The company said it would shift the focus of its activities towards building a portfolio of gas-producing assets and electricity generation from renewable energy
UK-based oil and gas company Parkmead has unveiled its plans to withdraw from the Greater Perth Area (GPA) project in the UK North Sea, due to high taxes and fiscal changes.
The company said it would shift the focus of its activities towards building a portfolio of gas-producing assets and electricity generation from renewable energy.
Parkmead updates strategy for UK North Sea project. (Credit: Arvind Vallabh on Unsplash)
In recent years, Parkmead has worked to advance the development of the GPA project, amid challenges including sour gas combined with ageing nearby infrastructure.
The company received positive initial findings from a Net-Zero feasibility study, which showed a technical solution for the reinjection of sour gas into a nearby depleted reservoir.
However, the updated development capital costs for Perth, including the additional costs of achieving net-zero requirements, have increased to almost one $1bn.
Parkmead said that it will no longer pursue the proposed GPA development and stop extending the license period for P588 and P2154, which contain the Perth discovery.
Also, the company will record around £33m in impairments relating to GPA development.
According to the company, UK upstream industry is facing several challenges, including volatile oil and gas prices, ageing infrastructure, and increasing operating costs.
Together with the increase in taxation in the last 12 months, the loss of key equipment and human resources has affected the company’s drilling campaigns in the UK North Sea.
Also, the investment decisions on new projects were delayed or cancelled, as the increase in capital cost made traditional funding sources move away from oil and gas projects.
Parkmead said that, with a management team that has a successful track record of operating on the UKCS, it will remain committed to its home region.
The company plans to drill a high-impact well in the Skerryvore area in the UK Central North Sea, which could be developed in a timely and cost-efficient manner.
The well, which is surrounded by modern infrastructure, is estimated to produce 157 million barrels of oil equivalent (mmboe) from multiple horizons on the flank of a salt diapir.
Furthermore, Parkmead is committed to pursuing attractive exploration and appraisal opportunities within the transition period and pursuing acquisition opportunities.
Parkmead executive chairman Tom Cross said: “Parkmead has developed a clear strategy for its future in the UK North Sea. Over recent years a great deal of our team’s effort has been directed at trying to unlock the complex Perth area.
“Our team is naturally disappointed that despite these huge efforts, working closely with neighbouring operating companies and highly skilled supply chain companies, the combination of challenging factors means it is not economically viable to take the project forward.
“As a balanced energy company, Parkmead will continue to progress its diverse portfolio of gas, oil and renewable energy assets in order to maximise shareholder value.”
