Frontier primed for exciting 2009

2009 is primed to become the most exciting year ever on the UK Atlantic Frontier, both on the development front and in the hunt for, and confirmation of, new resources.

The industry has been there before – poised for something big, but then ambitions have been thwarted for a variety of reasons. Barring the global financial crisis stopping the various ambitions, it is hard to believe that a leap forward won’t be made, given that it is estimated that 17% of the UK’s oil&gas resource is located to the west.

Many of the building blocks for a good year are in place.

Total broadly has the reserves starter pack – 1.5trillion cu ft – to justify the $5billion development of the Laggan/Tormore gas discoveries.

Chevron has further appraisal wells mapped out for the clearly significant Rosebank/Lochnagar discoveries, which are likely to lead to a £multi-billion development based on floating/subsea infrastructure.

OMV has secured the semi-submersible, Paul B. Loyd, to drill the Tornado prospect.

BP is pressing on with Phase 2 of Clair, with a third phase contemplated and redevelopment of Schiehallion still a possibility.

Chrysaor is developing Solan, a small discovery dating from the 1990s, and which will he a standalone project (front page story)

And, just over the line in Faroese waters, ENI is set to drill the Anne Marie prospect next summer, apparently with a rig secured for the purpose.

Total’s ambition for Laggan/Tormore is, in some respects, the hot story from the frontier as the company is basically now content that the UK’s first Atlantic gas development project is economic and will press ahead despite the lack of foresight on the part of the Brown Government with regard to pump-priming the first gas pipeline West of Shetland.

The company has just completed a call for third-party investment in the project’s proposed export infrastructure and expects to make a decision by the end of this year on whether to go solus or bring in partners to enable broader-based future access to the proposed pipelines.

As Chevron leads on Rosebank/Lochnagar, where there is a gas content, and is a 10% stakeholder in Laggan/Tormore, it would not come as a surprise if the company upped its commitment to the pipeline infrastructure.

For now, Total’s proposed development is based around a subsea production system exporting straight to the beach in Shetland for initial processing before being transported onwards to St Fergus gas terminal. The fields lie 125km (78 miles) off Shetland in some 600m (1,968ft) of water.

The group has settled for five wells on Laggan and three on Tormore, exporting via twin 18in lines to Sullom Voe for conditioning prior to sending onwards via a 24in, 224km pipeline, possibly tying into existing Frigg infrastructure at the MCPO-1 complex, and thence to St Fergus.

Designed output is currently indicated as being some 500million cu ft per day.

Total has lobbied the UK Government long and hard regarding support for the pipeline side of the development, but to no tangible avail thus far.

NW Europe senior VP Michel Contie, who has spearheaded so much to do with the West of Shetland dream, is known to be baffled as to why the politicians cannot see the value of strategically seeding this part of the UK Continental Shelf where gas export infrastructure is badly needed.

The most puzzling aspect is that the Government has pressed companies to work together to exploit West of Shetland gas potential. But for making the Tormore find last year, Total’s Laggan project might still be stalled.

It has taken five wells to get thus far: 206/1-2 (Laggan discovery), 1986; 206/1-3, 1996; 206/1a-4a, 2004; 206/1a-4aZ (suspended), 2004, and 205/5a-1 (Tormore discovery), 2007.

Current stakeholders comprise: block 206/1a (P911) – Laggan: Total 50%; DONG 20%; ENI 20%, and Chevron 10%. Block 205/5a (P1159) – Tormore: Total 47.5%; DONG 20%; ENI 22.5%, and Chevron 10%.