UK player frustrated by production shut-in at North Sea gas project

UK-headquartered IOG plc has revealed that production at its Saturn Banks Project – Phase 1, located in the UK sector of the North Sea, has been shut-in following liquids handling issues discovered by Perenco (UK) Limited (PUK).

Sanctioned in October 2019, the IOG-operated Saturn Banks Project – Phase 1 consists of Blythe, Elgood, and Southwark fields in the UK Southern North Sea. IOG holds a 50 per cent stake in this project and its partner CalEnergy Resources holds the remaining 50 per cent.

IOG brought Blythe and Elgood on stream in mid-March 2022, however, later that same month a chemical injection fault necessitated the Blythe well to be temporarily shut-in. Following a delay in sorting this out, the production was restored in April 2022.

In an update disclosed on Monday, IOG advised that over the past month, Blythe and Elgood hydrocarbon liquids – condensate – flowing into the Saturn Banks Reception Facilities (SBRF) slugcatcher had fluctuated considerably, reaching peak levels of up to 1,850bbl/d.

The SBRF – co-owned by IOG and CalEnergy Resources and operated by Perenco – lies adjacent to the main Perenco Bacton terminal, where all liquids streams, including Saturn Banks liquids, are processed through the terminal’s Condensate Stabilisation Unit (CSU).

IOG informed that a Perenco operational risk assessment identified a drainage system deficiency in the CSU’s two recycle compressors in the past week. This has been highlighted by the increased Saturn Banks liquid rates, thus, it needed to be addressed before any further Saturn Banks liquids can be processed.

As a result, Perenco first limited the SBRF slugcatcher to a 15 per cent maximum liquid level, however, following a progressive reduction in flow rates to manage these constraints, Perenco decided to enforce a full shut-in of Blythe and Elgood production to prevent further liquids from entering the slugcatcher, explained IOG.

Andrew Hockey, CEO of IOG, remarked: “Whilst relatively high liquids flows are welcome and generate revenue, liquids handling issues within the Perenco Bacton terminal have unfortunately required a short-term shut-in of Saturn Banks production. This is a very frustrating interruption to our efforts to maintain stable, consistent early gas flows, however, maintaining the highest safety standards must always be the first priority.”

The company says that Perenco has been developing a modification to its CSU compressor drainage system to resolve the issue. In a bid to enable limited initial resumption of Saturn Banks production – currently projected to be c.30 mmscf/d of gas – one compressor is expected to be modified within approximately one week, subject to a safety review scheduled for Monday, 23 May 2022.

After modification of the second compressor – expected to take approximately one further week – has been carried out, Saturn Banks’ production is expected to be gradually restored to normal levels over the following weeks. Although, IOG stated that the outcome of Perenco’s safety review may affect this provisional timeline.

As explained by the UK player, Blythe and Elgood condensate yields per unit of gas produced are expected to decline relatively rapidly during the first year of production, reducing any longer-term potential for such onshore liquids handling challenges. On the other hand, Southwark is expected to have a far lower condensate yield.

IOG further stated that the average aggregate Saturn Banks gas production over the 30 days prior to 20 May was 41 mmscf/d – achieving uptime of 74 per cent at Blythe and 78 per cent at Elgood – with the volume-weighted average realised gas price of 100p/therm.

The company also added that UK NBP day-ahead prices continued to diverge over recent weeks not only from European benchmark day-ahead prices but also from NBP forward curve prices, following record-high LNG inflows into the UK, lack of domestic storage and interconnector capacity driving significant short-term price volatility.

“We are in close dialogue with Perenco at both management and technical levels to ensure the modification to their plant is rapidly expedited. Subject to their risk review, we currently expect a limited re-start after approximately one week with a gradual return to full production levels over the following weeks,” concluded Hockey.

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