Hurricane Energy’s boss has thanked the UK oil and gas industry’s regulator for giving the company more breathing room with its licence obligations.
The Oil and Gas Authority (OGA) has extended the deadline for plugging and abandoning the Lincoln Crestal well until June 30, 2021, in light of the Covid-19 pandemic.
Hurricane and partner Spirit Energy will also be given until June 30, 2022 to start drilling a commitment well on the Lincoln field, a job initially scheduled for next year.
Hurricane chief executive Robert Trice said: “We would like to thank the OGA for their flexibility regarding the timing of activities planned at Lincoln during these challenging times.”
Lincoln Crestal was one of three wells drilled last year in the Greater Warwick Area — which contains the Warwick and Lincoln fields, located west of Shetland — by Hurricane and 50:50 partner Spirit.
Two of the targets were non-commercial, but the joint venture considered Lincoln Crestal fit for development as a tieback to the Aoka Mizu vessel on Hurricane’s wholly-owned Lancaster field.
However, Hurricane said in March that it had been “unable to achieve regulatory consent” with the OGA to undertake a field development.
Its “working plan” was to plug and abandon the well by June 22 in line with its original obligations.
But the suspension consent, which provides the deadline for this activity, was extended to the end of September to account for disruption caused by the Covid-19 pandemic.
Hurricane said that first extension would let it gather more long-term pressure data from Lincoln.
The OGA has now given Hurricane and Spirit even more room to manoeuvre, living up to an earlier promise to take a “flexible approach” to work commitments amid the crude price rout.
Hurricane’s shares dropped 45% in London on Friday after the firm revealed one of the two production wells on its Lancaster field had been shut in due to “interference”.
Ashley Kelty, oil and gas equity researcher at Whitman Howard, said the glitch on Lancaster may convince the OGA to let Hurricane suspend the Lincoln Crestal well as a future producer, rather than plugging and abandoning it.