Oil & Gas

IOG moves to deal with Southwark set backs

IOG (AIM: IOG.L) is looking to deal with recent setbacks to Southwark with hydraulic stimulation operations expected next week for the A2 well.

According to the company, first gas is expected from the well by year end, subject to stimulation progress and operational risks to final hook-up and commissioning.

The stimulation vessel SLB Bigorange XVIII is scheduled to start mobilising to Southwark today.

A resumption plan has been agreed for the Southwark A1 well and first gas is expected from it in the second quarter of 2023.

Earlier this year the southern North Sea-focused gas producer cut its production guidance for the second time in three months amid long-running delays to drilling at the A1 and A2 wells on the Southwark field, which are both key components of its core Saturn Banks development.

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The Saturn Banks Pipeline System has been depressurised ahead of the installation of a final subsea spool connecting to Southwark.

During the pipeline’s shutdown, the firm plans on dewatering and backgassing the Saturn Banks Pipeline System outer section to Southwark.

Production is expected to restart in late November, subject to operational risks and Perenco Bacton terminal maintenance, which commenced overnight on the 4th and 5th of November.

IOG chief executive, Rupert Newall, said: “The IOG team is addressing recent operational challenges in order to restore forward momentum across the business.

“Our new COO Dougie Scott and I have set clear short, medium and longer-term objectives that can unlock shareholder value from our diverse portfolio of gas and infrastructure assets.

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“I am much encouraged by the renewed focus and commitment of everyone at IOG to mitigate risks and deliver these objectives.

“For the remainder of 2022, our top priorities are safe and timely resumption of Saturn Banks production after the Bacton shutdown and successful stimulation to deliver first gas at the Southwark A2 well.

“The pipeline depressurisation and stimulation vessel mobilisation announced today are two steps towards these goals.

“Additionally, having assessed several A1 drilling options in light of well conditions to date, we have decided on an optimal plan to complete and bring it onstream after A2.

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“The increase in cash generation from both Southwark wells can underpin the multiple further value adding activities we are planning over coming months, including Blythe production optimisation, progressing Nailsworth as part of a wider Central Hub development with Elland and Panther, the appraisal campaign at Goddard and Kelham, evaluating the commercial potential of the Grafton area (P2589) via seismic reinterpretation, and submitting bids for a range of complementary assets when the 33rd Round closes in January.

“I look forward to keeping investors regularly updated as we progress through this important phase for the business.”

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