Tweaks to North Sea gas project’s concept encapsulate ‘far superior’ export route

ASX-listed Hartshead Resources has made changes to the gas offtake route for natural gas development in the UK sector of the North Sea and submitted a revised concept select report addendum (CSRA) to the North Sea Transition Authority (NSTA) on its own behalf as its joint venture (JV) partners did not back the submission.

Following the completion of a farm-in deal, Viaro Energy’s RockRose got a 60% working interest in production license P.2607, which includes the Anning and Somerville fields, while Hartshead was left with a 40% stake.

The duo arranged to amend the farm-out deal and joint operating agreement (JOA) at the end of 2023, so that, the latter had the option to divest an additional 20% equity interest in the UK Southern Gas Basin asset in return for an uncapped free carry of all gross costs for Phase I development costs.

After the UK government’s budget announcement, Hartshead underlined that the revised oil and gas fiscal regime provided the necessary information to evaluate the Anning and Somerville gas fields’ development project under new terms.

The firm evaluated an alternative gas export route after reviewing multiple development options for the fields in 2023/2024 to provide an optimized development. Once the original concept select report (CSR) was submitted in May 2022, a letter of no objection to proceed with the selected development concept was received from the NSTA in July 2022.

The development concept consisted of two, normally unmanned production platforms (one on each field), six production wells (three on each field), and an export gas pipeline, tying into third-party infrastructure for the onward transportation of gas to the Bacton Gas Terminal and into the UK NTS.

However, Hartshead Resources has now submitted a new CSRA to the NSTA with an identical development concept as originally submitted in the CSR, but the firm claims that an addendum is required as it has evaluated and selected what it describes as “a far superior” offtake route for the gas production from the two fields.

As a result, the selected export route now ties into the CalEnergy Resources-owned and operated Saturn Banks pipeline system for transportation to the Perenco-owned and operated Bacton Terminal, where gas will be processed before entry into the UK grid.

According to Hartshead, discussions regarding commercial and technical specifics for transportation and processing of gas are progressing well. The firm also claims the route has “significant advantages” over the one previously selected.

These benefits are perceived to entail increased production volume capacity, accelerated production, the earliest projected first gas date, simpler tie-in to host infrastructure, and superior economic performance.

The company elaborates that it is in advanced discussions regarding capital investment for pipeline infrastructure associated with the development, consisting of the potential for 100% funding for the extension of the existing Saturn Banks pipeline to the field development area.

In line with this, the firm has confirmed that the potential for re-use of other existing infrastructure, such as the re-purposing of an existing production platform, is being investigated and progressed. This is also the subject of infrastructure funding discussions.

The CSRA has been submitted by Hartshead under the sole risk provisions of the P2607 joint operating agreement (JOA), as the JV did not vote in favor of its submission to the NSTA. While the firm has elected to submit this on its behalf, it underlines that partners who did not vote in favor of the submission can still join the development.

Discovered in 1969, the Anning and Somerville fields, which came online in 2008 and 1999, respectively, ceased production in 2015, at which point Somerville had produced 48 bcf of gas and Anning had produced 16 bcf.

Upon the completion of Phase 1, the project’s Phase 2 will focus on the Hodgkin and Lovelace fields, while Phase 3 may also be on the cards, as a study by Xodus Group, generated a new prospect inventory, totaling 14 prospects and leads with unrisked 2U prospective resources of 344 bcf.