IOG to Press on with UK Project Despite Weak Market
London-listed Independent Oil and Gas (IOG) is moving ahead with the development of the Southwark, Blythe and Elgood fields in the southern North Sea despite "highly volatile market conditions," it said on March 13.
IOG took a final investment decision in October last year on the first phase of its core project, which is scheduled to flow its first gas in July 2021.
Detailed design for the first stage's two, normally unmanned installations is "well advanced" and “fabrication activities are now under way”, IOG said in a statement. This work is proceeding under a letter of limited commitment, which will be converted into a full contract upon field development plan (FDP) approval, expected next month.
IOG has ordered most of the bulk materials for pipelines connecting the phase-one fields to the Thames pipeline, and pipelaying will take place in the second half of this year. The company has selected a well management company for its drilling campaign, involving three wells at Southwark, one at Blythe and one at Elgood. Competitive tendering is underway to acquire a rig and offshore services for the campaign. Drilling is slated to start in the first quarter of 2021.
"Amid highly volatile market conditions, we are very pleased that IOG's core strengths and competitive advantages remain intact: fully funded to cash flow, proven gas resource base, ownership of key infrastructure, strong team, high calibre joint venture partner, robust project economics with low opex, an exceptionally low carbon footprint, and a clear value creation strategy," CEO Andrew Hockey commented. "These advantages ensure we can maintain a rigorous focus on effective project execution, including utilising market dynamics to improve terms for key contracts."
IOG is yet to sanction the second phase of the core project, which will involve the development of the Goddard, Nailsworth and Elland fields. The overall project is targeting 410bn ft3 of 2P+2C gas reserves.