OMV Project Tempts Floater Contractors
Monday 5 September 2016
Austrian operator OMV has approached work-hungry contractors about the potential use of an existing floating production, storage and offloading vessel to kick-start early production from its challenging Cambo project in UK Atlantic Margin waters.
The project remains at an early stage but the move, which sources said has happened in recent weeks, has raised hopes of renewed momentum in the scheme, which OMV has been eyeing as a hub to unlock its West of Shetland fields.
One industry source with knowledge of the scheme stated he sensed OMV had “shifted up a gear”.
It is understoof that contractors including Netherlands-based Bluewater and Norway-based Teekay Petrojarl have been asked to provide information on the availability of existing floating production, storage and offloading vessels, while the OSX-1 floater — currently owned by Brazil’s OSX — could be another contender.
One source said: “They are back out in the market with a request for information. OMV wanted updates and to reconfirm the availability of various units.”
OMV confirmed that it is aiming to begin a concept selection process “early next year” as it looks to install some form of early production system (EPS) on Cambo.
“The preferred case is for an EPS to optimise future development,” an OMV spokesperson said.
The scheme is currently in the early “assess” stage, said the spokesperson.
The timing of a final investment decision will be dependent on the development concept chosen, added the spokesperson, who declined to discuss what type of concepts might be suitable.
Project watchers said the harsh operating environment and 1000-metre-plus deep water West of Shetland would almost certainly require some form of FPSO.
One source said they felt OMV was seeking a unit that could be used both as an EPS and in a full-field scenario. This was backed up by another who said they understood the early production system could be required for a “longer rather than shorter period”.
It is understood that vessels that could be in the running are Bluewater’s Aoka Mizu FPSO, which has just left Nexen’s Ettrick field off the UK, and Teekay’s Petrojarl Varg FPSO, which is being demobilised from the loss-making Varg field off Norway by operator Repsol.
According to Bluewater, which released its financial results last week, Aoka Mizu left Ettrick for the last time on 1 August after ceasing production on 1 June.
“Redeployment opportunities for the FPSO Aoka Mizu are actively being pursued,” Bluewater said in a report released to the Oslo stock exchange.
Meanwhile, the OSX-1 unit is in lay up at Lyngdal Offshore & Marine in Norway following its de¬mobilisation last year from the Tubarao Azul field off Brazil.
However, that vessel is being bid on jobs elsewhere, possibly outside the North Sea, sources suggested.
According to sources, the Aoka Mizu and Petrojarl Varg are also competing on two other UK schemes — Alpha Petroleum’s Cheviot project in the northern North Sea and Hurricane Energy’s Lancaster scheme, located West of Shetland.
Sources also linked Bluewater’s Munin FPSO to Cheviot.
The Petrojarl Varg was linked this week to Wintershall’s Skarfjell project off Norway, as the German operator prepares to make a concept decision by the end of the year.
Project watchers said the number of existing vessels suitable for the scheme would be limited.
“This is West of Shetland — if you look at possible vessels, the options are limited. There are plenty of units available but not that many of them can operate West of Shetland unless you go for an expensive large unit.
“It looks like they would need something that could come quite quickly and would be cost efficient,” one said.
However, another source suggested it may be too early to read too much into OMV’s fresh contact with the market, saying “It is difficult to know how serious they are.”
In July, OMV sold a 30% interest in the Chevron-operated Rosebank scheme — the other major West of Shetland project in which it has a stake — to Canada’s Suncor Energy, retaining 20%.
OMV’s executive board member responsible for Upstream Johann Pleininger said the transaction would help to rebalance OMV’s portfolio “by reducing future investment requirements while retaining a large stake in the Rosebank development”.
In March 2014, OMV strengthened its position around Cambo, acquiring four licences belonging to US operator Hess.
It said at the time it has a “unique position” in the West of Shetland area thanks to its operating interest in the nearby Tornado discovery and the Suilven discovery and other prospects within tie-back range to Cambo.
The Blackrock prospect is located between Cambo and Rosebank. The Cambo-5 appraisal well was spudded on 31 May 2013 and completed drilling in 2014.
The Block 204/5a well was located 136 kilometres west of the Shetland Isles in a water depth of about 1090 metres.