Thames Pipeline fit for IOG gas. FID in 4Q

Independent Oil and Gas has said that a 150-bar pressure hydrotest has fully confirmed the Thames Pipeline’s integrity at a pressure “well above that required” to deliver IOG’s Southern North Sea gas safely to Bacton terminal.

The company said this was is a major step towards FDP approval as the Thames Pipeline is now conclusively proven for a new economic life over the next two decades as a fully viable, minimal cost, zero tariff export route delivering a maximum annual capacity of 200 BCF directly into the UK market.

The Thames pipeline previously transfered gas from the Thames area complex which was decommissioned following cessation of production in 2015.  The pipeline was acquired by IOG for a nominal sum in April 2018 from the previous owners who had decommissioned the pipeline and the Thames area fields in 2015.

Apart from the pressure test, IOG said that a tethered pig inspection run from the terminal into the line’s final section also delivered excellent results, with no internal corrosion nor external defects found.

IOG said that those operations demonstrate pipeline capacity of up to 550 MMcfd, creating substantial tariff-free ullage for IOG’s existing gas portfolio and future acquisitions, plus third-party gas tariff opportunities. The Company’s current SNS development projects will use around half of this available capacity at peak.

The company has said it has made significant further technical and financial progress on the SNS gas development project and is now in the final preparatory stages for FID.

“Front End Engineering and Design (“FEED”) studies and bidding processes are substantially complete and contract negotiations with preferred parties well advanced,” IOG said.

IOG is targeting a Final Investment Decision for the project during Q4 2018 “and funding plans are being finalized accordingly.”

The company has revised the project schedule to reflect the optimal timing for both fabrication and installation of key infrastructure, including unmanned platforms, connecting pipelines, and associated subsea equipment.  The delivery of Phase 1 offshore installation is scheduled to start immediately after the 2019-20 winter season, rather than in Q4 2019, leading to an expected first gas date towards the end of Q2 2020.

Andrew Hockey, CEO of IOG said: “I am delighted to announce that the internal inspection and high-pressure hydrotest have indisputably confirmed the viability of our pipeline as a very low-cost export route for all of our own substantial gas portfolio, plus a potential extra revenue stream through third-party tariffing. Full ownership of this export pipeline with very substantial capacity of 550 MMcfd – acquired for a nominal sum – gives us real competitive advantage to capture consolidation opportunities in the Southern North Sea.

“The recommissioning of the Thames Pipeline will breathe new economic life into a part of the North Sea formerly considered to be in terminal decline and help to maximize economic recovery for the UK. The new gas developments enabled by the re-use of this pipeline will make a significant contribution to providing domestic energy resources to UK homes and industry over the next two decades and provide extended employment opportunities in the region.

This is an especially exciting time for the Company as we progress ever closer to a transformational FID and also prepare to drill a fully funded appraisal well at Harvey in the coming months which could dramatically increase our proven reserves and company valuation.”