UK approves IOG’s plan for North Sea development

The UK Oil & Gas Authority (OGA) has approved IOG’s field development plan for the Core Project Phase 1 located in the UK North Sea.

IOG said on Friday that full contract awards are expected shortly for key Phase 1 workstreams, including platform fabrication, pipelay and subsea work, and well management.

Project execution activities remain on track and at present, there is no impact to schedule from the ongoing industry and macroeconomic turbulence.

Andrew Hockey, CEO of IOG, commented: “Such government endorsement brings a welcome boost to the UK offshore industry and supply chain given the current environment.

“This innovative low-carbon project, re-using previously decommissioned infrastructure to develop otherwise stranded domestic gas resources, is a definitive example of Maximising Economic Recovery (MER), in line with UK government strategy“.

He added: “As Phase 1 execution ramps up, we have avoided any schedule impact to date from Covid-19 and are also targeting cost savings even more proactively to help deliver our project on time and budget”.

The Phase 1 EIA review process has been successfully completed by the Offshore Petroleum Regulator for Environment and Decommissioning (OPRED), which is part of the Department for Business, Enterprise and Industrial Strategy (BEIS).

Further to this, the Phase 1 FDP was approved and all necessary Phase 1 Fields Production Consents granted by the Oil and Gas Authority (OGA) on behalf of the UK government, on the afternoon of 30 April.

The necessary Pipeline Works Authorisation applications (PWAs) and other required consent applications have been submitted for the pipelay activities planned for later this year and are in progress with the relevant bodies.

The suite of commercial agreements relating to, among others, pipeline proximity and crossing, procurement, onshore refurbishment activities and terminal processing are either completed or being progressed with the relevant third parties as planned.

Fabrication activities for the two Phase 1 Normally Unmanned Installation (NUI) platforms continue to ramp up, alongside procurement of major equipment items and deliveries of bulk materials.

With FDP approval in place, a full engineering, procurement, and construction (EPC) contract is expected to be signed with the platform contractor in the near future, superseding the current limited commitment letter.

At the platform fabrication yard, a two-shift system is in place to optimise Covid-19 restricted working conditions and ensure work progresses as planned. Expected platform delivery dates have not currently been affected by Covid-19 despite pressures on the supply chain.

According to IOG, good progress continues with the major long lead subsea and pipeline items. The 24-inch (Southwark) and 12-inch (Blythe) line pipe have now been manufactured and delivered from Greece to the UK for storage prior to loading onto the pipelay vessels in the summer.

With FDP approval in place, the full EPC contract award to the main SURF contractor is also expected to supersede the currently limited commitment letter in the near future.

Planning and preparation continue for the offshore pipelay programme in 2H 2020. The PWA applications for laying the 24-inch and 12-inch extensions to the Thames Pipeline have been submitted and formally accepted for review by the OGA.

The approval process for such applications entails standard internal and public consultation periods, the first of which is underway. PWA approvals are expected towards the end of 1H 2020, enabling the pipelay programme to proceed as planned thereafter.

IOG’s competitive tendering process for the jack-up rig for the five-well Phase 1 drilling programme is also progressing well, with a view to securing attractive terms given current industry conditions.

Preparations are also underway for tendering offshore drilling services and detailed well and completion design work is likewise proceeding on schedule.

The selected well management contractor is now well established, supporting the IOG in-house drilling and subsurface teams with detailed well planning and design, contracting strategy and regulatory processes. Further details will follow after contract signing.

The two unused and refurbished subsea wellheads and trees purchased by the company have been successfully tested. These are typically long-lead items.

One set is to be used on the Elgood subsea well and the other available for Harvey or other incremental development opportunities. The company has also agreed a contract to procure the control system for the Elgood subsea well.

Front-End Engineering and Design (FEED) studies on the TRF refurbishment at Bacton Gas Terminal (BGT) are ongoing, with good co-operation between IOG, the BGT operator Perenco UK Limited (PUK) and the engineering contractor Worley.

Tendering and planning activities are also being progressed for the environmental, geo-technical and other surveys required at the TRF site. Initial preparatory works at the TRF are expected to start in May 2020.

The Covid-19 pandemic has necessitated operating protocols to be temporarily revised at BGT, which as one of the UK’s main gas terminals is a site of national strategic importance.

IOG is working proactively with PUK to resolve any potential disruptions which might arise to planned TRF activities.