Premier Oil’s Tolmount development in the North Sea sanctioned by business partners
Premier Oil is going ahead with the development of its Tolmount Main gas field in the North Sea, the FTSE 250 firm announced today.
The project now moves into its execution phase with construction works set to begin later this year with gas expected to be reached by the fourth quarter 2020.
The site is located in the Southern North Sea, the largest gas basin on the UK's continental shelf. It is estimated to produce around 500bn cubic feet of natural gas in total with peak production of up to 58,000 barrels of oil a day.
Tolmount Main's development is expected to entail exporting gas to shore via a new gas pipeline. An EPCIC (Engineering, Procurement, Construction, Installation and Commissioning) contract has been offered to Italian offshore giant Rossetti Marino.
Centrica's Easington terminal in East Yorkshire has been selected as the host facility and Saipem as the pipeline contractor. Selection of a rig contractor for the four necessary development wells is expected imminently.
Premier owns a 50 per cent stake in the gas field, with Dana Petroleum owning the other half.
Premier is expected to spend $120m (£94m) on developing the site, comprising of project management and development drilling costs.
The infrastructure costs are shared between Dana Petroleum and Humber Gathering System who will pay for the platform and pipeline expenditures instead. Premier will also pay a tariff for the transportation and processing of Tolmount Main gas as part of the deal.
Tony Durrant, CEO of Premier Oil, said that the deal was a significant one for Premier.
He said: "The sanction of our high return Tolmount project marks a major milestone for Premier and underpins our medium term UK production profile. Tolmount is one of the largest undeveloped gas discoveries in the Southern North Sea and is, in barrel of oil equivalent terms, similar in size to our Catcher project. We have also secured an innovative financing structure for the project which minimises our capital expenditure whilst maintaining our exposure to the upside in the Greater Tolmount Area.”