France's Total studying options for UK's Glendronach gas field, mum on FID

London — France's Total is still looking at options for developing the Glendronach gas discovery offshore the UK, a company spokesman said Tuesday, despite an appraisal well pointing to resources at the lower end of expectations.

Total unveiled the Glendronach discovery in September 2018 in the increasingly prolific waters of the West of Shetland area, saying it was a "major" find with estimated recoverable gas resources of 1 Tcf (28.3 Bcm).

However, an appraisal well drilled last year pointed to "economic challenges" for the project, according to information posted to the Oil & Gas Authority (OGA) website.

"Glendronach remains part of our strategy for West of Shetland and we are progressing studies on the development options," the Total spokesman said.

"The discovery lies close to existing infrastructure and is also a play opener in an area where there are other prospects. This makes the West of Shetland basin an attractive region for exploration and development," he said.

Total initially said the Glendronach discovery -- which is located in a formation below the Edradour reservoir -- could be developed quickly using existing infrastructure.

It said the find -- which at the time was described by analysts as the largest conventional gas find offshore the UK in 10 years -- could even be brought online before the end of 2019.

But instead, Total opted to drill an appraisal well ahead of taking FID on the project, which was initially planned for 2020.

The company declined to comment Tuesday on whether the 2020 guidance for the FID remained in place.

Total has launched of a number of own-operated gas assets in the West of Shetland area in recent years, including the major Laggan-Tormore field complex and the nearby Edradour and Glenlivet fields.

It also operates the Shetland Gas Plant, which processes gas from the fields.

Mercury levels

According to the update posted to the OGA website, Glendronach still has the potential to be produced with existing Edradour-Glenlivet production into existing infrastructure, thereby utilizing existing ullage at the Shetland Gas Plant.

However, it said high levels of mercury were found during the drill stem test in 2018, meaning a Gas Mercury Removal Unit (GMRU) would need to be installed and additional minor modifications at Shetland Gas Plant carried out.

The additional budget for these modifications necessitated drilling of the appraisal well "to reduce volume uncertainty," it said.

It had been envisaged for the appraisal well to also be a "keeper well" but because the results were at the lower end of expectations the project is now pursuing a single well development opportunity, it said.

The OGA said the challenges for the project were now "essentially economic in nature" and ongoing work is focused on reducing reservoir uncertainty and capex optimizations.

Further, additional subsurface and technical work, including revisiting the GMRU scope to optimize the design, is required before FID can be taken.

"Should this work lead to a positive outcome, FID is expected to be around July 2020," it said.

The Glendronach find was considered a boost for the UK's domestic gas sector, which, despite a string of field start-ups, is still headed for long-term decline.

UK gas production amounted to 39.6 Bcm last year, according to data from the European Commission, down slightly from 40.7 Bcm in 2018, but is forecast to fall further in the coming years.

Glendronach is operated by Total with a 60% stake, alongside partners Ineos (20%) and UK utility SSE (20%).