Corallian files plan for West of Shetland gas discovery

UK’s Corallian Energy has filed its draft Field Development Plan for the Victory gas discovery in the West of Shetland to the country’s authorities with expectations for the Final Investment Decision (FID) by the end of 2022.

Corallian Energy has a 100 per cent interest in Victory licence P2596 and is the operator of the asset while Reabold Resources holds a 49.99 per cent interest in Corallian.

Location of Victory discovery - Corallian Energy
Location of Victory discovery; Source: Corallian Energy

Reabold confirmed on Thursday that Corallian had submitted the draft FDP for the Victory gas field to the Oil and Gas Authority (OGA). The related Environmental Statement for Victory is expected to be finalised during 1Q 2022 and will be issued to the department for Business, Energy and Industrial Strategy’s (BEIS) Offshore Petroleum Regulator for Environment & Decommissioning (OPRED), as part of the FDP approval process.

The OGA is expected to review the plan during H1 2022 and the approval will be sought towards the end of 2022, concurrent with the FID for the project. The first gas from the project is anticipated in 2024.

Following the finalisation of both static and dynamic modelling, together with well / network optimisation studies for the development, RPS Energy Limited has recently completed a Competent Persons Report on the Victory project. The report estimates a total Victory field 2C or best / mid-case technically recoverable resource of 179bcf dry gas.

Based on a historical average gas price valuation of 50p/therm, Corallian’s 2C economic valuation (NPV10) of Victory is £193 million (about $256.9 million).

Sachin Oza, Co-CEO of Reabold, commented: “Submission of a draft Field Development Plan is a significant milestone for this important gas field. Victory is in relatively shallow water, close to pre-existing subsea infrastructure, allowing a cost-effective tie-back solution. It is fully appraised and requires no additional pre-development drilling.”

According to information on Corallian’s website, subject to the successful negotiation of infrastructure access, the field will be economically developed as a direct subsea tie-back to the TotalEnergies-operated Greater Laggan Area gas pipeline, which has an access tee for third party business located 17km south of the Victory discovery well 207/1-3.

Meanwhile, Corallian in October 2021 decided to conduct a formal review of the various strategic options available to maximise value for all its shareholders. As part of the review, Hannam & Partners will approach third parties, who could potentially be interested in making an offer for up to 100 per cent of the fully diluted share capital in Corallian.

An update on the review process is expected during the first quarter of 2022.