Independent Oil and Gas’s (IOG) Skipper discovery in the UK North Sea received an increase of recoverable resources by 6% to 34.1 MMbbl.
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Map of Skipper. From IOG. |
Skipper, currently in the advanced stages of planning, will be a vertical well drilled to 5600ft with the primary objective of retrieving good quality reservoir condition oil samples in order to optimize the Skipper field development. The well is located in the Northern North Sea, in Block 9/21a, in license P1609.
IOG said that the company believes an approved field development plan on Skipper would convert the Board’s estimated 34.1 MMbbl of contingent resources into 2P reserves. The AGR Tracs’ historical CPR estimate for Skipper is 26.2 MMbbl 2C resources, using a 19% recovery factor. Successful flow tests from nearby heavy oil fields substantiate the company’s estimate of a 25% recovery factor.
The secondary well objective is to drill two mapped reservoir structures beneath the Skipper oil field in the Lower Dornoch and Maureen formations, in which the CPR authors have mapped structures, which could contain an additional 46 MMbbl of oil in place. If oil is present in these structures these accumulations would be co-developed with Skipper in line with the company’s hub strategy.
The North Sea focused oil and gas companyis progressing discussions and documentation with a major North Sea rig provider to use a semisubmersible drilling rig to drill the Skipper appraisal well, with costs to be met on a mostly deferred basis. The base case is a 25-day contract. Subject to finalization of contract and funding the rig is ready to mobilize at short notice.
Commencement of drilling is contingent upon the timing of approvals relating to well permitting, completion of well funding, completion of the acquisition of the other 50% of Skipper, and transfer of operatorship. All technical and environmental submissions including well permits are progressing with the OGA and DECC.
Terms have been agreed with GE Oil and Gas to provide wellheads and related equipment for this well and additional subsea equipment for the subsequent Skipper development.
GE has approval to provide a US$3 million (£2 million) loan to part fund the Skipper appraisal well. The formal documentation is now close to completion.
Discussions are ongoing with other service providers for the rig as well as vessels, helicopters and logistics support.
AGR has been providing significant well planning support to IOG and subject to OGA approval, will be the well operator for Skipper.
IOG continues to progress discussions to raise sufficient additional capital with the aim of ensuring that the Skipper well is fully funded, including an appropriate contingency. Completion of the acquisition of the other 50% of Skipper and transfer of operatorship are contingent on full well funding.
Based on the company view of 34.1 MMbbl recoverable resources, the breakeven Brent oil price for the project is estimated at $34/bbl. This is the NPV10 = 0 estimate using the company’s cost estimates for a 13-well FPSO development.
“Despite the challenging market conditions, we are making great progress towards drilling this transformational well for IOG. Drilling this well on Skipper secures the license, allows IOG to complete the agreed acquisition of 50% of the license from Alpha and subject to OGA and DECC approval, will see IOG become a license operator in the UKCS. The results from the well should allow us to prepare the field development plan, which upon approval will convert this contingent resource into proven reserves,” Mark Routh, IOG CEO said. “This would see a more than 10-fold increase in IOG’s proven reserves.”
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