IOG inks master services agreement with Schlumberger

Independent Oil and Gas (IOG) has signed a letter of intent and consultancy master services agreement (CMSA) with Schlumberger in relation to development of its two Southern North Sea gas hubs, the Blythe Hub and the Vulcan Satellites Hub.

The CMSA provides a framework for Schlumberger to assist IOG in the period prior to final investment decision on the SNS development project.  A jointly established team will work to complete the field development and execution plans.

Mark Routh, CEO and Interim Chairman of IOG said: "We look forward to finalising terms with Schlumberger and other key contractors in the coming months.  Our commercial model aligns the incentives of all project participants towards the efficient delivery of IOG's substantial gas resources.

"Discussions with potential gas offtakers also continue to progress well and it is envisaged that these arrangements will include gas prepayments which would also contribute significantly to our development funding."

To develop the hub, IOG acquired the Thames Gas pipeline, which previously took gas into Bacton gas terminal, onshore England. It was will be recommissioned to transport some 500 Bcf from the Blythe, Elgood, and Vulcan gas hubs. IOG plans to drill 10 wells, lay over 70km of new connector pipelines and install up to five new platforms for these hubs. The Harvey asset, between Blythe and Vulcan, is likely to also be part of the project.

“We saw a pipeline was empty and, if we recommissioned it, we would have a pipeline that could start to unlock these stranded assets,” Routh said.  Acquiring the pipeline from Perenco, Centrica and Tullow cost £1, with IOG taking on all future liabilities, which amount to several million pounds.

Environmental surveys started in February, and in July, a field development plan was submitted.

Work to recommission a 60km section of the 24in Thames pipeline was underway in July, with plans to send intelligent pigs down it to assess its condition. 

The project will be the first recommissioning of a decommissioned SNS pipeline. IOG has been inviting the supply chain to work on the basis of payment on production, estimated at 150 MMcf/d at its peak by 2020.

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