Dutch Firm 'Leaves Gas in the Ground'
Dutch producer Tulip Oil has decided to leave the gas in the Q10-A field until prices recover, it said in a statement on July 14. Prices typically rise with demand at the start of winter; but this year there is the chance that any rise will be capped by LNG. The Dutch gas hub, the title transfer facility, has seen very low prices as a result of the Covid-19 epidemic and more US LNG arriving in northwest Europe than ever before.
The Dutch North Sea field flowed only 119mn m3 of gas in the second quarter, compared with 198mn m3 in the first, and production is now being maintained at 1mn m3/day, Tulip said.
"The Q10-A field continues to generate strong Ebitda (pre-tax) margins at these production levels," Tulip said, noting that its gas sold for €5.6 ($6.4)/MWh in the second quarter, versus €9.9/MWh in the previous three months. Despite the cut, Tulip is still preparing for future production growth.
"The reservoir models have been calibrated and preparations continue for two additional future Q10 wells," the company said. "Steps are also being taken to increase production capacity substantially by activating existing third-party compression facilities. Spare production capacity is being managed in conjunction with the gas price outlook."
Tulip is also maturing further drilling targets to appraise reservoirs near Q10-A, which was discovered in 2015 some 20 km off the Dutch coast. It consists of an unmanned platform with six well slots. Produced gas is pumped via a 42-km pipeline to the P15d platform, from where it is transported to shore.
Tulip serves as operator of production licences Q07 and Q10a, as well as exploration licences Q10b, Q08 and Q11. Its state-owned partner EBN controls the remaining 40% interest.