Serica's North Eigg hits six-week delay
Serica Energy, the UK-listed player active in the North Sea, admitted on September 14 that its exploration campaign at the North Eigg prospect was likely to be affected by significant delays – up to six weeks.
Rig failures and lead times for sourcing new equipment have led to a postponement in North Eigg's drilling operations. Delays were experienced by Serica while drilling some of the well's top-hole sections, while work on the hole's third section was halted because of critical problems during "pre-job testing".
The problems will come at a cost. Serica expects to book an additional £3mn to its net cost share, after tax, for North Eigg in which it owns 100% equity interest. But Serica does not envisage changes to the ultimate geological outcomes, and indeed expects UK government schemes - specifically investment allowances against the new energy profits levy - to cover the cost of delays.
Serica said: "A replacement has been sourced and planning is underway to transport this to the drilling rig." North Eigg is one of two high-pressure, high-temperature prospects wholly-owned by Serica, along with South Eigg, both of which lie proximate to Serica's existing operated stakes further south, at Rhum gas field and Bruce/Keith.
In the event of a commercial discovery at North Eigg, Serica would develop the field via subsea tie-back to existing facilities at Bruce, generating domestic sales in line with the UK's energy security strategy, unveiled by the last Conservative government back in April.
Together with South Eigg, the exploration area contains an estimated 100mn barrels of oil equivalent, in terms of P50 prospective resources. North Eigg is considered the primary target, seismic studies of the area having delineated a structural trap reservoir structure, backed against the East Shetland bounding fault.
Mitch Flegg, CEO of Serica Energy, said: "This high-impact exploration well is the latest in a series of capital investment projects undertaken by Serica with the objective of increasing our production in an environmentally sensitive manner.
"This programme is designed to help increase the UK's security of supply and reduce its reliance on imports. The technical delays encountered on this project are extremely frustrating but do not impact either the chance of success or the significant prospective volumes of this exploration prospect."