INDEPENDENT Oil & Gas has announced encouraging results from a well it drilled off Shetland where stormy weather posed big challenges.
London-based Independent said the well on the Skipper discovery found the oil it contained was thinner than expected raising hopes it may be cheaper to develop the field than had been thought.
The results will be studied with interest in the industry amid hopes that there could be massive amounts of oil and gas to be recovered from beneath the seabed off Shetland.
But news that Independent’s drilling work was delayed by a force 10 gale highlighted the complications firms can face off Shetland.
Independent spent months trying to secure the funding to drill a well to appraise the Skipper heavy oil find as firms grappled with the fall out from the crude price plunge.
The company believes Skipper, which was discovered in 1990 by Unocal, may contain 34 million barrels recoverable oil equivalent.
However, heavy oil is harder to extract from beneath the seabed than lighter crude, making such fields costlier to develop than conventional alternatives.
The authors of an expert report on the field published in September last year noted the main uncertainty at Skipper was the viscosity of the oil. This will determine how easily it will flow to the surface.
Aim-listed Independent said the initial results of the appraisal well it started drilling in July indicated the viscosity was significantly better than assumed in the report.
The results need to be confirmed in laboratory tests but Independent said they raised hopes that the company would have to drill fewer wells than expected to bring Skipper onstream.
With drilling work continuing on two prospects that lie beneath Skipper, Independent hopes the well may make additional finds. These could form part of an enlarged development.
Chief executive Mark Routh said: “The initial data acquired from the Skipper well, our first operated well, is an excellent result.”
He added: “We now move on to drill the exploration prospects, where any further oil discoveries would provide additional upside and look forward to analysing the results in order to progress the Skipper field development plan as soon as possible.”
Independent said it suspended drilling operations for almost two and a half days for safety reasons after a force 10 gale battered the drilling location.
The company will finance the additional costs associated with the delay by drawing on the £13.55m facility it secured from the London Oil & Gas investment business recently.
The funding package provided evidence that some financiers share Mr Routh’s view that now is a good time to invest in the North Sea. The costs of assets and services have fallen since the oil price started tumbling in June 2014.
Independent has said Skipper could be developed profitably if crude sells for more than $34 per barrel, compared with $49/bbl yesterday.
However, last August a firm that Independent had expected to provide investment that would help fund the development of Skipper apparently lost interest.
The unnamed firm decided not to proceed with the planned investment following the renewed fall in the oil price last summer.
Cairn is working with Enquest on a scheme to bring the giant Kraken heavy oil field into production off Shetland next year. Mr Thomson said it expects to generate significant cash from Kraken production at current oil prices.
Oil services giant Petrofac has said it suffered more than 300 days of interruption due to high winds and poor weather when building the Laggan-Tormore processing terminal on Shetland for Total.
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