Hurricane delays plans for new Lancaster well
Oil and gas company Hurricane Energy has decided to postpone the drilling of a second production well on the Lancaster field off the UK due to the complex nature of the well.
The Lancaster field is located in blocks 205/21a, 205/22a and 205/26b, licence P1368 Central. Hurricane has a 100 per cent interest in this licence.
Hurricane has previously announced that it is engaging with its stakeholders on a proposed development plan and associated funding for the Lancaster field.
The company confirmed on Tuesday that the stakeholders include an ad hoc group of convertible noteholders.
Discussions on the company’s forward work programme, strategy, financing, and balance sheet recapitalisation are ongoing.
Hurricane delays Lancaster well
On 18 December 2020, Hurricane outlined contemplated next steps in the Lancaster development programme, which included a second production well in 2021 by side-tracking from the existing 205/21a-7z well into the central area of the field.
At the time, Hurricane said that re-entering and side-tracking the existing 205/21a-7z well could add meaningfully to the production capacity from the existing 205/21a-6 well, accelerate production of existing reserves, and, depending on oil price, materially improve near-term cashflow generation.
Development costs were estimated at c.$60 million with the first production possible by late 2021.
However, Hurricane has now revealed that this proposed side-track is more complex in nature than previous wells on Lancaster due to the incorporation of an intelligent completion and the challenges of delivering the well trajectory from the side-track location.
As a result, Hurricane has concluded that it will not be possible to drill this well during the 2021 summer weather window without unacceptable operational and cost risk.
While no firm decisions have been made, the company is now considering various options.
These include drilling the side-track in 2022 following further planning activity during 2021; drilling the side-track together with the previously contemplated water injection well as a combined programme in 2022; or drilling the side-track in 2022 and the water injection well in 2023.
All options for potential further development activity are subject to factors that are or may be outside the company’s control which include field performance, prevailing oil prices and support from relevant stakeholders and counterparties.