A three-day gas and condensate leak at Total’s Elgin platform 149 miles east of Aberdeen, Scotland, is raising the specter of a huge payout bill for the French supermajor, as the company says it could take several months to bring the leak under control.
Gas is leaking from the wellhead platform at an estimated rate of 200,000 cubic metres a day, and a 6-mile long trail of condensate has been seen on the water around the rig. Total says early reports of a sub-sea gas leak were incorrect and the leak is emanating at the surface.
All 238 workers have been evacuated, after the leak was spotted on Sunday, and an exclusion zone has mandated in the area surrounding the rig, which has seen oil workers quit platforms from as far as four miles away.
The Elgin facilities, which provide around 3% of the UK’s domestic gas supply, were evacuated after a blowout on 25 March during an operation to abandon a well.
Company spokesman Tony Peakin said a flare a burning on its evacuated Elgin in the U.K. North Sea is “faint and decreasing” and there’s no danger of igniting gas leaking from a damaged well.
However, the company says the leak may continue for up to six months, as this is how long the company estimates it will takes to drill an emergency relief well to plug the leak.
Meanwhile, Total’s share price has taken a pummeling on the French bourse, falling 6% yesterday and a further 2.18% today, over uncertainties of the costs to cap the well.
Should Total have to shut the Elgin field to cap the well, Total would take a EUR 5.7 billion hit in net present value terms, according to ratings agency Fitch, citing third party analysts. In cash terms Total has a EUR 2.6 billion stake in Elgin, and may have to reimburse its partners for their losses should responsibility for the leak fall in the operator’s lap.
Total’s ‘Rowan Gorilla V’ rig on West Franklin currently drilling development wells is expected to be mobilised, with another rig on potential standby. A quicker solution may be to inject mud into the well to cap it. Analysts have also suggested that the gas reservoir may not be large and the field will simply decline.
The leak underscores the operational risks of high pressure high temperature (HP/HT) deep well management, an actitivity which is set to increase in the Middle East as the industry’s focus turns to revering more challenging oil and gas.
