Production from the Wressle oil site near Scunthorpe will break even at $17.62 a barrel, the operator, Egdon Resources, has said.
In an update, the company’s managing director, Mark Abbott, said:
“Our modelling shows that the Wressle development is economically robust at and below the current oil price and remains a core focus for the business with a current expectation of first oil in the second half of 2020.”
Long-term production at Wressle was granted permission after a protracted planning battle, including two public inquiries.
After the second hearing, a planning inspector gave the scheme the go-ahead on 17 January 2020.
Egdon said it was currently working on fulfilling conditions, finalising detailed designs for the site and tendering for materials, equipment and services.
The first work on site would be installing groundwater monitoring boreholes and establish baseline conditions.
This would be followed by reconfiguring the site and installing surfaces facilities. Sub-surface work on the well would then be carried and production was estimated to begin during the second half of this year.
The statement also confirmed that Egdon had submitted its application for costs of the appeal on Wressle to North Lincolnshire Council.
Egdon holds a 30% stake in the Wressle licences, PEDLs 180 and 182. Other investors are: Europa Oil and Gas (30%), Union Jack Oil (27.5%) and Humber Oil & Gas (12.5%).
In January 2020, Egdon said low commodity prices, as well as the moratorium on fracking, were a challenge to its future. Its accounts for the year to the end of July 2019 said:
“[the combination] represent a material uncertainty that may cast significant doubt upon the group’s ability to continue as a going concern.”
Also in January, Europa revealed that its future depended on production this year from Wressle. Without it, the company said it risked failing to meet commitments without issuing shares or selling assets.
Updated 20/3/2020 to edit headline