Swiss company Ineos Group is looking to reduce further investments in the Breagh gas field in the UK North Sea causing a delay in the restart of drilling activities on the field.
Ineos is the operator of the field with 70% interest.
According to Sterling Resources, a Canadian-listed oil and gas company and a partner in the field with 30% interest, following completion of the acquisition of Dea UK’s UK North Sea business from LetterOne Group by Ineos Group in December, Ineos is conducting a review of further investments in Phase 1 of Breagh in relation to potential cost reductions and the timing of restart of drilling activity.
Sterling explained that such drilling activity would involve the drilling of up to four new wells and hydraulic stimulation of up to two existing wells, in addition to all new wells.
Given that no rig contract has been signed, Sterling’s estimate of when the drilling activity could start is set for April 2016. However, Sterling added, the activity could be further delayed.
Sterling previously estimated the rig activity would start in January 2016.
Two wells budgeted
Of the four potential new wells and the potential hydraulic stimulation of two existing wells, two wells (both hydraulically stimulated) and one hydraulic stimulation of an existing well have been budgeted and approved by the partnership for a 2016 campaign, Sterling stated.
The remaining drilling activity, two further wells and one re-entry and hydraulic stimulation of an existing well, is not yet budgeted and Sterling says it expects plans to be firmed up during the second or third quarter of 2016, following final interpretation of 3D seismic acquired in 2014 and associated reservoir studies.
Review of the potential second phase of development of Breagh is likely to continue through 2016, also following-on from the 3D interpretation and reservoir studies, the company added.
The Breagh field is tied back to a normally unmanned installation (NUI) on the western area of the field. The Breagh A offshore platform transports the produced fluids through the Breagh 20” export pipeline to the onshore Teesside Gas Processing Plant (TGPP), for process treatment, fiscal metering, and sale.
Sterling also added it does not expect any delay to the onshore compression project. Construction work is expected to start during the second quarter of 2016 with compression operational around the end of the third quarter of 2017.
According to Sterling, production at the UK Breagh gas field continues slightly ahead of management’s expectations. Production in December 2015 averaged 28.1 million standard feet of sales gas per day (“MMscf/d”) net to Sterling compared to 26.1 MMscf/d in the RPS mid-2015 reserves evaluation.
The field was in continuous production throughout December and January to date.