Ithaca secures pipeline access deal for Greater Stella production

The FPF-1 vessel, which serves the Greater Stella Area.
The FPF-1 vessel, which serves the Greater Stella Area.

Ithaca Energy has secured access to a major oil export pipeline allowing it to transport future production from its Greater Stella Area development project in the UK North Sea, at a cost of around $20million, with first production slated by September.

Ithaca has agreed a deal to access the Norpipe oil pipeline system, a 350-kilometre pipeline running from the Ekofisk offshore production facilities on the Norwegian Continental Shelf to a dedicated oil processing facility at Teesside in the UK.

Initial oil is scheduled to be transferred by tanker from Greater Stella but will switch to the pipeline sometime during 2017, which will significantly improve the economics of the project further the company said.

The move to pipeline exports, sometime in 2017, significantly enhances the long term value of the GSA production hub, reducing fixed operating costs, enhancing operational uptime and improving reserves recovery, the company said in a statement.

“This will significantly reduce the fixed operating costs of the Greater Stella Area facilities and enhance operational uptime, resulting in improved reserves recovery and increasing the long term value of the Greater Stella Area as a production hub,” said Ithaca.

“In addition, the company has taken advantage of the downturn in industry activity to secure attractive contracting terms, including a lump sum contract for the installation of the 44 kilometre pipeline required from the FPF-1 to the Norpipe system,” it added.

That work programme will cost around $20million.

Ithaca also said the delayed FPF1 production unit, will leave the shipyard in Poland where it is being constructed by early July.

First production from Greater Stella, in the central North Sea, will occur towards the end of September.

The FPF-1, being readied by Petrofac in Poland was delayed earlier this year due to problems during the commissioning phase of the unit.

Ithaca said there is only a “limited number of commissioning activities” that need to be completed before the unit begins to make its journey to the North Sea.

The period from sail-away to first hydrocarbons will be approximately three months Ithaca said in a statement.

Greater Stella will allow the company’s overall production to more than double to 20,000 to 25,000 barrels of oil equivalent per day whilst bringing down its operating costs across its wider portfolio to below $20 per barrel by the end of 2016.