Two gas development projects offshore the U.K. are gaining momentum. Premier Oil’s Tolmount Field is gearing up for tendering, while Independent Oil & Gas (IOG) is looking to start construction work on its Blythe Hub project by mid-2018, meaning it will also go to the market with tenders.

U.K. player Premier plans to make a final investment decision for Tolmount in the U.K. North Sea in first-half 2018, with tendering for “major project scopes” imminent.

FEED work for the onshore and offshore parts of the Tolmount development is ongoing, said Premier, which operates the field in the Southern Gas Basin.

“Tendering of the major project scopes will commence shortly. We are targeting project sanction in the first half of 2018,” Premier told SEN, adding the estimated capex for the project is about $550 million gross.

Premier added that it is “discussing alternative funding options for Premier’s share of this cost with infrastructure funds.”

Tolmount is “a relatively straightforward development,” Premier said, noting the company needs a standalone normally unmanned platform using four wells and a 48-km (30-mile) subsea gas export tie-in pipeline. There are existing processing facilities onshore that Premier said it will use.

Tolmount was discovered by E.ON in 2011. It was drilled by the ENSCO 92 rig. The field was handed over to Premier when the company acquired E.ON’s U.K. North Sea assets in early 2016 for $120 million.

Subsurface studies on Tolmount East and Tolmount Far East are continuing before any appraisal drilling will be undertaken.

Premier estimated the Tolmount development holds gross resources of between 5.67 Bcm and 28.33 Bcm (200 Bcf and 1 Tcf).

The company plans to target the Tolmount main structure and recover 15.30 Bcm (540 Bcf) of gas from the planned four production wells.

Premier operates Tolmount with a 50% stake but previously said it would consider farming out a 20% stake.

IOG Turns In Blythe Hub FDP

IOG has submitted the field development plan (FDP) to the U.K. Oil and Gas Authority (OGA) for the Blythe Hub, which comprises the Blythe and Elgood fields in the U.K. Southern North Sea.

The Blythe and Elgood gas fields are 100% owned and operated by IOG and located near existing infrastructure and other IOG-owned licenses, which hold the Vulcan Satellites Hub and the Harvey prospect. Both are tieback options to the Thames Pipeline System that IOG is recommissioning to develop its Southern North Sea projects.

Blythe contains 2P reserves of 971.7 MMcm (34.3 Bcf), equivalent to 6.1 MMboe, while Elgood has 623.3 MMcm (22 Bcf) of 2C resources (4.3 MMboe), the company said in a news release.

According to IOG’s FDP, Blythe will require an unmanned production platform, while Elgood will use a subsea tieback.

IOG has a target breakeven price for the Blythe Hub of less than £0.25/therm, equivalent to about $20/boe. Total gas recovery is expected to be about 1.84 Bcm (65 Bcf).

Reservoir modeling has already been completed, while well design work is underway as IOG prepares an Environmental Impact Assessment.

Contracting and funding processes are being combined with the Vulcan Satellites Hub to benefit from synergies, IOG noted.

A May report by analysts Arden Partners stated, “IOG is pursuing a hub strategy, aimed at tying smaller fields together to make up economic developments. Its Blythe/Elgood and Vulcan Satellites clusters follow this principle, with shared infrastructure and a shallow-water location helping to keep costs down and boost returns.”

With regard to IOG’s Southern North Sea costs, Arden added, “This is a shallow-water region, with no field at greater water depth than 30 m [98 ft]. This is expected to allow development using unmanned fixed platforms, helping reduce both upfront capex and ongoing opex. We estimate total capex for the Blythe/Elgood and Vulcan Satellites developments of $385.6 million (£296m), or $6/boe. This compares favorably to capex elsewhere in the North Sea.”

IOG is pursuing an aggressive development schedule that targets first gas from the Vulcan South, Vulcan Northwest and Blythe fields in second-quarter 2019. The other fields, meaning Elgood for the Blythe Hub, would go online in the following months. Hopes are for every field in the Vulcan and Blythe hubs to be onstream by fourth-quarter 2019.

“We are very pleased to have delivered the Blythe Hub FDP for approval to the OGA, thanks to the team’s extensive development work. This is a major step forward from the single-field draft submission in December 2016. The Blythe Hub is of great strategic value to IOG alongside the larger Vulcan Satellites Hub,” IOG CEO Mark Routh said.

“There are significant synergies with the 100%-owned Vulcan Satellites Hub, containing independently verified 2C resources of 9.09 Bcm (321 Bcf), or 55.45 MMboe, which is also intended to be exported via the Thames Pipeline,” he added. “IOG is also 100% owner of the Harvey discovery, which lies between the Blythe and Vulcan Satellites hubs. Harvey needs further appraisal and is currently estimated to have P50 recoverable resources of 3.2 Bcm (113 Bcf), or 19.5 MMboe.”

—Steve Hamlen