Drilling to return to seven-year-old UK field as it hits oil production milestone

EnQuest has reached a milestone of 70 million barrels of oil produced during May from its field in the Northern North Sea which has been online since 2017. The UK oil and gas company noted it had delivered strong operational performance across its operated portfolio so far this year, with full-year guidance remaining unchanged.

EnQuest’s production for the first four months of the year averaged 43,595 Boepd (guidance 41,000 Boepd to 45,000 Boepd), with continued top quartile production uptimes across the operated portfolio maintaining full-year average 2023 production levels and partially offsetting the impact of natural field declines.

“EnQuest has continued to deliver strong operational performance across our operated portfolio during the early part of the year, with production to the end of April averaging 43.6 Kboed (above the mid-point of guidance),” said EnQuest Chief Executive, Amjad Bseisu.

The Kraken field net production averaged 13,700 Boepd, reflecting 98% production uptime and water injection efficiency of 95% as partial offsets to natural field decline. This continued strong operational performance saw the field, which produced first oil on June 23, 2017, reach the milestone of 70 million barrels of oil produced during May.

Planning work is underway ahead of the planned return to drilling at Kraken during 2025, with joint venture approval granted to order select long lead equipment required to facilitate the two-well sidetrack program.

Production at Magnus averaged 15,875 Boepd, with a production efficiency of 86% for the period. Following an unscheduled one-week shutdown due to the replacement of a seawater lift pump in Q1, a rolling changeout program has been initiated to minimize downtime going forward.

The Magnus five-yearly rig recertification scope is expected to be completed in June, ahead of a return to drilling activity in the second half of the year. Two sidetrack wells and multiple-scale squeeze activities are planned before the end of the year. Work to optimize the annual maintenance shutdown is ongoing.

The non-operated Golden Eagle net production for the year was 3,778 Boepd, with asset production efficiency of around 95%. The 2023/24 platform drilling program is ongoing, with the first well brought online in January 2024. The second well did not encounter sufficient hydrocarbon-bearing sands so it was not completed, while the third well is in the process of being completed for production. The final planned well in the program is a water injector, due to be completed in mid-2024.

Production from other UK upstream assets averaged 2,528 Boepd, reflecting a strong uptime of 86% at the Greater Kittiwake Area, EnQuest reported.

Project activity at the Sullom Voe Terminal (SVT) is underway, with the start of construction of a right-sized oil stabilization facility, which will enable the continued production from the East of Shetland basin, reduce the terminal power demand and associated emissions, decrease operating costs and release the existing stabilization facility for decommissioning, reducing the risk profile at site. This project is on schedule to be delivered in early 2025.

The construction of the new stabilization facilities provides an opportunity to connect SVT to the electrical power grid due to the lower power demand, which would allow for the retiral of the Sullom Voe Power Station, reducing terminal emissions by 90% and lowering operating costs. This is at an early stage but it is anticipated that first power from the grid connection could be achieved during 2026.

Average production at PM8/Seligi for the first four months of 2024 was 7,714 Boepd, with production uptime remaining high at 93% and benefitting from the availability of all compression units. Seligi gas, which is produced and handled by EnQuest in exchange for a gas handling and delivery fee, represented 1,486 Boepd of year-to-date production. Discussions are ongoing between with Petronas to expand on the existing foundational strategic agreement relating to Seligi gas.

EnQuest has drilled and completed the first infill well of a three-well program using a tender-assisted rig. First oil was delivered on May 9, with production rates in line with expectations as optimization work is ongoing. The remaining two wells in the program will be completed by July. Three workover wells were completed in May, with the hydraulic workover unit now being mobilized for the six-well plug and abandonment campaign. The 2024 shutdown is planned for the end of Q3 to complete critical integrity and maintenance works, including a turbine control panel upgrade to further improve compressor reliability.

Speaking about decommissioning, as of April 30, EnQuest has completed the plug and abandonment of ten wells in total across its Heather and Thistle projects, against an annual target of 25 wells. According to the company, this work has delivered a probabilistic average cost per well for P&A of circa £2.5 million, 42% lower than the industry benchmark of circa £4.3 million.

“During this period of political and fiscal uncertainty, we remain actively engaged in efforts to advocate on behalf of the sector and the 200,000 jobs which it supports to create an environment which supports investment in the UK’s delivery of energy security, decarbonisation and a just energy transition,” Bseisu said. 

“Following the commencement of EnQuest’s inaugural shareholder returns programme in April and with the foundations set for a pivot to growth during 2024, we are focused on delivering that growth through transformative acquisitions; utilising our differentiated operating capability and advantaged tax position to accrete value.”