By the OGJ Online Staff
LONDON, Nov. 22 --
Centrica PLC, the gas supply and service company created following the privatization of the British Gas Corporation, is to spend $88 million to acquire gas an oil production assets in the North Sea and Irish Sea.
The company has been seeking production assets for some time to supply its gas supply operations and these acquisitions will add annual production of 2.1 million bbl and 110 bcf to its portfolio. It is the biggest gas marketer in the UK domestic sector under the British Gas brand.
Largest of the acquisitions is Innogy Holdings PLC's 6.97 % interest in the Armada field, which the utility inherited when it bought Yorkshire Electricity, although no price has been revealed for any individual purchase.
The Armada gas complex in the North Sea has recently been granted government approval for a Phase 2 drilling program, which should maximize production between 2002 and 2010.
BG PLC is operator in the field and holds a 45.27 % interest. Its partners are BP PLC 18.20 %, TotalFinaElf Exploration Ltd. 12.53 %, Phillips Petroleum Co. 11.45 %, Centrica 6.97%, and Agip (UK) Ltd. 5.58%.
Following successful reservoir and well performance in Phase 1, the Armada partnership recently agreed to further development of the Armada reservoirs involving the drilling of up to three wells. The drilling is being undertaken by the jack up drilling rig Galaxy III and is scheduled to be completed in 2 weeks' time. Two wells will be drilled, with a third contingent on the results of the first 2.
The Armada fields, Fleming, Drake and Hawkins, extend over 31 sq kms and span five exploration blocks. First gas was produced in Oct 1997, after completion on schedule at a cost of �437 million, some �100 million below budget. Gas is exported via the CATS pipeline to Teesside, with liquids transported through the Forties Pipeline System to Cruden Bay.
Centrica is also buying Amerada Hess Corp.'s stake in the Amethyst field and related interests, including the Rose development. The purchases will take Centrica's interests in Amethyst to 8. 95 %. BP PLC is operator of the Amethyst complex and has a 59.5 % interest, BG Group PLC has 24.15 %, and Murphy Ltd. has 7.4 %.
Centrica said it had also reached agreement with Kerr-McGee Corp. and Burlington Resources Inc. for interests in Block 110/3c in the East Irish Sea. The deal takes Centrica's interest in that field to 52.8 % Cal-Energy Ltd. has 13.2 %, Edinburgh Oil and Gas Ltd. 13. 2 %. Kerr McGee and Burlington will each retain a 10.4 % interest. Discussions are now taking place to decide who will become operator on the block.
The block is part of the Rivers complex in the area and Centrica has already secured agreement with Burlington Resources (Irish Sea) Ltd. to process gas from the Rivers fields and to operate new offshore and onshore facilities.
Processing will take place at the British Gas Hydrocarbon Resources Ltd. (HRL) terminals at Barrow-in-Furness.
First gas is expected to be delivered to the national transmission system by early 2004.HRL operates the North and South Morecambe gas fields and onshore processing terminals at Barrow and has been working with Burlington since1999, processing gas from its Millom and Dalton fields.
The Rivers gas will come ashore from reservoirs located close to Centrica�s own South Morecambe field. The fields are estimated to contain recoverable reserves of 350 to 400 bcf.
John Shears, Centrica�s Director and General Manager, Assets Group, said, "This is good news for Centrica, recognizing our track record in the Morecambe fields since offshore developments in the East Irish Sea started more than 20 years ago and the considerable expertise that exists in the region. We look forward to extending our working relationship with Burlington."