Dorado project update
Wednesday 17 August 2022
Carnarvon Energy Limited has provided the following update on the Dorado development occurring within Production License WA-64-L, and Pavo pre-development studies in Exploration Permit WA-438-P.
Carnarvon Managing Director and CEO, Mr Adrian Cook, said:
“We are pleased that the Dorado development FEED process is now substantially complete and that the project, through this process, has been shown to be technically robust.
Carnarvon is keen to see the timely sanctioning of the Dorado development and commencement of the construction phase, and we continue to work collaboratively with the operator to achieve this.
That said, given the current regional inflationary pressures and supply chain challenges, the risk of cost escalation is unacceptably high and requires fiscal discipline until this environment shows signs of stabilising.
The analysis of the Pavo discovery to date shows that this is a tremendous resource with the potential to generate a significant amount of value for Carnarvon shareholders by utilising the proposed Dorado facilities. Accordingly, the Joint Venture is undertaking detailed studies to optimise an integrated Dorado development concept.”
Dorado development
The Dorado Front End Engineering and Design (“FEED”) process is substantially complete and has progressed to the point of the Dorado development being close to Financial Investment Decision (“FID”) ready.
The main outstanding matter is the finalisation the Engineering Procurement and Construction (“EPC”) contract for the Floating Production Storage and Offloading (“FPSO”) vessel. The Joint Venture has been working with the relevant contractor to ensure the contract is in an acceptable form. This requires the cost environment to be more stable and more certainty around supply chain capacity. Because the FPSO represents more than 50% of the expected project cost, it is important that this work scope is carefully contracted and managed, especially in the current supply chain environment.
Highlights
• Dorado development FEED is now substantially complete
• Production Licence has been awarded
• OPP continues to be assessed by NOPSEMA
• In the current inflationary cost environment and period of supply chain uncertainties, a prudent approach is being adopted which does not support FID in 2022
• The Joint Venture remains focused on value enhancement through further Bedout drilling and optimisation of an integrated Dorado development concept
• Carnarvon’s financing process, including potential divestment, is continuing to progress
The engineering work for the well-head platform (“WHP”) and FPSO is essentially complete, with a robust technical design able to extract the oil and gas from the Dorado field as planned and allowing for further tie-back opportunities such as Pavo. The initial development incorporates 10 wells being drilled into the four reservoirs (Caley, Baxter, Crespin and Milne) and the hydrocarbons being produced via a 16-slot WHP to an FPSO. The FPSO has a design capacity to process 100,000 barrels of oil per day, along with 215 million scf/day of gas injection and storage for around 1 million barrels of oil & condensate.
Pavo
Pre-development work has commenced for the Pavo discovery, with a Discovery Assessment report being filed with the regulator while studies are being undertaken for development of this resource.
The Pavo-1 well discovered 43 million barrels (2C, gross) of oil as a Contingent Resource – referred to as Pavo North. This highly valuable resource is intended to be tied back to the Dorado FPSO. The studies being undertaken are to ensure the current Dorado FPSO design is capable of receiving the Pavo fluids with minimal requirement for further enhancements during tie back operations.
The Pavo South structure is estimated to contain an additional resource of 55 million barrels of oil (Pmean, gross), and hasthe potential to generate significant further value. The Joint Venture is assessing options to drill this prospect as soon as possible.