Independent Oil and Gas (IOG) has signed a sale and purchase agreement regarding the acquisition of the recently decommissioned Thames gas pipeline in the Southern North Sea for a nominal consideration from Perenco UK, Tullow Oil and Centrica.
The pipeline will provide the proposed export route for IOG’s Southern North Sea assets.
Upon completion of the acquisition IOG will undertake an intelligent pigging inspection to ensure the pipeline’s integrity for safe re-use.
When completed, the company intends to export gas from IOG’s Blythe and Vulcan Satellite hubs once they are in production. These two hubs require an estimated maximum throughput of approximately 150 MMcfd.
IOG therefore expects the pipeline to have sufficient capacity to accommodate the export of gas from the Harvey discovery, subject to its successful appraisal.
Ahead of first gas, the company intends to acquire the onshore reception facilities at the Perenco Bacton terminal. A period of exclusivity has been agreed until the end of September 2018.
IOG anticipates using and upgrading the facilities in the meantime during the intelligent pigging works, subject to 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. Additional security will be provided post completion of the onshore facilities, prior to first gas from IOG’s gas hubs, the company explained.
Mark Routh, CEO and interim chairman of IOG, said: “I am delighted to have signed the sale and purchase agreement for this strategically important acquisition. We acquired most of our SNS gas portfolio at low cost because the assets in this area were considered stranded without a viable export route. This acquisition allays those concerns and is therefore of great importance to IOG as we now have a route to market for our gas. Subject to completion and remediation it will enable us to deliver up to half a trillion cubic feet of gas resources to the UK market over a period of fifteen to twenty years from the end of next year.”