The Ithaca operated Greater Stella Area is located in the heart of the Central Graben area of the Central North Sea, on the UK Continental Shelf. It is an area surrounded by various large producing fields, predominantly operated by the Majors, and numerous undeveloped discoveries.
The Greater Stella Area licences contain the Stella and Harrier fields, which are currently in the process of being developed, the Hurricane discovery and the “Twister” prospect, which was awarded in the 27th UK Offshore Licence Round in early 2013. Most recently, the Company has also added an approximately 17% interest in the “Vorlich” discovery, which is located 10 kilometres North of Stella.
The Company's focus on the Greater Stella Area is driven by monetisation of over 30 million barrels of oil equivalent of net proven and probable reserves (as independently assessed by Sproule International Limited at end-2015) and the generation of additional value via the wider opportunities provided by the range of undeveloped discoveries surrounding the production hub.
The Greater Stella Area production hub is underpinned by the development of the Stella and Harrier fields. The plan for the joint development of the fields was approved by the UK Department of Energy and Climate Change (DECC) in 2012. The development involves the drilling of subsea wells tied back to the “FPF-1” floating production unit, with the onward export of oil and gas. To maximise initial oil and condensate production and fill the gas processing facilities on the FPF-1, the hub will start-up with five Stella wells. Further wells will then be drilled in the GSA post first hydrocarbons to maintain the gas processing facilities on plateau.
Greater Stella Area Joint Venture
The joint venture partners across all the licences in the Greater Stella Area are Dyas, a long established privately owned North Sea oil and gas producer based in the Netherlands, and Petrofac, a leading international service provider to the oil and gas industry listed on the FTSE 100 in London.
Ithaca and its joint venture partner Dyas acquired interests in the Stella and Harrier licence through transactions with Shell, Esso and Maersk between 2008 and 2009. Ithaca also acquired an additional interest in the fields in 2011 via the acquisition of Challenger Minerals (North Sea) Limited from Transocean. Also in 2011, Ithaca and Dyas introduced Petrofac as a new strategic partner into the Greater Stella Area licences. The Petrofac transaction included the transfer of an ownership interest in the “FPF-1” floating production facility to Ithaca and Dyas, while granting Petrofac a right to earn a 20% interest in the Stella and Harrier fields and the transfer of a 20% interest in the Hurricane discovery. This created a fully integrated partnership for the production hub.
Given the strategic alignment of the partners in the production hub, the long term objective of the Greater Stella Area joint venture is to acquire, whether by acquisition or licence rounds, further undeveloped discoveries within the vicinity of the FPF-1 as low cost incremental developments to tie-in to the facilities when spare hydrocarbon processing capacity is available.
Ithaca’s New Frontier
The Stella field comprises the Stella Andrew sandstone reservoir containing light oil and rich gas condensate and the Stella Ekofisk reservoir containing a volatile oil. The Harrier field comprises the Harrier Ekofisk and Harrier Tor chalk reservoirs, both containing gas condensate.
The Stella discovery well 30/6-2 was drilled by Shell in 1979. The well encountered gas condensate throughout a 25ft section of Paleocene Andrew sand. Oil was also observed in the underlying Ekofisk chalk reservoir.
Since the discovery well, seven subsequent reservoir penetrations having been made on Stella with various wells / sidetracks.
An appraisal well (30/6a-8) and a sidetrack (30/6a-8z) were drilled by Ithaca in 2010. The 30/6a-8 well targeted the Andrew reservoir in a down flank location to test the extent of the structural closure, as earlier appraisal wells had been located on the crest. The well encountered light oil. The 30/6a-8z sidetrack was drilled to a mid-flank location and defined the extent of the oil rim and gas column.
Harrier was discovered in 2003 by Maersk with exploration well 30/6-4. Three sidetracks were performed from the discovery well (30/6-4z, 30/6-4y and 30/6-4x) to appraise, core and test the reservoirs on the Harrier structure.
License P. 011
The modification and upgrade of the FPF-1 floating production facility that is to be used for the offshore processing and export of hydrocarbons is being performed by Petrofac, a leading international service provider to the oil and gas industry. The contract for the modification of the FPF-1 for deployment on the Greater Stella Area production hub was awarded to Petrofac in October 2011.
The contract provides for the required works to be performed on a lump sum contract value basis, supported by vessel performance incentivisation mechanisms. This contracting strategy was employed in order to de-risk the FPF-1 related development capital expenditure and the ultimate operational "uptime" of the fields, with the latter being further supported by Petrofac’s equity interest in the Greater Stella Area fields. A contract has also been entered into with Petrofac for the provision of dutyholder services during the operational phase of the fields, under incentivised cost and uptime performance terms.
The contract for completion of the FPF-1 modification works was awarded by Petrofac to the Remontowa shipyard in Gdansk, Poland, where the vessel is currently located. The shipyard is located approximately 10 days towing time from its future location at the Stella field.
The major part of the FPF-1 modifications programme has involved the installation of new topsides oil and gas processing equipment on the vessel. The decision by Petrofac to install new equipment, rather than partially re-use the facilities that had previously been used on the FPF-1, will lead to a higher quality vessel capable of achieving high operational uptime performance.
In line with Ithaca’s strategic objective to increase value from the GSA infrastructure, the Company holds licence interests in a number of potential satellite fields.
The Hurricane discovery lies approximately 10 kilometres from the Company's GSA production hub. Hurricane was discovered by Shell with well 29/10b-4z in 1995, which identified hydrocarbons in the Eocene Rogaland formation in the western lobe of the structure.
In September 2012, the Company successfully completed drilling of an appraisal well on the eastern lobe of the Hurricane structure, identifying hydrocarbons in two reservoir intervals, the Eocene Rogaland sandstone and the Palaeocene Andrew reservoir; the latter being the main producing reservoir of the Stella field. The well was flow tested at a maximum flow rate of approximately 24 MMscf/d with associated condensate of 1,200 bopd with the full production potential of the well being limited by surface equipment.
The appraisal well has been suspended for future potential use as a production well for the Andrew reservoir, with the capability of also being used for future production from the Rogaland reservoir. The integration of any future Hurricane infrastructure into the Greater Stella Area hub can be accommodated within the existing design of the FPF-1 and subsea facilities.
The Hurricane licence interests are as follows:
Ithaca (Operator), 54.66%; Dyas, 25.34%; Petrofac, 20%
Vorlich is located approximately 10 kilometres north of the Company's GSA production hub. Vorlich was discovered and appraised in 2014 with exploration well 30/1f-13A,Z and 13Z. The well encountered hydrocarbons in a Palaeocene sandstone reservoir in Block 30/1c and a subsequent side-track into Block 30/1f confirmed the westerly extension of the discovery. The well was flow tested at a maximum rate of 5,350 boepd (approximately 80% oil).
Licence P363 contains approximately 80-90% of the Vorlich discovery, with the balance of the discovery located in licence P1588.
The Company acquired a 20% interest in Licence P363 in January 2016 from TOTAL E&P UK Limited. Following this, the Company signed three sale and purchase agreements (“SPA”) in the second quarter of 2016 with ENGIE E&P, INEOS and Maersk Oil to acquire a 100% interest and operatorship of licence P1588. Upon completion of the SPAs, Ithaca will own approximately 33% of the overall Vorlich discovery, with the licence interests being as follows:
Licence P363: BP (Operator), 80%; Ithaca, 20%
Licence P1588: Ithaca (Operator), 100%
Austen is located approximately 30 kilometres south east of the Company’s GSA production hub. Austen is an Upper Jurassic oil / gas-condensate accumulation on which a number of wells have been drilled, the most recent being appraisal well 30/1b-10,10Z drilled by ENGIE E&P in 2012 that was flow tested at a maximum rate of 7,820 boepd (approximately 50% oil).
An SPA was executed with ENGIE E&P in the second quarter of 2016 to acquire a 75% interest and operatorship of Licence P1823 (Block 30/13b). Upon completion of the acquisition, the Austen licence interests will be as follows:
Ithaca (Operator), 75%; Premier Oil, 25%.
The Greater Stella Area photo gallery includes images of operational activities associated with execution of the Stella development drilling campaign, the subsea infrastructure construction and installation programme and the FPF-1 modification works. New photos will continue to be added as development activities progress.