Serica gearing up for exploration drilling and well intervention in North Sea

UK-based oil and gas company Serica Energy has revealed a few activities planned for 2022, including a well intervention campaign to boost production from existing wells along with plans to drill an exploration well in the UK North Sea, in the hopes of finding more hydrocarbons.

Serica Energy reported on Thursday that it would continue with its programme of through-cycle investment in its diversified portfolio of assets. In line with its plans for 2022, a rig has been contracted for the drilling of the high-impact North Eigg exploration well in the summer of 2022.

Back in December 2019, the company received an Out of Round award of a 100 per cent interest in the UK petroleum license P2501 – blocks 3/24c and 3/29c – containing two high-pressure, high-temperature prospects. These are the North Eigg and the South Eigg, however, the former is the primary prospect estimated to contain 360 bcf (P50) and potentially over 1Tcf (P10) of recoverable gas.

Mitch Flegg, Chief Executive of Serica Energy, commented: “We will continue to pursue our investment-led strategy this year with a planned well intervention programme on Bruce and Keith in addition to our exploration well at North Eigg. As always, we continue to look for acquisition opportunities that fit our criteria and will add value for our stakeholders.”

The North Eigg is a gas prospect located close to Serica’s Bruce, Keith and Rhum (BKR) fields and it is expected that a successful discovery could be tied back to existing infrastructure in a carbon-neutral manner. In addition, the company has put plans in place for a well intervention campaign to take place in 2022 to improve the production potential of several Bruce and Keith wells during subsequent years.

“2021 was a very busy year for Serica, which reinforced the value of our through-cycle investment strategy as our expenditure during the low gas price environment of 2020 on the R3 and Columbus projects bore fruit this year. The importance of our contribution to the provision of vital lower carbon gas to the UK’s energy market was also demonstrated,” remarked Flegg.

In its presentation for the year ended 31 December 2021, Serica explained that the introduction of R3 and Columbus had increased its gas production to 85 per cent. The firm considers this to be a vital part of the UK’s energy mix, as the country moves towards net-zero. It is worth reminding that the Rhum R3 well was put into production in late August 2021, adding up to 6,000 boe/d net to Serica.

Furthermore, the first production from the Columbus field was achieved in late November 2021 and early production was initially constrained due to the temporary unavailability of full capacity in the export system, however, average rates of 3,270 boe/d net to Serica were still achieved in the period up to year-end.

Serica is the operator of BKR fields, which makes it responsible for over 5 per cent of the UK’s gas production with a significantly lower carbon footprint than imported LNG. Since the BKR net cash flow sharing arrangements came to an end on 31 December 2021, the company entered into a new phase from 1 January 2022, where it will be retaining 100 per cent – in 2021 it was 60 per cent – of the net cash flow from the BKR fields.

This will allow the firm to benefit fully from the recent increase in production levels, thus, the North Eigg gas prospect could boost production even further. To remind, Serica extended its contract with Odfjell Drilling earlier this month for operations on the Bruce platform. Located 340 kilometres northeast of Aberdeen in the UK Sector of the Northern North Sea, the Bruce complex consists of three bridge-linked platforms.

The company further adds that growing cash balances offer increasing options for further investment, acquisition, and distributions, thus, it intends to continue evaluating the optimum balance between these elements to deliver further shareholder returns.