Norwegian oil major Statoil has decided to postpone the Bressay project development, located on the UK continental shelf, due to low oil price environment that is, according to Statoil, “likely to persist over the next one to two years”.
The Norwegian company became the operator of the Bressay field in 2007 and it holds 81.625% interest, while the remaining 18.375% interest is held by Shell.
After several media reports saying that Statoil is postponing the development of Bressay field, Offshore Energy Today reached out to the Norwegian company seeking confirmation of these reports.
In an e-mail to Offshore Energy Today, Statoil spokesperson said: “Statoil and partner Shell have for many years worked hard to find a profitable development solution for the challenging Bressay asset. We have made significant progress through innovative solutions, and achieved substantial improvements in the business case, compared to earlier development concepts.
“However, in the context of the price and market environment likely to persist over the next one to two years, these improvements are not sufficient to proceed with the project at this time. Statoil and partner Shell have therefore decided to halt the current concept selection process.”
Statoil is the operator of two fields on the UKCS, Bressay and Mariner, with Mariner set for first oil in the second half of 2018.
The spokesperson added: “Statoil remains strongly committed to the UK Continental Shelf. The Mariner field development continues, and we are actively pursuing opportunities to increase value creation from the Mariner area.”
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 Bressay discovery stretches over four licences. One of them, P920, was due to expire in July 2014 and is now extended to December 2016.
Recoverable reserves in Bressay are estimated at 100-300 million barrels of oil.
Statoil recently dropped its previous platform solution plans for the Snorre 2040 development, in the Norwegian North Sea, deciding in favor of a subsea solution as a possible development concept. The company said that, through the work on the subsea solution, the level of costs had been significantly reduced.
Offshore Energy Today Staff
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Posted on March 4, 2016 with tags Bressay, Mariner, North Sea, Statoil, UK.
Statoil has delayed a major heavy oil development in the North Sea amid concerns about the costs of the project.
Statoil has indicated it is to “re-evaluate” the development concept for its Bressay heavy oil field in the UK North Sea and it has also decided to delay a field development decision.
Bressay was due to follow Statotil’s US $7 billlion Mariner heavy oil development by about a year
and was to use the same basic offshore concept – a fixed platform with a floating storage and offloading vessel. Mariner was approved for development by Statoil back in February this year.
But it has emerged that Statoil now consider’s Bressay to be too expensive – despite the the fact that high value contracts already placed for the Mariner field include options to supply to the Bressay project too.
“Interpretation of extended well test data from the nearby Bentley field, a close analogue to Bressay, has given positive indications that there is potential to simplify the concept and investigate alternative development solutions,” a Statoil source has disclosed. “This will also involve reconsideration of the overall execution and procurement strategy for Bressay and re-engagement with the contractor market,” the operator source has revealed .
Statoil has already held talks with the UK’s Department of Energy and Climate Change about the change of heart over Bressay, which was due to involve further major investment in the UK sector of the North Sea.
“We are in good dialogue with UK Department of Energy and Climate Change and a decision to delay the project to improve the development concept will require an agreement with DECC and a further license extension to allow planning and execution within an agreed time line,” the spokesman adds.
And: “The project [team] will continue its efforts to increase the value of the business case through improvements in the reservoir drainage plan, simplifying the production facilities and reviewing the project execution and contract strategy.”
Statoil’s original plan for Bressay was for a fixed production, drilling and quarters (PDQ) platform with about 33,000 tonnes of topsides, with an 18,000 tonnes jacket, and forecast peak production of 70,000 b/d was suggested, via around 70 wells drilled from 35 production bores. After processing, Bressay’s heavy oil was was to be offloaded to an FSU and from there offloaded by shuttle tankers.
Statoil’s original project schedule suggested that the PDQ would be installed in 2016 to allow for pre-development drilling, followed by installation of the topsides in 2017 and first oil in the first quarter of 2018.
Bressay’s reserves are estimated at between 200 and 300 million barrels, and field life was predicted to be around 30 years, with an investment figure of around £4.7 billion, similar to the Mariner development, or about US $7.5 bn.
Already Statoil has placed a number of major contracts for the Mariner development including fabrication of a PDQ jacket and topsides, and for the provision of development drilling facilities and an FSU. All of these contracts included options for Bressay.
Spain’s Dragados Offshore is building the steel jacket for the Mariner PDQ; South Korea’s Daewoo Shipbuilding and Marine is building the Mariner platform topsides, working with CB&I and Rig Design Services, and Subsea 7 has secured a US $170 million contract for SURF construction work at Mariner. Odfjell is to provide platform drilling services at Mariner; Noble is contracted to supply a harsh-environment Cat J design jackup rig for the project under an initial four-year $650 m contract, and Sembcorp Marine is building this new drilling unit. Also Prosafe is due to provide accommodation support at Mariner from April 2016 with either of its newbuilds, Safe Boreas or Safe Zephyrus. In July Emas AMC – which previously bought Aker Maritime – won a contract from Statoil to install the Mariner FSU, for which Statoil has an option for the FSU’s construction with Samsung Heavy Industries in Geoje, South Korea. Capex at Mariner is put at £4.6 billion ($7.3 bn).