London-listed oil firm Premier Oil has signed heads of terms to enter into an infrastructure partnership regarding the Tolmount development in the UK North Sea with Dana Petroleum and CATS Management.
Premier said on Thursday in its financial report for the first half of the year that the infrastructure partnership deal would see the partners jointly construct and own the Tolmount platform and export pipeline as a standalone development.
The deal also includes undertaking the on-shore modifications at the Dimlington terminal.
The Tolmount field will be tied-in to the platform, and a tariff will be paid to the infrastructure owners for the transportation of gas production through the infrastructure over the life of the field.
Premier, as the operator, will maintain its 50 percent equity interest in the license while its share of the capex is estimated at approximately $100 million.
“On this basis, Tolmount is a very attractive project, meeting our economic thresholds even at low gas prices, allowing us to use our UK tax losses and with significant further reserve upside,” said Premier.
Another commercial heads of terms was signed with the operator of the Dimlington terminal to process the Tolmount fluids and undertake terminal modification works on behalf of the Tolmount project.
The company added that tendering of the major project scopes such as platform, pipeline, and drilling rig would begin shortly, with development sanction planned for the first half of 2018.
To remind, Premier selected a development concept in February 2017, comprising of a standalone normally unmanned installation (NUI) and a new gas export pipeline to shore.
The initial phase, which will target the Tolmount main structure, aims to recover 540 Bcf (P50 estimate) of gas from four producing wells at a plateau production capacity of 300 mmscfd.
FEED contract for the Tolmount development was awarded to Wood Group in April. Under the scope of the deal, Wood Group would provide topsides, jacket, pipeline, flow assurance and subsea engineering expertise for the development’s offshore assets, export pipeline, and the onshore terminal.
The original Tolmount discovery was made by E.ON in 2011. Tolmount became a part of the Premier Oil portfolio after Premier bought E.On’s UK North Sea assets in early 2016 for $120 million.
Offshore Energy Today Staff