Siccar Point delays sanction date for Cambo project due to coronavirus

Oil and gas company Siccar Point Energy has delayed its planned sanction date for the Cambo project, located West of Shetland, to 2021 in light of the unprecedented worldwide macroeconomic dislocation resulting from Covid-19.

Siccar Point’s joint venture partner in the Cambo project is Shell UK with a 30% interest.

The Cambo field, located 125km northwest of the Shetland Islands and in a water depth of 1100m, was discovered in 2002, and subsequently had 4 appraisal wells drilled up to 2012 and a final successful appraisal well was drilled and flow tested by Siccar Point during the summer of 2018. It is one of the largest undeveloped fields in the UKCS and will open-up other prospects for potential development in the area.

Siccar Point and Shell UK had been planning to bring the project to a Final Investment Decision (FID) in the third quarter of this year.

In an update on Monday, Siccar Point said it would now be targeted for the second half of 2021, subject to the approval of the necessary license extension, a request for which has been submitted to the Oil and Gas Authority.

Siccar Point will continue to work with existing key supply chain partners over the coming period to ready the project for FID next year.

Jonathan Roger, CEO of Siccar Point, commented: “Cambo remains an extremely attractive development with compelling economics. However, given the uncertainty of the global situation, including whether any people, goods and services can be mobilized in OECD countries, it makes sense to hold-off final approval until some normality returns to the market and a clear and robust path forward can again be established.

“In the meantime, Siccar Point is very well positioned with respect to this downturn having both substantial cash balances and very full hedging for 2020 and 2021. During the period of delay, we will continue to mature key aspects of the project to facilitate a swift and efficient ramp-up when market conditions stabilize”.

When it comes to the project’s progress, Siccar Point in August 2019 awarded an exclusive Front-End Engineering and Design (FEED) contract to Sembcorp Marine for the design of a Sevan cylindrical FPSO for its Cambo field development.

In addition to the FPSO contract, other FEED work is being undertaken by BHGE for wells, subsea and riser systems, and by Genesis for a gas export pipeline.

A draft Field Development Plan has been submitted to the Oil & Gas Authority.

In November 2019, Siccar Point submitted an Environmental Statement for the Cambo field development to the UK authorities.

The concept for the Cambo project is a dedicated, moored FPSO vessel, which will produce hydrocarbons from two drill centres. The oil will be exported via shuttle tanker and gas will be exported through a new gas export pipeline extending 70 km to the southeast of the Cambo field and will terminate at the West of Shetland Pipeline (WOSPS) Pipeline End Manifold (PLEM) tie-in.