Spirit Energy boosts output at two North Sea fields

Following successful offshore drilling campaigns, oil and gas company Spirit Energy has boosted production from two North Sea fields.

Hummingbird Spirit FPSO; Source: Spirit Energy

According to Spirit Energy’s update on Friday, the first gas from the new C6 well at Spirit Energy’s Chiswick field in the Southern North Sea was achieved on March 11, 2020, and has added up to an additional 15 million standard cubic feet of gas per day to the field.

The Chiswick field, around 75 miles off the coast of Norfolk, has been producing gas since 2007. The new well brings overall production from the Greater Markham Area (GMA) to 110 million standard cubic feet of gas per day – enough to heat nearly 950,000 homes.

The development well, completed two months ahead of schedule, is expected to help extend life of the GMA hub to 2028.

The GMA hub spans both the UK and Dutch Continental Shelves, and comprises the Markham, Chiswick, Grove, and Kew fields.

Chestnut field

The Chestnut field is located in block 22/2a of the UK Continental Shelf (UKCS), in 117m water depth.

Spirit said that, together with partner Dana Petroleum, it had completed drilling of a new production well at the Chestnut field, extending the life of that field by as much as three additional years.

Initial expectation when the Chestnut field first came online more than a decade ago was for a little over two years’ production.

First oil from the new Chestnut well was achieved on March 19, 2020. Thanks to the £56 million ($67.32M) investment from Spirit Energy and Dana Petroleum in the new well and a contract extension with Teekay Corporation for the Hummingbird Spirit FPSO, another 2.5 million barrels have been unlocked, Spirit Energy explained.

Neil McCulloch, Executive Vice-President Technical & Operated Assets, said: “The results from the new well at Chiswick exceeded our expectations and will provide us with valuable data to identify further drilling targets in the area.

“At the same time, the work our teams have done alongside our partner Dana Petroleum and our supply chain colleagues, notably Teekay Corporation and Altera Infrastructure, to maximise the potential of the Chestnut field has been exceptional and is making this field a notable success story.

“The industry faces unprecedented challenges but, taken together, the additional gas and oil from Chiswick and Chestnut provide a boost to production from two UK fields at a time when the secure supply of energy is critical.”


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Coronavirus spread pushes Bahamas well drilling to October

London-listed oil company Bahamas Petroleum Company (BPC) has further pushed back the drilling of its first exploration well in The Bahamas, the Perseverance #1.


BPC said on Wednesday that the delay was a result of the “massive, unprecedented, and adverse impact of the spread of the COVID-19 virus.”

According to the company, drilling operations planned for the May/June 2020 timeframe can no longer be assured and are rescheduled to October 2020 onwards.

Cost-effective drilling can best be delivered by ensuring continuous operations throughout the entire period of the 45 – 60 day drill plan uninterrupted.

National and regional shutdowns are impacting the ability of drilling rigs and other mission-critical equipment to get properly prepared and certified for drilling due to travel bans and border closures. Also, The Bahamas declared a state of emergency with a curfew in place on March 17.

This is further compounded given the need to take into account the timing of the traditional hurricane season in The Bahamas which happens between July and mid-October.

“The Board has thus concluded that if the company was to continue to seek to commence drilling in the first half of 2020, there would be an unacceptable level of risk to the company’s ability to operate continuously, responsibly, safely, and within currently established guidelines, timelines and, as a consequence, budgets.

“Accordingly, the company has determined to postpone drilling operations until mid-October 2020 onwards, being after the expected peak in the COVID-19 response, and also after the peak risk period for hurricanes in The Bahamas,” BPC stated.

BPC added that the impact of the response to the spread of the coronavirus, both globally and in The Bahamas, also constituted a force majeure event under the terms of the company’s licenses. Due to that fact, BPC expects to receive a corresponding extension to the current term of the licenses from the Government of The Bahamas.

Simon Potter, CEO of BPC, said: “Given the ever-evolving adverse impact of the response to the spread of the Covid-19 virus – which is changing daily and is affecting everyone and all enterprises, around the globe – it has become clear to us that if we continue to push forward with drilling in the first half of 2020, safe and responsible operations would be compromised.

“Shareholders should be encouraged, however, that we are in a strong position to resume drilling activities toward the end of 2020, compared to where we were just a year ago. The company has cash reserves, and financial backers intent on flexibly supporting the company.

“We also have an approved environmental authorization from the Government of The Bahamas, farm-in discussions remain on foot, and the current crisis is presenting a number of interesting alternative opportunities for us.

“The spread of the Covid-19 virus represents a global threat to our collective way of life, and we all have to face reality over the coming months – which in the case of our company means pausing our drilling plans for a time, as hard as that may be. We hope that all of our shareholders, stakeholders, employees, and contractors take care, and stay safe and well in this extremely difficult time for all.”

No change in cost estimate

BPC said that the cost estimate for the Perseverance #1 well was in the range of $25 – $30 million, with potential contingencies for up to an extra $5 million. The company does not anticipate the cost estimate to change due to the rescheduled start of operations.

All previously agreed financial elements would see total funding availability of around $45 million, and issuance of approximately 1.6 to 1.8 billion new shares of BPC.

As a result of the global COVID-19 crisis, a large number of international drilling programs were canceled or postponed, and a large number of rig contractors are revisiting their work programs.

This is expected to have knock-on effects on rig availability and potentially lower rig pricing in the revised drilling window. BPC is already revisiting discussions with a range of contractors for securing a suitable drilling rig for the revised drilling window.

Furthermore, the company will continue to assess options for a farm-out or similar transaction in the coming months, and stated that a number of interested parties, including oil and gas majors and supermajors, have indicated that they would wish for discussions to continue regardless of the coronavirus global crisis and the recent decline in global oil prices.

BPC is also evaluating some potentially value-creating alternative strategic options presented to the company in light of the global COVID-19 crisis.


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Current market challenges not preventing Dorado partners to push for FEED

Australia’s Santos and Carnarvon Petroleum are progressing as planned with the development of the Dorado project, located offshore Australia, despite recent challenges in the market. The partners are focusing on starting the project FEED as planned. 

Dorado field illustration; Source: Santos

The giant Dorado development is located in permit WA-437-P. Santos is the operator and holds an 80% interest and Carnarvon is its partner with the remaining 20% interest.

Carnarvon said on  Monday that its strategy had intentionally targeted projects that have the potential to produce in low-cost environments and thereby absorb extreme economic events such as we’re experiencing at present, namely, a dramatic global response to the spread of the COVID-19 virus and to the fall in oil prices.

The sheer size and nature of the Dorado field means that it is a strong and robust project which is expected to produce at globally competitive capital and operating costs per barrel, Carnarvon said.

Entering FEED

On the Dorado field work, the Carnarvon team is working closely with the operator on a variety of components that are required to formerly enter the Front End Engineering and Design (FEED) phase. At this time there is nothing preventing the beginning of FEED nor its ongoing work throughout this and next year. This is a priority for Carnarvon and the recent global events have not affected this position, the company noted.

The exploration prospects around Dorado, such as Pavo and Apus, are looking attractive on the new Keraduren 3D seismic data. There are also new prospects showing up on the 3D seismic data.

Carnarvon is of the view that the current spot prices for oil do not represent longer term prices expected to be realized in ‘normal’ market conditions.

Carnarvon said: “The company has considered this situation carefully, particularly having regard to when the business expects first production from Dorado, and is confident that it makes sense to proceed with the businesses’ plans unchanged.”

Carnarvon’s Managing Director and Chief Executive Officer, Adrian Cook, said: “We have experienced market volatility in the past, such as with oil prices falling in 2015. During those times we also carefully assessed the situation and felt confident to remain active, working through the uncertainty and volatility that was present at the time.

“Taking this considered approach put the company in an incredibly strong position that resulted in the discovery of the Dorado field in 2018. We have once again taken the time to carefully assess market conditions. Our strong conviction is that the COVID-19 virus issue and low oil prices will be resolved in time. We are of the view that the most appropriate course of action at the current time is to continue to focus on the delivery of our plans, and that includes supporting the operator in advancing the Dorado development.

“Importantly, through careful management, we are in a position to proceed with our plans because of the very strong financial position of the Company. At 31 December 2019 we reported cash of $119 million. Since this time, we have been very prudent with our outlays and we will have more than enough financial resources available to cover our 2020 expenditure. Based on our current forecasts, we will also have more than enough to reach the Final Investment Decision for the Dorado liquids development.”

It is worth mentioning that Santos’ preferred concept for the Dorado project is an FPSO and wellhead platform development. In the initial phase, Santos plans for oil and condensate development followed by future phase of gas export.


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Husky defers two offshore projects after taking an ax to capital spending

Canadian oil and gas company Husky Energy has decided to cut its 2020 capital spending by $900 million in upstream spending and an additional $100 million in additional measures. 

Illustration. Source: Husky Energy

Under the new plan, Husky has decided to delay the development of an oilfield located offshore China as well as development of a natural gas field offshore Indonesia.

Husky said on Thursday it is taking a series of actions to fortify its business in response to challenging global market conditions.

With these initiatives Husky is looking maintain the strength of its balance sheet while protecting value in an extended low commodity price environment.

“Husky has three important advantages: a strong balance sheet, an Integrated Corridor which includes a sizeable downstream and midstream segment, and Offshore operations that include long-term gas contracts in the Asia Pacific region not linked to the price of oil,” said CEO Rob Peabody.

Given current market conditions, Husky will start the reduction, or shut-in, of production where it is cash negative on a variable cost basis at current prices.

The company’s total liquidity is $4.9 billion, comprised of $1.4 billion in cash and $3.5 billion in unused credit facilities. In line with its committed credit facilities, Husky is required to maintain debt to capital of no more than 65%, and is well below this threshold with a ratio of 27% with no long-term debt maturities until 2022.

The company has revised its capital investment guidance in Upstream from $2.6 billion – $2.8 billion to $1.75 billion – $1.9 billion.

The company’s total investment guidance was reduced from $3.2 billion – $3.4 billion to $2.3 billion – $2.5 billion.

Total Upstream Production (mboe/day) has been revised from 295 – 310 to to 275 – 300.

According to Husky, investment in resource plays and conventional heavy oil projects in Western Canada has been halted, with a focus on optimizing existing production and lowering costs. Furthermore, drilling of sustaining pads at all thermal operations has been suspended and Lloydminster thermal projects scheduled to be delivered beyond 2020 have been deferred and will be reconsidered as market conditions improve.

In the Asia Pacific region, the development of the Block 15/33 oil field offshore China has been deferred by a year. In Indonesia, development of the MDA-MBH natural gas field has been deferred.

The Liuhua 29-1 field at the Liwan Gas Project is being advanced as planned, with first production expected by the end of 2020.

The company said it continues to review further capital adjustments in response to the current market environment.

Additional cost reduction initiatives totalling approximately $100 million in 2020 will include a reduction in well servicing activities on uneconomic production, and a halt in exploration activity.


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Tailwind files environmental statement for North Sea project

Oil and gas company Tailwind Energy has filed an environmental statement for its Evelyn development, located in the UK North Sea, to the UK authorities. A final investment decision for the project is expected to be made this year. 

Triton FPSO
Triton FPSO; Source: Tailwind

Tailwind is working towards committing to development of the Evelyn field located in the Central North Sea.

Ensuring that environmental matters have been fully considered for the Evelyn Development, before the full field development decision is taken, Tailwind has prepared an Environmental Statement presenting the findings of the Environmental Impact Assessment and has been submitted to the UK’S Secretary of State for Business, Energy and Industrial Strategy (BEIS), the company informed on Tuesday, March 10.

A public consultation on the plans is underway. Tailwind will make a final investment decision on the Evelyn field in 2020, conditional upon the approval of the Environmental Statement.

Tie-back to Triton FPSO

The first phase of development will consist of a single well, subsea tie-back to the Triton FPSO. The subsea tieback will include a new 10ʺ production line, 4ʺ gas lift line and umbilical for control services. The first oil is expected by the end of 2022.

There is also a possible phase 2 development consisting of a second well also covered by the field development plan. A decision whether to proceed with Phase 2 will be taken following review of the success of the first phase of production to decide if it is necessary to maximise hydrocarbon recovery. The development of a second well (EV2) will include the installation of a new 10ʺ pipeline, 4ʺ gas lift pipeline and umbilical between EV2 and the Evelyn valve skid (EVVS).

No significant topside processing system modifications are required to process the Evelyn fluids over the Triton FPSO. The tie-in point for Evelyn will be via the new Triton P1 riser, which is already being replaced as part of a Dana maintenance subsea scope during the major 2022 shutdown, and is outwith the scope of this ES.

The Evelyn development is located in the Triton cluster. Tailwind in September 2018 completed the purchase of Shell UK Limited, Shell EP Offshore Ventures Limited, and Esso Exploration and Production UK Limited interests in the Triton Cluster.

The Triton area consists of six producing oil fields developed via common infrastructure in the UK Central North Sea, located approximately 190km east of Aberdeen in water depths of 90m. The six fields currently producing oil and gas via the Triton FPSO, are Bittern, Guillemot West, Guillemot Northwest, Clapham, Pict and Saxon.

Dana Petroleum and Endeavour Energy are Tailwind’s partners in the Triton cluster. Dana currently operates the Triton FPSO along with the Clapham, Saxon, Pict and Guillemot West fields. Following the recent Tailwind transaction with Shell/Esso, Dana now also operates the Bittern field. Tailwind is operator of the Gannet E Field, with Dana as pipeline operator and Petrofac as well operator. Tailwind also operates the Belinda/Evelyn discoveries with Petrofac as well operator.


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GALLERY: Yinson’s FPSO heads to Nigeria for First job

Yinson’s FPSO Abigail-Joseph has set sail from Singapore to the Anyala & Madu fields in Block OML 83 & 85, offshore Nigeria, marking the completion of its conversion and a life extension phase ahead of its contract with First E&P.

As previosuly reported, Keppel Offshore & Marine delivered the FPSO Abigail-Joseph to Yinson following refurbishment and life extension work, engineering and procurement, fabrication and installation of new structures including the helideck and riser balcony, as well as the installation, integration, and completion of topside modules.

Yinson said in an update earlier this week that the vessel had set sail to Nigeria. It is expected to reach Nigeria by early May after which it will undergo final commissioning works. The start-up of production is scheduled for the end of May 2020.

The vessel is chartered by client First Exploration and Petroleum Development Company on a firm seven-year contract with options to extend.

The conversion of the vessel, which was carried out in Keppel Benoi Shipyard Singapore, was completed within seven months. This is believed to be the world’s fastest delivery of a brownfield FPSO modification and upgrading project, Yinson said.

Yinson’s Group Chief Executive Officer Lim Chern Yuan said that the redeployment strategy was proving to be a strong strategic decision.

The FPSO Abigail-Joseph is a redeployment of one of Yinson’s existing vessels, FPSO Allan, which had previously operated for nearly 10 years in the Olowi Field in Gabon. The FPSO is Yinson’s second vessel to operate in Nigerian waters, with the first being FPSO Adoon which is currently operating in Block OML 123.

The FPSO Abigail-Joseph has a storage capacity of not less than 550,000 barrels and is designed to produce 50,000 barrels of oil per day with gas lift and gas injection capacities at 15 MMSCFD and 39 MMSCFD respectively.

Images by Yinson


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McDermott in groundbreaking ceremony for Saudi yard

Saudi Aramco and McDermott have reached a milestone with McDermott breaking ground on its new fabrication facility within the King Salman International Complex for Maritime Industries and Services in Ras Al-Khair, Saudi Arabia.

Source: McDermott

The overall site, which is being developed by Saudi Aramco, is expected to be the largest maritime industries complex in the Kingdom and the Middle East region in terms of production, capacity, and scale, McDermott said on Tuesday announcing the milestone.

Within the development, McDermott said it is building a facility spanning 1.2 million square meters that will include offices, pre-fabrication shops, blasting and painting shops and large assembly shops capable of fabricating platforms and modules for both offshore and onshore projects for Saudi Aramco and other customers in the region.

The facility will incorporate up to 80,000 square meters of covered shops to house the latest automation technology and will also include a 580-meter reinforced bulkhead providing marine access.

“The Saudi Aramco team has been working tirelessly for a number of years to create the infrastructure from which McDermott and the other anchor tenants within the Complex are able to establish their facilities,” said Mohammad Al Assaf, Saudi Aramco Vice President of New Business Development.

“With McDermott breaking ground, we move a step closer to the Complex acting as a hub for job creation and supply chain development in accordance with Saudi Vision 2030 objectives,” added Al Assaf.

“The SAFIRA fabrication yard enhances our long history and close relationship with Saudi Aramco, our largest customer, and demonstrates our commitment to the Saudi Vision 2030,” said David Dickson, McDermott President and Chief Executive Officer.

Linh Austin, McDermott Senior Vice President, Middle East and North Africa, said: “As the first EPC Contractor to establish a full-scale fabrication facility in Saudi Arabia, we will build on generations of knowledge and experience within McDermott to create something extraordinary. But this project is also about people, and we will continue building our in-Kingdom engineering and procurement offices as well as sourcing and developing local talent on all levels in the company.”

In March 2019, Saudi Aramco signed a land lease agreement with McDermott Arabia Company, Ltd., a subsidiary of McDermott International, to grant McDermott a lease to establish this fabrication facility.

Under the provisions of the land lease agreement, McDermott will benefit from the Complex wide infrastructure that is being developed by Saudi Aramco. Such infrastructure includes employee accommodation, medial facilities, and recreation areas.


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Aibel ticks another milestone for Equinor’s Johan Sverdrup platform

Norwegian contractor Aibel has ticked off another milestone in the construction of the P2 platform modules for the Equinor-operated Johan Sverdrup project located offshore Norway.

Source: Aibel

Aibel said on Monday that the first deck of the Utility Process Module (UPM) for the P2 platform, being built in Haugesund, was completed on Friday, February 21. The P2 module is being constructed in The North Sea Hall.

Stig Jessen, Aibel’s project director for Johan Sverdrup, said: “We are now 50% finished and are in the final stages of our design where we have soon released 50,000 drawings. This module is the very heart of the platform, it weighs 5700 tons and is very complex. That’s why we chose to build it here in Haugesund, to make sure we’ll finish on time and with the high quality needed in a weather-hard environment in the North Sea.”

Deputy Mayor of Haugesund, Trine Stokland, congratulated Aibel on behalf of the municipality: “You are in possession of very many strong hands and wise heads in combination with world-class technology. The Johan Sverdrup P2 project is a good example of this.”

Equinor’s project director for P2, Ståle Nordahl, said: “It is no coincidence that the Johan Sverdrup P2 platform is being built at Aibel, and it is with pride that the fifth platform for the large Johan Sverdrup field is now taking shape precisely here in Haugesund.”

Aibel’s construction manager for Johan Sverdrup, Bjørn Pedersen, said that the project is on schedule in relation to the delivery.

At the moment, 3,500 people are working to finalize the three modules (MSF, UPM, and HVDC) that make up the 25,000-ton P2 platform.

The modules will be assembled in March next year. The platform is scheduled to set sail to the Johan Sverdrup field in January 2022.

It is worth reminding that Aibel last December also completed the first deck for the Main Support Frame (MSF) module for Johan Sverdrup’s P2 process platform. The MSF module is being built by Aibel’s yard in Thailand.


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Masirah flows first Yumna oil into tanker

Exploration and production company Masirah Oil has completed the Yumna 1 well and flowed first oil into an Aframax tanker. The well is located in Block 50, 30km offshore east Oman. 

Bull Papua tanker; Source: PT. Buana Lintas Lautan, Tbk

Masirah awarded a contract to Foresight Offshore Drilling to use the Foresight Driller IX drilling rig for the appraisal well on Block 50 in early November 2019.

Later that month, Masirah also awarded a contract to Wings Offshore for the floating storage and offloading (FSO) vessel, Mt Bull Papua, to be used on the Yumna field. The Mt Bull Papua is an Aframax tanker with a storage capacity of 750,000 barrels.

The well was spud on December 26, 2019.

In an update released earlier this week, Masirah said that the well came in as expected and confirmed the updated reservoir model.

The Yumna 1 well has tested at a production rate of 11,843 stock tank barrels of oil per day through a 1-inch choke, with a crude oil gravity of 42 degrees API. The Yumna field is being further appraised with an extended early production test.

The company also stated that further data evaluation and testing would be done and its findings would be released when completed.

Masirah is an 86.37 percent owned subsidiary of Singapore’s Rex International.

Commenting on Masirah’s update, Dan Broström, Executive Chairman of Rex International, said: “We are very happy with the successful results from the Yumna 1 well and are pleased to play a part in opening up a new frontier offshore, east of Oman. We expect the high level of activity to continue as we move forward in the block. We thank the Ministry of Oil & Gas in Oman for their support and help in this endeavor.”

Offshore Energy Today Staff


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Japanese firms team up for Brazilian FPSO project

Illustration

Japanese companies have teamed up to proceed with a charter project for the deepwater FPSO for the Petrobras-operated Marlim field located offshore Brazil.

MODEC, Mitsui, Mitsui O.S.K. Lines (MOL), and Marubeni have agreed that Mitsui, MOL and Marubeni will invest in a long-term charter business currently promoted by MODEC for the purpose of providing an FPSO for use in the Marlim field.

The four companies entered into related agreements on Thursday, January 30, 2020.

Based on these agreements, Mitsui, MOL, and Marubeni will invest in Marlim1 MV33 B.V. (MV33), a Dutch company established by MODEC, and the companies will proceed with the project jointly.

MV33 has received a letter of intent for a long-term charter agreement for the deployment of the FPSO in October 2019 from Petrobras, the Brazilian state oil company. The FPSO will be chartered for 25 years under this charter agreement.

The FPSO will be named Anita Garibaldi MV33 and will be deployed at the Marlim field situated in the Campos Basin. The field is located approximately 150 kilometers from Rio de Janeiro, in the southeast coast of Brazil. FPSO will be moored in approximately 670 meters water depth, in the year of 2022.

The project is the eighth occasion under which the companies have collaborated to operate FPSOs in Brazil.

The FPSO will be capable of processing 80,000 barrels of crude oil per day, 248 million standard cubic feet of gas per day, 390,000 barrels of water injection per day and will have minimum storage capacity of 1,000,000 barrels of crude oil.

Also on Thursday, MODEC signed a sales and purchase agreement with Equinor to supply an FPSO vessel for the Bacalhau field offshore Brazil. According to MODEC, the FPSO will be the largest FPSO ever delivered to Brazil.


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