NORTH Sea-focused Zennor Petroleum has highlighted the potential of a field it expects to bring into production next year after making good progress with development work.
Zennor said two production wells on the Finlaggan field north east of Aberdeen had flowed at better than expected rates underlining the quality of the reservoir they will tap.
Read more: £400m North Sea field developments approved as recovery gains momentum
The private equity-backed firm said the drilling of the wells represented a key step in de-risking the development of the 30 million barrel field leaving it on track to start production next year.
“With the drilling and completion phase behind us we are now fully focussed on the Summer 2019 subsea installation programme which will take us another step closer to realising first production from Finlaggan next year,” said managing director Martin Rowe.
The progress made by Zennor will be welcomed by champions of the North Sea oil and gas industry.
Finlaggan provides an example of the kind of project that regulators want to see developed in order to make the most of the North Sea’s reserves and the facilities installed in the area.
Read more: Reserves could sustain UK oil production for two decades says regulator
The field was discovered by ConocoPhillips in 2005 and contains gas condensate liquids.
When the Oil and Gas Authority approved plans for the development in October it noted Zennor planned to connect Finlaggan to production facilities used by the Britannia field around 12 miles away. The OGA was pleased the process would involve utilising existing infrastructure while maximising economic recovery from the region.
Zennor has played a part in the shake up in the North Sea triggered by the plunge in the crude price from 2014 to 2016.
This has seen some established players reduce their exposure to the area in order to increase investment in places in which they see better prospects, including the USA.
Independents such as Zennor have picked up the baton in the belief there are opportunities in the North Sea that bigger fish may have overlooked, or feel are too small.
Read more: Serica continues North Sea acquisition spree
Zennor acquired Finlaggan from ConocoPhillips in 2015. It acquired a 9 per cent increase in the Britannia field from Japan’s Mitsui E&P in September last year. The deal prices were not disclosed.
Mr Rowe has said that having the ability to use the Britannia infrastructure would provide Finlaggan and the portfolio Zennor acquired in the 30th licensing round with a cost-effective, fast track route to production.
Last month ConocoPhillips agreed to sell its North Sea portfolio to private-equity backed independent Chrysaor Energy for $2.7bn.
Zennor’s experience provides vindication for Kerogen Capital’s decision to back the business amid the downturn triggered by the crude price fall.
Kerogen acquired Zennor in 2015 when it agreed to provide $100m to support work on Finlaggan and other moves to grow the firm’s North Sea portfolio.
Kerogen has also supported Hurricane Energy’s pioneering exploration drive West of Shetland, where the oil and gas company is preparing to start production from the giant Lancaster field.
Read more: Shetland oil pioneer shrugs off 'Monty Python slap in the face with a wet fish'
Zennor secured £170m debt funding for Finlaggan last year. Some banks looked to cut their exposure to the North Sea amid the downturn.
The two production wells on Finlaggan each flowed at more than 12,000 barrels oil equivalent per day. Zennor expects to start production from Finlaggan in the fourth quarter of 2020.
Founded in 2006 as MPX E&P, Zennor is run by a team of veterans of the North Sea business who worked for firms such as ARCO.
The acquisition of the interest in Britannia doubled Zennor’s production to around 5,000 boepd.
The company can use cash flow from production to fund other North Sea projects.
It is working with firms ranging from BP to Aberdeen-based Parkmead Group on North Sea development projects and has interests in exploration licences.
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