Siccar farms out West of Shetlands blocks to Ineos

An interesting Tuesday for the UK North Sea news. First we reported on Serica’s acquisition of BP’s Bruce assets, now there’s more. Ineos is taking Siccar Point’s interest in the West of Shetlands assets.

Siccar Point has informed that it has signed a farm-out  deal with Ineos covering two exploration licences (P.1854 and P.1935) in the West of Shetlands area, containing, what Siccar said was, “the significant Lyon prospect.”

Siccar Point Energy’s CEO Jonathan Roger said: “As license operator we are excited to be moving forward in conjunction with Ineos to drill the Lyon prospect. This represents an opportunity to unlock the material gas potential of the most northerly licensed area of the UKCS. We look forward to working with Ineos in this new exploration partnership and to operating our first exploration well.”

Geir Tuft Ineos Oil & Gas CEO said Ineos planned to become a significant player in the area.

He said: “This deal confirms our aim to take a leading role to develop the Northern Gas Fields using the significant infrastructure investments already made West of Shetland.”

“With the purchase of the DONG E&P business earlier in the year, Ineos took over a significant portfolio of producing assets and discoveries West of Shetland. It is clear that the Northern Gas Area holds further opportunities that could help unlock the development of those discoveries. The deal with Siccar complements our assets.”

Siccar currently owns a 100 percent ownership in both blocks. Following the completion of the farm-out, Ineos will have 66.666% in each block, with Siccar left with the remaining 33.334% in the blocks. Siccar Point acquired a 100% operated interest in these licenses from the takeover of OMV (U.K.) in January 2017.

As for the “significant” Lyon prospect, it is located in the P.1854 license. According to Siccar, the Lyon could contain 1-3 trillion cubic feet of gas recoverable.

If Lyon is successful, Siccar thinks it would be large enough to form a new gas-hub development similar to the Total operated Laggan-Tormore fields which have been developed with sub-sea infrastructure with pipelines to the Shetland Gas Plant. Existing smaller gas discoveries in the Lyon area such as Tobermory, Bunnehaven and Cragganmore would all be suitable tie-back candidates into the Lyon gas hub, the company has said.

The P.1935 licence is 30 km north of the Lyon Prospect. A number of immature Tertiary gas leads have been mapped on the existing 2D seismic data. If Lyon is successful this licence would provide further upside to the area. 3D seismic would be required to firm up the prospects. Lyon assessment is being completed with a drilling decision at the end of 2017.