LONDON – Independent Oil and Gas has agreed to acquire the recently decommissioned Thames Gas pipeline in the UK southern North Sea for a nominal sum from Perenco UK, Tullow Oil, and Centrica Resources.
- The pipeline will provide an export route for production from IOG’s proposed Blythe and Vulcan Satellite hub developments in the area to the Bacton Gas Terminal on the Norfolk coast.
- IOG will own and operate the 24-in. pipeline, which has an estimated throughput capacity of 300 MMcf/d, with no tariff payable for transportation of the gas to Bacton. However, a processing tariff will be payable toPerenco, the terminal owner.
- Completion of the deal remains subject to regulatory consents and provision of security to Perenco to cover the cost of additional pipeline integrity surveys that may be required in the future, up to a likely maximum of £500,000 ($624,000). On completion of the acquisition IOG will perform an intelligent pigging inspection to ensure the pipeline’s integrity for safe re-use.
- Blythe and the Vulcan Satellite hubs will likely need throughput of around 150 MMcf/d, leaving ample capacity to also accommodate gas from IOG’s Harvey discovery, subject to successful appraisal drilling.
Ahead of first gas, the company then intends to acquire the onshore reception facilities at the Perenco Bacton terminal – it has secured a period of exclusivity for negotiations until the end of September 2018.
In the meantime IOG anticipates using and upgrading the facilities during the intelligent pigging campaign, subject to conclusion of a construction and tie in agreement which is now being drawn up.
Under the terms of the acquisition additional security to be held by Perenco, the current Thames pipeline operator, for future decommissioning will be required before commencement of gas export (not expected to exceed £2.5 million [$3.1 million] including the pipeline integrity surveys). Additional security will be provided post completion of the onshore facilities, prior to first gas from IOG’s gas hubs.
Mark Routh, CEO and interim chairman, said the pipeline “will enable us to deliver up to half a trillion cubic feet of gas resources to the UK market over a period of 15-20 years from the end of next year. We are also open to work with third parties who may wish to use our export facilities for a tariff.”