IOG to investigate Blythe H2 constrained flow rates

IOG plc will investigate a potential mechanical blockage downhole constraining flow in the Blythe H2 development well in the southern North Sea.

ISSUES

Remedial downhole equipment will be mobilised in the coming weeks and run in the well with the rig alongside, with H2 well shut in during these operations.  

The news follows gas and oil influx, a stuck drill string and a plugged drillpipe in the well which halted operations.

In mid-May the problems were overcome and the company conducted well clean-up and testing operations from 4 to 7 June.

FLOW RATES

IOG today said it had drilled the H2 well to a total depth of 13,400 ft MD with initial data indicating “better reservoir quality (permeability and porosity) in the H2 wellbore versus H1”.

The well has flowed at a maximum dry gas rate of 22.8 mmscf/d and 280-336 bbl/d condensate with no formation water observed, but below the expected initial H2 gas rate of 30-40 mmscf/d.

The company is assessing the impact of potentially lower than expected H2 2023 production rates because of the H2 well.

“No faults or fractures were encountered in the H2 reservoir section, unlike at H1 where a sub-seismic fracture appears to be causing formation water production,” added the company.

Final H2 well costs are expected to be £15m net to IOG.

COMMISSIONING

IOG still expects to bring H2 onstream this month, despite 34 days lost to well control, with the hand over for final hook-up and commissioning to take one week.  

Once H2 production has started, H1 is planned to be shut in.

BLYTHE H1

Current gross unconstrained H1 production rate is approximately 15.5 mmscf/d.

Average 2023 gross production year to date to 31 May was 13.9 mmscf/d, factoring in shutdowns and liquid letdowns alongside other Bacton gas streams. 

SENIOR SECURED BOND

IOG added that a fall in gas prices meant that it was likely to breach one or more of the covenants of its €100 million senior secured bond at the next covenant test date of 30 June 2023.

Cash at bank as at 31 May 2022 was £21.5m including restricted funds of £6.8m.

The company said it was taking action to address the balance sheet including preliminary discussions with an ad-hoc group of bondholders representing 40% of the bonds.