Independent Oil and Gas Plc (LON:IOG) shares dropped back almost 9% in early Tuesday deals after the company updated on its progress towards final investment decision for the Southern North Sea (SNS) gas project.
It said that evaluations of the Thames Pipeline had ‘fully confirmed’ its integrity at the pressure required to transport gas to the Bacton terminal. This is a ‘major step’ toward approval of the field development plan, IOG said.
“The Thames Pipeline is now conclusively proven for a new economic life over the next two decades as a fully viable, minimal cost, zero tariff export route delivering a maximum annual capacity of 200 BCF directly into the UK market,” the company said in a statement.
Additionally, it told investors that it had made significant further technical and financial progress for the project which is now in the final preparatory stages ahead of a final investment decision, due in the fourth quarter.
IOG highlighted that funding plans are being finalised, construction of key project infrastructure is due to follow in 2019, with installation anticipated in early 2020 ahead of ‘first gas’ in the second quarter of 2020.
"This is an especially exciting time for the Company as we progress ever closer to a transformational FID and also prepare to drill a fully funded appraisal well at Harvey in the coming months which could dramatically increase our proven reserves and company valuation,” said Andrew Hockey, IOG chief executive.
Hockey added: "The recommissioning of the Thames Pipeline will breathe new economic life into a part of the North Sea formerly considered to be in terminal decline and help to maximise economic recovery for the UK.
“The new gas developments enabled by the re-use of this pipeline will make a significant contribution to providing domestic energy resources to UK homes and industry over the next two decades and provide extended employment opportunities in the region.”
In London, IOG shares were down 3.05p or 8.65% changing hands at 32p.