There are still options on the table for i3 Energy on the Serenity field, although a more modest concept is now likely in the works as it faces a “heavy downgrade”.
The Westhill-headquartered firm had hoped its appraisal well would firm up recoverable resources of 100 million barrels of oil, in turn requiring its own FPSO to develop.
However, hydrocarbons were “not present” at the 13/23c-12 appraisal, around 80 miles off Aberdeen, and the firm is facing it being “heavily downgraded”.
“This is a blow for the JV,” said Ashley Kelty of Panmure Gordon, “this reduces the potential upside for Serenity and the companies will now assess what is optimal concept for a smaller development.”
Dave Moseley, North Sea vice president at Welligence, said: “The result means the near-100 MMboe recoverable resources estimated pre-drill is almost certainly heavily downgraded.
“Options now are likely to be either further appraisal drilling to refine volumes or, possibly more likely, a low-cost development of a small area of proven volumes around the discovery well towards the east of the structure.”
The more likely option for such a development is a tie-in to the Repsol Sinopec Bleo Holm FPSO, said Moseley, which is stationed over the Ross and Blake fields, “potentially in tandem with Repsol Sinopec’s Tain discovery”.
There’s time for negotiation there; Repsol Sinopec isn’t expected to take a final investment decision on Tain until next year, having previously been expected in 2021.
Tain alone is expected to produce around 10 million barrels of oil equivalent.
Tennyson securities previously valued the field at $1bn in a recent note, and has been asked how yesterday’s announcement impacts that price tag.
Shares in London and Toronto-listed i3 Energy were down 10% yesterday afternoon following the Serenity news.
Liberator and Serenity
The Serenity appraisal comes after i3 handed back another of tis key assets – Liberator – to the industry regulator last year after it was deemed “sub-commercial”.
I3 had hoped for 23 million barrels of oil from the field, in licence P1987.
Mr Mosely said there have been some issues on seismic mapping which could be coming into play.
“Seismic mapping of the Lower Cretaceous turbidite sands, including those targeted at i3 Energy’s Serenity appraisal well, has proven challenging, with variable reservoir presence and thickness. This has partly contributed to recent wells in the play, including Liberator and West Wick, coming in below expectation despite nearby well control.
“Given this, the 3.5 km (2 miles) between the Serenity discovery and this latest appraisal well was arguably a relatively significant step-out, with the well failing to find the target reservoir or hydrocarbons.”