UK Independent Takes on Saltfleetby Gasfield
UK onshore oil-focused independent Angus Energy has taken 51% and the operatorship of the onshore Saltfleetby gas field, Lincolnshire, it said August 19. Subject to regulatory approval, which CEO George Lucan told NGW could take a month, the company will take responsibility for producing the remaining gas – and so enter a new business.
It did not pay any money but it will assume the decommissioning costs, put at £1.75mn. "This amount, taken together with a site remediation estimate of £0.75mn, brings the total potential gross liability to £2.5mn as was originally expected," it said in a stock exchange announcement.
Lucan said it would make sense to commission a competent person's report to assess the reserves, but for now, the existing two wells could be brought into operation without the immediate need for any further exploration. The company could drill some more including sidetracks in the coming year, again subject to OGA approval. In all it could be an eight-well project, he said.
Although the company will use conventional production techniques, modern methods will allow production to continue for another nine or ten years, Lucan said. The company has not yet set up a route to market, as first it needs to establish what the reliable flow rate is, but the infrastructure is there. It is close to the pipeline built to serve the Theddlethorp terminal, where the gas will be processed. "The main thing is to reconnect there," he said, with first gas coming to market at just the wrong time – at some point in the second or third quarter of next year – when prices are at their lowest. Then Angus will have to look at the various options for booking pipeline capacity.
Saltfleetby was formerly owned by Russian gas giant Gazprom's Wingas subsidiary, with a view to conversion into a gas storage facility. But the economics have shifted decisively against storage, and the government has not shown any concrete interest in financing strategic storage. So the field still has some 800mn m³ of gas that would have been used to maintain pressure for storage operations. However, once the field has been drained to the last drop, Lucan said, it could be of interest as a carbon sequestration site.