EnergyWatch

Ineos nears milestone for problem-stricken Hejre field

Ineos expects to have completed preparatory efforts for development projects Hejre and Solsort in 2020, says CEO Sebastian Koks Andreassen in an interview with EnergyWatch. Neither of the projects are projected to be completely operational within the next few years.

Photo: Claus Fisker/Ritzau Scanpix

Ineos counts on completing the technical studies for the Hejre field during the first half of 2020. The UK-based company, among the largest petrochemical operators in the world, will thereby have settled the groundwork for its drawn-out facility expansion, Ineos Oil & Gas Scandinavia Chief Executive Sebastian Koks Andreassen tells EergyWatch.

When Ineos took over Dong's, since renamed Ørsted, oil assets in 2017, the former became field operator for Hejre – a field that Dong had decided to expand along with parter Bayerngas for a price of DKK 12.1 billion (EUR 1.62 billion). The original plan set out for the field to be commissioned in 2015.

However, things became complicated when big delays and obstacles with the field's topsite prompted Dong to finally scrap the whole build-out plan.

Ineos has since worked to find a solution for expanding the field.

"We have invested the time and money in technical studies allowing us to make a decision on concept choice at some point next year. We have somewhere between 20 and 30 persons working on a daily basis with the technical and commercial aspects of Hejre," Andreassen says.

"That number will, of course, become larger, if and when we begin the engineering work. And we've invested in more than just wages to these 20-30 persons. To an even higher degree, we're paying consultancy firms and engineering companies to help us," he continues.

The CEO says the field extension plans are going according to plan in the sense that no actual "showstoppers" have appeared during the process. The company now awaits the basis for the concept that can lead to an investment decision.

Two possible solutions

Along with partner Spirit Energy, Ineos is exploring which field extension solution is most viable.

From an earlier attempt to expand Hejre, drilling has already been carried out on five wells, three of which are ready for extraction. Moreover, a pipeline has been laid, and a jacket foundation is in place. The only piece missing is the topsite; the processing facility rig handling the oil and gas retrieved from the underground.

"It has been natural for us to assess how to exploit as much of the existing infrastructure as possible. The next step was considering the optimal solution for the build-out. In other words, the minimum exertion to extract what's in the underground in a safe and prudent manner," he explains.

At the earlier stage of the Hejre project, the topsite installation was meant to be placed atop the Hejre discovery itself. But Ineos has come upon the idea to look for other fields that already have an attached processing plant.

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Photo: Ørsted

Ineos is working to bring two solutions to maturity, both of which will utilize processing plants at existing infrastructure – either via the Harald field, operated by Total, or the Siri field, operated by Ineos.

Regardless of which solution Ineos chooses, supplemental equipment will need to be moved over to Hejre, but otherwise using an existing topsite is possible. Doing so in this way would cut quite a few costs.

But doing so won't be a smooth process, Andreassen says.

"It will take time to figure out if Hejre's volumes can be handled by existing plants, which adjustments need to be made, if the equipment will suffice and be durable enough for the job. And we're looking into that – both regarding Harald and Siri," the CEO says.

It's still too early to set a date on initial extraction. There's so much work ahead of us yet.

Sebastian Koks Andreassen, Ineos CEO

Further to Solsort

Extending Hejre is not the only development project occupying Ineos. The same applies to the smaller Solsort find, which the company wants to develop – and it has no existing infrastructure to lean upon.

The Solsort license was also included in the package of assets Ineos acquired from Dong and which the latter conceived as a combined development concept for joining the two projects. Ineos has now arrived at the conclusion that it makes best sense to split the endeavors into two parts.

This has meant, among other things, that the two projects' timelines need not be identical. However, Solsort is actually in the same development phase as Hejre.

On the other hand, most indications point to an investment decision being made for Solsort, allowing the field to be tied to Syd Arne, operated by Hess. There are only eight kilometers from each other.

This is connected to the fact that Solsort is estimated to have less volume than Hejre, for which reason it is even more dependent on another processing plant to handle the extracted volumes.

As quickly as possible

Concerning both Hejre and Solsort, the next step is choose a concept, followed by securing the Danish Energy Agency's approval for the concept before Ineos and field partners can figure out how to specifically extend the infrastructure. Only then can an investment decision be made.

In other words, a few more years will pass before hydrocarbons start to flow from Hejre and Solsort.

"It's still too early to set a date on initial extraction. There's so much work ahead of us yet. And we as a company are, of course, interested in this being done as quickly as possible, but the most important thing is to have the right concept sorted beforehand," Andressen says with caution.

Such attentiveness has not diminished since the Hejre project crashed to the ground, when Dong and Bayerngas attempted to blow air under its waxen wings.

English Edit: Daniel Frank Christensen

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