 Bcf respectively, 320.7 Bcf or 55.3 MMboe collectively.

These fields lie in Block 49/21a (License P039), Block 49/21d (License P2122), Block 48/25b (License P130) and Block 49/21c (License P1915) in the UK sector of the SNS, some 30-45km east of the Blythe field.

IOG says the fields are considered ready for development with no further appraisal required.

“The company is preparing a joint Vulcan Satellites hub FDP for these three assets, which will be co-developed as a gas hub using up to three NUI platforms with gas exported via the acquired and recommissioned Thames pipeline,” says IOG.

The company is planning to submit the FDP in 2H 2017.

“Reservoir modelling and other technical and engineering studies are ongoing in Q2 2017 as inputs to this FDP,” IOG says. “Once that work is complete, the company intends to commission an updated CPR on the Vulcan Satellite fields during the course of 2017. The company provisionally anticipates the development plan to consist of a total of seven fracture stimulated wells.”

FID on the Vulcan Satellites is expected to be reached by Q1 2018, with first gas expected to follow by Q2 2019.

IOG’s latest economic forecasts estimate that the Vulcan Satellites collectively have an un-risked net present value (using a 10% discount rate) in the region of $371 million (£290 million), with a life-of-field average breakeven gas price in the 15-16p/therm range.

Harvey

IOG recently conducted 3D-seismic reprocessing and remapping of Harvey, which led to an improved understanding of the complex faulting that exists in the overlying strata.

“Based on this work, the internal management probabilistic estimates of the P90/P50/P10 gas initially in place for Harvey are 77/176/403 Bcf and probabilistic estimates of the P90/P50/P10 resources are 44/113/290 Bcf. Therefore, if 13 appraisals confirms these volumes, Harvey has the potential to be the biggest single asset in the group’s SNS portfolio,” says IOG. “Appraisal drilling will be required to better understand gas volumes in place, build a reservoir model and prepare a development plan.”

Under the P2085 license, IOG says it would need to commit to this well before the end of 2017.

“It would most likely be drilled as part of the Blythe and Vulcan hubs development drilling campaign, which is expected in 2019, however depending on other factors it may be possible to accelerate this to 2018,” the company says. “If the appraisal well is successful, the company believes that the most likely development plan would be to install a NUI platform at the field and a connector pipeline exporting the gas to the acquired and recommissioned Thames Pipeline approximately 20km to the south.”

IOG North Sea has a 100% working interest in license P2085, which lies to the east of Blythe (Blocks 48/23c and 48/24b).

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