UK North Sea-focused oil and gas company IOG said Monday that first gas has started flowing from Phase 1 of its Saturn Banks Project, with the start-up of production from the Blythe field on Sunday. Phase 1 covers the production from Blythe, Elgood, and Southwark fields.
Andrew Hockey, CEO of IOG, said: "I am delighted to confirm that Saturn Banks Phase 1 First Gas has been achieved. Yesterday the Blythe well was safely opened up and IOG gas has started to be delivered into Bacton and on into the UK market. The Elgood well is expected to follow in the next two days.
"I am immensely grateful to the whole IOG team for their determined efforts to achieve this major target. My sincere thanks also go to our joint venture partner CalEnergy Resources and their owner Berkshire Hathaway Energy, to all our shareholders and bond investors, as well as to our many contractors, commercial partners, and regulators."
"Phase 1 First Gas is just the first step on a bigger journey, giving us the operational platform and financial capacity to deliver multiple further phases of growth. By delivering domestic gas supplies through our co-owned infrastructure on a Scope 1 and 2 Net Zero basis we can generate strong and sustainable returns for shareholders."
The news comes just days after IOG on Friday said it had struck a new gas sales agreement ("GSA") with BP Gas Marketing Limited ("BPGM"), for Saturn Banks gas.
The deal covers its equity gas from all of the Saturn Banks Phase 1 fields (Blythe, Elgood, Southwark), plus the Nailsworth and Elland fields which are part of Phase 2, in the southern North Sea, on a long-term basis with break clauses after September 2023.
First gas
After the final commissioning of the Saturn Banks Reception Facilities (SBRF) at Bacton terminal, backgassing of the pipeline system was successfully completed over the past week, IOG said.
This enabled the planned start-up sequence, with Blythe the first well to be opened up and forward flow commencing into the SBRF on Sunday 13 March. The Elgood well is planned to start-up in the next two days and an initial view on flow rates will be assessed once stable production has been established from both fields.
"The Company intends to analyze reservoir performance data over the initial months of production to inform an annual production guidance range," IOG said.
As for the Southwark project, it has faced delays, most recently due to the issues with the seabed at the Southwark drilling location. In a statement on Friday, IOG said it has "been making good progress with the required regulatory and commercial processes to implement the rock dumping solution to the seabed scour issue at the Southwark field location."
"Resumption of Southwark drilling, therefore, remains targeted for later this month, potentially moving to mid-April due to the interplay of logistical factors and tidal conditions. On that basis, Southwark First Gas currently remains targeted for Q3 2022," the company said Friday.
The entire Saturn Banks offshore system, including the platforms, pipelines, associated subsea equipment and production wells, will be normally unmanned with remote operation from the control room at Bacton terminal.
Fiona MacAulay, Chair of IOG, commented: "I am hugely proud of everyone in our team for overcoming the many challenges to deliver this historic milestone, going from Final Investment Decision to first production in under two and a half years. Through constructive collaboration, guided by our values of resourcefulness, innovation, drive, efficiency, resilience and safety, we have transformed IOG from an unfunded start-up to a gas producer expected to generate significant cashflow this year and into the future.
With heightened energy security risks across Europe and the continued urgency of the energy transition, there has never been a more important time to bring new UK gas resources on stream. This is especially true of IOG's gas which has far lower carbon intensity than imports."
Alistair Macfarlane, Area Manager - Southern North Sea and East Irish Sea at the Oil and Gas Authority, said:
"As the UK transitions to net zero it will need a stable and secure supply of domestic gas to reduce its reliance on imports, which often have a larger carbon footprint, and so first production from the Saturn Banks project is a positive development."
The news of the first gas was also welcomed by Offshore Energies UK (OEUK), until recently known as OGUK, an association representing the interests of the country's offshore energy industry companies.
Jenny Stanning, external relations manager at OEUK, said: “This new source of gas, from the UK’s own waters, boosts our energy security at time when the Ukraine crisis has reminded us of the urgency and importance of maintaining our own energy supplies.”
“The UK is reducing its overall energy use and moving to lower carbon sources of energy but that is a long-term project. In the meantime, 24 million households heat their homes with gas which also produces about 40% of our electricity.
“That means the UK needs secure supplies of energy – and the most secure place to get it is from our own surrounding seas.
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