Comment

OGA gives Alligin and Finlaggan the green light

Approvals brings 2018 UK FID tally to 12

Ross Cassidy, an analyst with Wood Mackenzie’s Europe upstream team, said: “In further positive news for the UK upstream sector, the Oil and Gas Authority has approved two field developments today - BP's Alligin project in the Greater Schiehallion Area, West of Shetland, and Zennor Petroleum's Finlaggan project in the central North Sea.”

Alligin holds reserves of 20 million barrels of oil equivalent and will require investment of more than  £200 million ($261 million). Finlaggan has reserves of 26 million barrels of oil equivalent and requires more than £190 million ($248 million) to develop.

Mr Cassidy added: “They share the same development concept – two- well subsea tie-backs to nearby hubs. Both are low-cost, high-value barrels, which boost the profitability of their respective greater areas – the Greater Schiehallion Area and the Britannia Hub.

“This brings the numbers of UK FIDs in 2018 to 12, which add up to over 390 million barrels of oil equivalent of reserves and more than £3 billion ($3.9 billion) of investment year to date in the UK sector. There could be a further two FIDs before the year end – Sillimanite and Columbus.”

He said: “These two projects involve ‘old and new money’ in the UK upstream sector. BP is a long-standing investor, while Zennor Petroleum is relatively new, private-equity backed company. It is funded by Hong Kong-based Kerogen Capital.

“For BP, Alligin signals a change of tack after its massive West of Shetland projects in recent years, it provides a boost to the Schiehallion Area, improving economics and allowing the field to produce for longer.

“For Zennor Petroleum, Finlaggan is its first operated development and fits with the company’s strategy of capitalising on low-risk appraisal drilling and development opportunities. It also allows the private equity-backed player to leverage the existing Britannia infrastructure, where it recently acquired an 8.97% stake in from Mitsui E&P UK.”