Onshore permitting delays offshore North Sea Breagh gas production

Offshore staff

CALGARY, Canada – Sterling Resources has updated progress on the RWE Dea-operated Breagh gas field development in the UK southern North Sea.

Modifications at the Teesside Gas Processing Plant (TGPP) in northeast England that will receive the gas have been delayed by about an additional 90 days. Therefore, first sales gas is unlikely before mid-July.

Otherwise pipe work installations are essentially complete and the project has moved to a phase of pre-commissioning involving cold and hot loop testing.

All elements of the onshore pipeline have been completed. Preparations are in hand to de-water the pipeline from TGPP to the Breagh Alpha (BA) platform to nitrogen.

Drilling continues on the fifth BA producer well, A05, which should be finished by early May. This will be followed by completion, perforation, and production testing of that well and perforation and production testing of the A04 well.

Two additional wells will then be drilled and are estimated to come onstream in mid-August and early November. As Phase 2 of Breagh will likely involve construction of a second platform for the field’s eastern area – previous plans to drill three extended-reach wells will probably be shelved, with seven conventional wells for Phase 1 instead.

Initial production at Breagh is estimated in the 150-180 MMcf/d range, with five or six of the seven planned production wells onstream. Average production for the last five months of 2013, if operations start in the first week of August, is estimated to be 180 MMcf/d.

Phase 2 of Breagh will probably be based around a 12-slot normally unmanned installation (BB) in 65 m (213 ft) of water, 6 km (3.7 mi) east of BA. However, the platform could be manned intermittently for maintenance purposes.

Additionally, Phase 2 will require installation of a 6-km, 20-in. pipeline from the BB platform to the BA platform. Seven or eight deviated wells will be drilled from BB platform to an array of targets a short distance from the platform. Phase 2 facilities will be managed from the onshore TGPP control room.

Sterling estimates incremental Phase 2 development costs at $435 million. First-phase costs are now likely to reach $992 million if 10 wells are drilled, or $835 million if seven are drilled.

About 25 km (15.5 mi) northeast of Breagh is the Crosgan gas prospect, straddling blocks 42/10 and 42/15. The chief geological target is Whitby sandstone. A well is planned in late 2013 using the jackup ENSCO 70. If the outcome is commercial, development studies will be initiated with the likely concept being a small gas platform tied back to BB platform on the east side of Breagh.

Crosgan’s production would be comingled with Breagh’s gas offshore and exported to the TGPP via the Breagh infrastructure.

4/15/2013

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