Independent Oil & Gas PLC Pipeline Integrity Confirmation & Project Update (7709B)
September 25 2018 - 1:00AM
UK Regulatory
TIDMIOG
RNS Number : 7709B
Independent Oil & Gas PLC
25 September 2018
25 September 2018
Independent Oil and Gas plc
Pipeline Integrity Confirmation & Project Update
Independent Oil and Gas plc ("IOG" or the "Company"), the
development and production focused Oil and Gas Company, is pleased
to provide conclusive confirmation of the integrity of the Thames
Pipeline and a progress update on its Southern North Sea (SNS) gas
project.
Highlights:
-- A 150-bar pressure hydrotest has fully confirmed the Thames
Pipeline's integrity at pressure well above that required to
deliver IOG's gas safely to Bacton terminal. This is a major step
towards FDP approval.
-- 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.
-- 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.
-- These 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 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.
-- FID is expected during Q4 2018 and funding plans are being
finalised accordingly. Construction of key project infrastructure
is expected to follow during 2019 with installation scheduled for
Q1-2 2020 and first gas in late Q2 2020.
Andrew Hockey, CEO of IOG commented:
"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 maximise 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."
Pipeline Integrity Confirmation
After detailed consultations with regulatory authorities on the
necessary steps to re-commission the Thames Pipeline, on 6
September 2018 IOG ran an internal crawler-based measurement device
from the Bacton terminal to 800m offshore to assess the line's
internal and external condition. This section was at a higher risk
of degradation since decommissioning in 2015. The inspection tool
was successfully run and resulting data analysis showed no internal
corrosion nor external defects, confirming the excellent condition
of that section of the line and removing the potential need for
refurbishment work.
This result in turn enabled the Company to determine the safe
maximum test pressure (as required under the Pipeline Code) for a
24-hour hydrotest to be 150-bar. The hydrotest was successfully
completed on 21-23 September 2018. As the maximum operating
pressure required under IOG's Field Development Plan (FDP) is
approximately 80-bar, the 150-bar test level translates to a
maximum allowable operating pressure of 100-bar, establishing a
very substantial capacity margin. This level represents a maximum
capacity of approximately 550MMcfd, comfortably encompassing all
planned production from IOG's 632 BCF portfolio (303 BCF 2P
reserves and 329 BCF mid-case resources) portfolio while leaving
extensive tariff-free ullage for any further fields acquired in the
future or tariff-paying third-party gas.
Project Update
Alongside the pipeline integrity operations, the Company has
been progressing numerous other critical workstreams to reach the
required level of project definition for Phase 1 FID. Front End
Engineering and Design (FEED) studies have been completed for all
key areas, including refurbishment of the Thames Reception
facilities at the Bacton terminal. The selection process for major
project contracts is concluding, with commercial details agreed and
contracts now under negotiation.
In that context, the Company expects to proceed to FID and
obtain FDP approval during Q4 2018 and has been finalising funding
plans accordingly. The project schedule has been revised to reflect
the optimal timing for both fabrication and installation of key
infrastructure, including unmanned platforms, connecting pipelines
and associated subsea equipment. Safety is paramount in all IOG's
operations and as such the delivery of Phase 1 offshore
installation is scheduled to commence 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.
-ENDS-
Certain information communicated in this announcement was, prior
to its publication, inside information for the purposes of Article
7 of Regulation 596/2014.
Enquiries:
Independent Oil and Gas plc
Andrew Hockey (CEO)
James Chance (CFO)
Mark Hughes (COO) +44 (0) 20 3879 0510
finnCap Ltd
Christopher Raggett
Anthony Adams
(Corporate Finance)
Camille Gochez
(Corporate Broking) +44 (0) 20 7220 0500
Peel Hunt LLP
Richard Crichton
David McKeown +44 (0) 20 7418 8900
Camarco
Georgia Edmonds
Tom Huddart
Monique Perks +44 (0) 20 3757 4980
Notes
About Independent Oil and Gas:
IOG owns substantial low risk, high value gas Reserves in the UK
Southern North Sea. The Company is targeting a 2P peak production
rate in excess of 200 MMcfd (c. 35,000 Boe/d) from its substantial
current portfolio (2P Reserves of 303 BCF) via an efficient hub
strategy. Alongside this it continues to pursue value accretive
acquisitions, to generate significant shareholder returns. All
IOG's licences are owned 100% and operated by IOG.
Further information can be found on
www.independentoilandgas.com
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END
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