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Lyon result a ‘huge disappointment’ for Siccar Point and Ineos - analysis

An analyst has classed the results of the Lyon exploration well West of Shetland as a “huge disappointment” for operator Siccar Point and partner Ineos.

Lyon, around 75miles north-west of Shetland, was one of the most hotly anticipated wells for the UK this year but yesterday Siccar announced drillers “did not encounter reservoir quality sandstone”.

Siccar Point had hoped for between 1trillion-3trillion cubic feet of gas and to use Lyon as a hub for nearby discoveries such as Tobermory, Bunnehaven and Cragganmore.

The well has now been plugged and abandoned by Diamond Offshore’s Ocean GreatWhite rig.

Lyon is operated by Siccar with 33.3%, with the remaining stake owned by Ineos.

Alyson Harding, Westwood Global’s technical manager for north-west Europe, said it will be a blow to the two firms.

She said: “This result will be a huge disappointment for Siccar Point and partner Ineos who were hoping to create a Northern hub West of Shetland, that would also incorporate the Tobermory and Bunnehaven gas discoveries.

“The prospect was based on seismic amplitude responses, with the well targeting a high amplitude sweet spot.

“The seismic data will now need to be re-calibrated and the area reinterpreted to see what the implications are for potential follow on prospects in the area.”

Elsewhere in the West of Shetland, Siccar is expected to sanction the Cambo field later this year, thought to hold at least 600million barrels of oil.

The firm will also be looking ahead to upcoming licencing rounds near their existing acreage.

Ms Harding added: “Siccar Point has previously expressed interest in the West of Shetland area in the upcoming UK 32nd Round which is due to open imminently.

“The Faroes 5th Round is being run concurrently, which will also be of interest to them, being adjacent to Cambo and Blackrock. It is too early to see what impact this well result will have on its appetite for exploration in the area.”

 

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