Oil & Gas

Ithaca to benefit from boost to tax allowance

Ithaca Energy news

Aberdeen oil explorer Ithaca Energy said yesterday it would benefit from a tax boost as it announced it had been given the go-ahead for its £630million Greater Stella development.

The project, the largest undertaken by the company to date, will see the Stella and Harrier fields in the central North Sea developed through a floating production vessel.

It is due to come on stream in the second half of next year and produce about 30,000 barrels of oil equivalent per day; treble its estimated production for the end of 2011.

Ithaca said it would benefit from an increase in the small-field allowance, announced in the Budget. This saw the size of field which can claim the allowance doubled and the allowance also doubled to £150million. Ithaca has not specified what its tax boost will be.

Last month, Deo Petroleum said it would benefit from the same tax break for its share of the Perth field by about £25million.

Energy Minister Charles Hendry welcomed yesterday’s announcement.

He said: “Last month’s Budget announced changes to the field allowance for small fields to encourage exploration activity and enhance the case for development of technically challenging fields.

“It is vitally important we encourage a vibrant industry for these smaller fields to maximise the benefit to the UK of our offshore oil and gas reserves.”

Ithaca also revealed yesterday that the floating production vessel BW Athena had arrived at the Athena field ready to be hooked up. The development is due on stream later this year.

The Greater Stella area will be developed through a partnership with oil service firm Petrofac, which took a 20% stake in the field in return for 80% equity in its FPF-1 semisubmersible floating production unit.

At a later date, Ithaca’s nearby Hurricane prospect – on which drilling has been delayed due to the Wilhunter semisubmersible being weather delayed in the northern North Sea – could also be tied into the production vessel. The entire area, including Hurricane, is estimated to have proved and probable reserves of about 32million barrels of oil equivalent.

Ithaca said development drilling using the Ensco 100 heavy duty jack-up rig is due to start in the second half of this year.

Alongside Petrofac, who will be dutyholder on the FPF-1, Ithaca’s partner on the Greater Stella area is Dyas UK.

Read the latest opinion pieces from our Energy Voice columnists

Comments are closed