Business Irish

Saturday 3 December 2016

Corrib production ahead of schedule as final well opens

Published 14/09/2016 | 02:30

Production levels have now reached full plant capacity
Production levels have now reached full plant capacity

The final of six wells at the Corrib offshore gas site will have been brought online by the end of this month, according to Canadian firm Vermilion, which owns 18.5pc of the field.

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The company said that the project ramp-up since December had exceeded expectations and that production volumes have now reached full plant capacity.

"Irish production continued to ramp up during the quarter, with better than expected well deliverability and minimal downtime at Corrib since start up on December 30, 2015," noted Vermilion in its quarterly results.

At the end of the second quarter, Corrib - which is 83km offshore - was producing the equivalent of almost 59,000 barrels of oil a day.

The Corrib project also recorded gas sales totalling $126m (€112m) in the period, based on the level of sales that accrued to Vermilion in relation to its stake in the project.

In the three months to the end of June, Vermilion received gas sales proceeds of $23.3m from Corrib.

Less transportation, operating and other costs, the funds that flowed to Vermilion from Corrib amounted to $15.5m.

"Our production in Ireland is not subject to royalties," the Canadian company added in its results.

In France, Vermilion paid $6.5m in royalties during the second quarter; it paid $3.7m in Canada; $661,000 in the US; $964,000 in Germany; and $396,000 in The Netherlands.

It noted that lower gas prices have also resulted in the company taking an impairment charge on its Irish asset.

"As a result of declines in the European natural gas price forecast, which decreased expected cash flows, Vermilion recorded a non-cash impairment charge of $14.8m in the Ireland segment for the six months ended June 30, 2016," it said.

Shell owns 45pc of Corrib, with Statoil owning 36.5pc.

Ireland was importing about 90pc of its gas supplies prior to Corrib coming on stream at the end of 2015.

The remaining 10pc was being generated from the Kinsale gas field, which is near the end of its life.

There's estimated to be about 1 trillion cubic feet of gas at Corrib, making it about 70pc the size of the Kinsale field.

The Corrib field is expected to provide between 60pc and 65pc of the nation's gas at peak production.

Irish Independent

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