North Sea FPSO goes offline once again

The oil and gas production at a floating production, storage, and offloading (FPSO) vessel in the North Sea, which is working on oil and gas assets operated by the UK-based upstream oil and gas player Serica Energy on the UK Continental Shelf (UKCS), has been switched off a week after a partial restart was achieved.

Following the suspension of production at the FPSO Triton on October 26, 2024, there was an extended outage that resulted from problems with gas export compression availability. After the completion of the necessary repairs on the compressor, production was anticipated to begin last week.

However, Serica underlined on November 26 that the operational vulnerability would remain until maintenance works were finished. After the Gannet GE-05 well was tied back to the FPSO Triton on October 25, under budget and ahead of time, it was expected to come online in the days that followed.

Following a limited resumption of production last week, Serica claims that an issue with one of the FPSO Triton’s compressor seals was discovered, resulting in production being suspended once more The FPSO operator, Dana Petroleum, is working to identify and execute the necessary repairs, which are anticipated to take two to four weeks.

Therefore, Serica’s production for 2024 is now forecast to be approximately 35,000 to 36,000 boepd. The company reiterates that operational vulnerability will remain until the ongoing works to restore two compressor operations get sorted out, which is still expected in Q1 2025.

With production at Triton suspended, the firm’s current production from the Bruce hub and other assets totals around 28,000 boepd, with about 22,000 boepd of production being gas, benefiting from the current gas price of around 115-120 p/therm. 

Located approximately 190 km east of Aberdeen in water depths of 90 m, the Triton area consists of eight producing oil fields: Evelyn, Bittern, Guillemot West and Guillemot Northwest, Gannet E, Clapham, Pict, and Saxon, which were developed via the FPSO Triton in the UK Central North Sea.

Dana Petroleum Limited and Waldorf Production UK act as Serica’s partners in the Triton cluster after the firm acquired the entire issued share capital of Tailwind Energy in a deal worth approximately £367 million.

After the COSL Innovator rig reached target depth on the next well in Serica’s campaign, the EC1 well on the Guillemot NW field, with a similarly positive outcome to the B-6 and GE05 wells, the EC1 well was expected to start production in Q1 2025. The high-impact drilling campaign is slated to continue with wells on Evelyn and Belinda in H1 2025.

According to the North Sea operator, the Chancellor’s announcement in the Autumn Budget that first-year allowances against the energy profits levy (EPL) would be retained at 100%, along with confirmation there would be no further changes to the EPL or associated reliefs, removed “significant uncertainty.”

As a result, Serica expects to receive full tax relief against EPL on the costs of the remainder of the Triton drilling program. However, the company emphasizes that the increase in the rate of EPL and extension until March 2030, combined with uncertainty about the longer-term fiscal regime, has increased the economic threshold for a longer cycle of investments.

In line with this, the UK firm is reviewing its Bruce infill drilling plans in terms of costs and the prioritization of specific targets. The work, which includes additional subsurface studies, is said to have identified potentially attractive new opportunities around Bruce, where no wells have been drilled since 2012.

“As previously announced by Neo, the operator of the Buchan Horst field (SQZ: 30%), activities on this project were slowed pending clarity regarding the long term fiscal regime and guidance for environmental statements (ESs). Together with the Autumn Budget, the government announced consultations on the post EPL tax regime after and on the ESs. The timetable for the former has not been announced and the latter is due to close in January 2025,” elaborated Serica.

While underlining that it continues to be very active in screening a broad range of cash-generative and value-accretive merger and acquisition (M&A) opportunities, the UK player points out these are being explored not only in the North Sea but also in other geographies.