Breagh Production to Remain Shut for Two Months

After RWE Dea last week announced that production from the Breagh offshore field had been shut due to a number of mechanical issues, Sterling Resources today said it could take up to 8 weeks for production to resume.

Breagh Production to Remain Shut for Two Months

Sterling Resources Ltd. announced today that the key physical investigative work has been completed and has identified several damaged elements at the inlet area to the Teesside Gas Processing Plant (“TGPP”) at Seal Sands, near Teesside on the east coast of England.

When gas reaches the TGPP, there is a buried junction at which point gas and liquids are taken off above ground to be processed in the plant, and any pigging devices are removed from the pipeline. The junction is fitted with bars (“Barred Tee-Junction”) to guide the pigging devices to pigging reception facilities. The key findings of the physical investigation to date are as follows:

· Inspection of the junction has been completed by means of a remotely controlled camera, which showed that the bars within the junction are severely deformed;

· After removal of the spool piece on the inlet to the gas/liquid separator two damaged pipeline spheres used in pigging operations to sweep the pipeline of liquids were found; and

· Four thermo-wells between the Barred Tee- Junction and the inlet to the gas/liquid separator, which protrude into the gasline at the inlet to the plant, were severely deformed. Temperature probes in the thermowells were damaged, thereby creating the indications of abnormal conditions.

Remedial action plans are being developed for rectification of the surveyed damage. Preliminary estimates for return to production is six to eight weeks. A full root cause investigation into the occurrence is ongoing.

The initial physical investigations have identified areas of immediate repair which are being addressed on an urgent basis,” stated John Rapach, Sterling’s Chief Operating Officer. “We are concerned at this occurrence and are working closely with our partner RWE Dea to ensure a thorough understanding of the event. Once the root cause investigation is complete, a full statement on both progress of repairs, and definitive work scope and schedule will be made,” added Rapach.

The Breagh field is located in UKCS blocks 42/12a and 42/13a of the Southern North Sea in 62 metres water depth, approximately 100 kilometres east of Teesside. Gas is exported via a 20-inch pipeline from the Breagh Alpha platform to Coatham Sands, Redcar on the UK mainland, and then via an 11 kilometre buried onshore pipeline to the TGPP at Seal Sands for processing. The TGPP site is owned by North Sea Midstream Partners and after processing at the TGPP, the gas enters the UK National Transmission System.

During 2009, RWE Dea UK acquired its current 70 percent interest in the Breagh gas field and became operator, with Sterling retaining the remaining 30 percent.

November 20, 2013