Norwegian oil company Statoil has canceled an option for a fixed platform for a UK North Sea development from South Korea’s shipbuilder Daewoo Shipbuilding and Marine Engineering.
According to the shipbuilder’s regulatory filing on Friday, Statoil canceled the order for the fixed platform for the Bressay heavy oil project located in the UK sector of the North Sea on Thursday, July 28.
The field is operated by Statoil with 81.625% interest, while the remaining 18.375% interest is held by Shell. The order, placed back in 2013, was worth around $1.41 billion.
The shipbuilder also said that Statoil dropped the order for the project, already exacerbated by delays, due to deterioration in the global business environment. To remind, Statoil already put the Bressay development on ice, over low oil price environment, in March this year.
Offshore Energy Today reached out to Statoil seeking confirmation and further details about the cancellation of the order.
A Statoil’s spokesperson referred to the company’s previous update from March when Statoil said that after working many years to find a profitable development solution for the challenging Bressay asset, it had decided to halt the concept selection process.
The Bressay heavy oil field was first discovered in 1976, but a combination of technical and commercial challenges has resulted in the long period to mature the discovery to development. The discovery stretches over four licenses.
Offshore Energy Today Staff
Follow Offshore Energy Today
Posted on July 29, 2016 with tags Bressay, Daewoo, North Sea, Statoil, UK.
In just two days’ time, work putting together one of the biggest and heaviest jigsaw puzzles you could imagine is due to start offshore Shetland in the UK North Sea.
Mariner topsides. Images from OE Staff.
It’s the eight huge modules for Statoil’s US$7 billion Mariner heavy oilfield development, which once assembled will together form a 38,000-tonne platform topside.
The work comes as Statoil is nearing load out of its Hywind pilot floating offshore wind farm turbines to the UK, as well as being close to starting a three-well exploration campaign, part of which could help prove more resources on Mariner, which could in turn result mean the need for a new wellhead platform in the field.
“We are very fortunate to be building something these days,” Uno Holm Rognli, project director for Statoil, said during a meeting with journalists on Shetland today. “Building a new organization, building something. All the topsides are coming together."
The investment decision was made on the 2 billion boe in place Mariner field at the same time as the Aasta Hansteen and Gina Krog projects in Norway – prior to the oil price collapse. Had the decision been made in today's oil price environment, Mariner may not have made the cut, admits Rognli. But, despite this, he says it’s a good project. “We have a project that will stay out there 30 years,” he says. “The oil price will go up and down in those years and we can live with that,” he says.
Another nearby project to Mariner, Bressay, had been due to follow Mariner, but has since been parked, however.
“Bressay, we have parked because it’s even more complicated and difficult than Mariner,” says Rognli. Statoil wants to learn more about Mariner, which has taken on learnings from Grane, in Norway, and Peregrino, in Brazil, before tackling Bressay, he says. “We hope we can do something with Bressay, but we do not know,” he says. “We have to look at the concept and see what we can do. We are sort of starting from scratch.”
Mariner process modules.
Holding back on Bressay doesn’t mean Statoil is holding back in the UK, however. “Statoil is one of the active operators on the UK Continental Shelf this year, drilling three exploration wells, starting any time soon,” says Rognli. One is in the Mariner area. Statoil is also drilling an appraisal well on southeast Mariner, using the Noble Lloyd Noble jackup, which has been pre-drilling wells on Mariner since late-2016 (two are complete, with a further two part drilled). This could help prove up further reserves and may result in more investment.
“The problem with heavy oil is that it is difficult to do a subsea tieback, it would probably have to be a well head platform and some sort of processing before being sent back [to Mariner|. We want to drill two wells to see what we have. The potential development of southeast Mariner depends on how much we find.”
Meanwhile, the focus will be on the heavy lift campaign. The campaign, expected to start this weekend, is the culmination of three years’ construction work in Samsung Heavy Industries’ yard in South Korea. It will see the eight modules – weighing up to 10,000-tonne each – lifted off five heavy transport vessels, and onto the 22,000-tonne Mariner jacket by the Saipem 7000 heavy lift vessel.
Three of the loads – including the living quarters (complete with bedding and towels) and utilities modules, three process modules and the crane and flare – are ready and waiting in Shetland to ship out. A further two, carrying a further process module and two drilling modules, are en-route, with one in the English Channel and the other near Aden, Yemen.
The Noble Lloyd Noble jackup, which has been pre-drilling wells on Mariner, is preparing to move to allow the Saipem 7000 to perform the eight heavy lifts. This is expected to run through July, perhaps into early August, depending on weather.
However, while the focus and fanfare will fall on the stunning sight of the lifting work, the grunt work is yet to come. Hook up and commissioning is due to take over a year and involve up to 750 people a day offshore at any one time, supported by the 480-bed Safe Boreas flotel. Some 3000 cables will need to be spliced and some 1500 pipe spools installed alone. In total, some 50,000 permits to work will be required during the campaign.
Production from three to five wells is due to start in 2H 2018, and even then the intense work will continue – some 100 wells are due to be drilled on the field in order to drain the thick viscous oil it contains via the Mariner topsides and to the Mariner B floating storage unit, which is already on station.
A one-year delay on the project was announced in 2015. But, this gave Statoil an opportunity, says Rognli. “We saw an opportunity to do this a bit different. We had a rig and did modifications to the jacket so we could start drilling before the jacket was in place. That will help us to start production earlier.”
Once on plateau, the field will produce 55,000 boe/d, with an aim to produce at least 250 MMboe of the 2 billion boe in place over its life time. That could be increased over the life time of the field as new technologies are developed.
Vidar Nygadr Karlsen, completion manager, who has spent the past two years overseeing the facilities construction in South Korea, says Mariner has been a long time coming.
“Mariner has been there quite some time,” says Rognli. “We say this is the awakening of the giant field.” In fact, Mariner was discovered in 1981 and had had 18 wells drilled on it when Statoil took over the Mariner license in 2007. Statoil drilled no further wells until last year, when it started production well drilling. But, the firm spent a lot of time maturing the development, says Rognli. New seismic, from 2012, played a key role in unlocking the field’s reserves, helping Statoil to map their location and extent. “That made it possible to see where the oil was for us to have a good plan to develop the field,” he says.
The 22,000-tonne Mariner jacket, built at Dragados’ yard in Spain, was installed in 2015 by the Saipem 7000. The Mariner B floating storage unit was also built at Samsung Heavy Industries in Korea and was installed in 2016.