Australia's Hartshead eyes new route to market for UK North Sea gas project

Australia's Hartshead Resources said Nov. 27 it was looking at an alternative route to market for gas from its planned North Sea field development with plans to draft a revised development plan.

In a statement, Hartshead said that with the fiscal terms set out by the UK government in its budget last month, it was now able to advance the Anning and Somerville gas field development.

"The UK government's recent budget announcement has provided the clarity that our industry has needed and been calling for since February this year," CEO Chris Lewis said.

"We are now in a position to advance the Anning and Somerville gas fields development, which remains a robust and high value project under these new fiscal terms," Lewis said.

The first phase development plan consists of six production wells from two platforms at Anning and Somerville that will connect subsea to infrastructure for onward transportation and processing for entry into the gas network.

At plateau, the project -- located in offshore license area P2607 -- would produce some 140 MMCf/d (4 million cu m/d).

Alternative route

Hartshead said the revised fiscal regime had provided the necessary information for the evaluation of the Anning and Somerville development project under the new terms.

It said it had also undertaken the evaluation of an alternative export route to determine if it provided a "superior" development project.

"Part of the recent work undertaken involved a reassessment of the gas export route including an option that had previously been unavailable," it said.

"Recent changes in asset ownership and operatorship have seen this alternate route become available to transport the Anning and Somerville gas to market."

Hartshead said it planned to update the regulator on the status of the Anning and Somerville development project in early December.

This, it said, would be a precursor to submitting the necessary documentation including a revised field development plan "to allow the project to progress to the execution phase."

Hartshead submitted the original plan for the development of the Anning and Somerville fields to the North Sea Transition Authority in June 2023.

In March last year, Hartshead said it had agreed with Shell on the key commercial terms for the transportation and processing of gas from the Phase 1 gas field project.

Under the agreement, gas was to be transported to Shell's Leman Alpha platform before being delivered to the Bacton terminal for processing and delivery into the national grid.

Gas price

Hartshead said earlier this month that current high gas prices in the UK were a "positive economic indicator" supporting the advancement of its North Sea gas assets.

"The firm gas price underscores the economic viability of progressing Phase 1 of the Anning and Somerville gas fields which Hartshead is aiming to make FID on in the near term," it said Nov. 6.

Its Nov. 27 statement noted that UK NBP spot gas prices had continued to increase through the autumn. "This confirms that strong gas demand through the summer months is forecast by the market to extend into the winter season," it said.

Platts, part of S&P Global Commodity Insights, assessed the NBP day-ahead price at 117.39 pence/therm ($14.73/MMBtu) on Nov. 26, up from 94.50 p/th on Oct. 1 and from 71.50 p/th at the start of the year.

In September, Hartshead also said its net resource base offshore the UK had risen to 1.5 Tcf after the final award of six licenses the company won in the UK's 33rd licensing round.

Hartshead said all the licenses had been "fully executed and awarded", adding total contingent and prospective resources of 1.187 Tcf net to the company on top of existing resources in its previously awarded P2607 license.

All blocks within the licenses contain either gas field re-developments or undeveloped gas fields.

Hartshead was awarded the P2607 license in 2020 as part of the UK's 32nd licensing round. It contains multiple gas fields, some of which have been only partially developed, as well as several exploration prospects.