Chemicals and oil products group Ineos' subsidiary Ineos UK SNS has agreed to acquire a majority stake in two West of Shetland exploration licenses from Siccar Point Energy.
The area, called the Northern Gas Fields, contains the estimated 1-3 Tcf recoverable Lyon prospect, which could be big enough to form a new gas hub in what Ineos says is the most northly licensed area of the UK Continental Shelf, 150km north of the Shetland Islands.
The deal, seeing Ineos take 66.6% in licenses P.1854 and P.1935, with Siccar retaining the rest and operatorship, follows Ineos' acquisition of stakes in producing assets and discoveries West of Shetland, from DONG E&P.
Siccar Point will remain operator. Ineos says Lyon is a "material prospect... If successful it could be large enough to form a new gas-hub development similar to the Laggan-Tormore fields, which have been developed with subsea infrastructure and pipelines to the Shetland Gas Plant.
"Existing gas discoveries in the Lyon area such as Tobermory, Bunnehaven and Cragganmore would all be suitable tie-back candidates into a Lyon gas hub.
The deal follows a string of deals in the North Sea, seeing majors farm out to smaller operators. Read more here.
Fiona Legate, Senior Analyst North Sea Upstream, at Wood Mackenzie, says: "It’s good to see Ineos expanding its West of Shetlands position following the DONG deal earlier this year, and also moving into the exploration space.
"Ineos and Siccar Point Energy already have a working relationship as they are both partners in the Rosebank development.
"Ineo's production in the UK right now is dominated by mature Southern Gas Basin assets, this production base was boosted by the DONG deal which provided production from the Greater Laggan Area fields. Exploring could provide Ineos with their next growth project if a discovery is made."
Geir Tuft Ineos Oil & Gas CEO said: “This deal confirms our aim to take a leading role to develop the Northern Gas Fields using the significant infrastructure investments already made West of Shetland.”
“With the purchase of the DONG E&P business earlier in the year, INEOS took over a significant portfolio of producing assets and discoveries West of Shetland. It is clear that the Northern Gas Area holds further opportunities that could help unlock the development of those discoveries. The deal with Siccar compliments our assets.”
Siccar Point Energy’s CEO Jonathan Roger said: “As license operator we are excited to be moving forward in conjunction with Ineos to drill the Lyon prospect. This represents an opportunity to unlock the material gas potential of the most northerly licenced area of the UKCS. We look forward to working with Ineos in this new exploration partnership and to operating our first exploration well.”
Subscribe
