EnQuest limits UK capex following energy levy

Feb. 17, 2023
EnQuest is budgeting for capex on its offshore activities this year of about $160 million.

Offshore staff

LONDON  EnQuest is budgeting for capex on its offshore activities this year of about $160 million.

Its plans include drilling three new wells on the Magnus Field in the UK’s East Shetland Basin and completing the (non-operated) latest drilling campaign at Golden Eagle in the central UK North Sea.

The first wellbore, which failed to locate reservoir-quality sands, was plugged, and the well has since been side-tracked to the second target. Bad weather means that first production from this well will likely be pushed back to the spring.

Two more platform wells should be drilled at Golden Eagle later in the year, subject to partner approval.

Following the UK government to increase its levy on North Sea petroleum profits, EnQuest has decided to defer further investments at the Kraken Field in the northern UK North Sea. And several other operators are reconsidering UK capital outlays, with Equinor and Harbour Energy both opting to withdraw from the Bressay Field, a potential heavy oil tieback to Kraken.

As a result, EnQuest’s equity in Bressay has risen to 100%, although it is seeking farm-down opportunities while progressing planning for a development.

The company expects to set aside about $60 million for abandonment this year, mainly for the ongoing P&A decommissioning programs on the Heather/Broom and Thistle/Deveron fields.

Planning continues for repurposing the Sullom Voe terminal on Shetland and the connected offshore infrastructure. EnQuest has identified a carbon capture and storage (CCS) to store up to10 MM metric tons per year of CO2 from emitters in the UK, Europe and elsewhere and has submitted two CCS license applications for areas close to its existing UK offshore infrastructure.

It is also working on an electrification proposal to support new asset developments in the North Sea basin, and is assessing opportunities for using the excess energy generated by wind power from onshore and offshore wind farms under development around Sullom Voe site to produce green hydrogen and derivatives.