MercoPress. South Atlantic News Agency

Falklands’ government supports Premier Oil proposed development concept

Stephen Luxton: “Maximum economic recovery of offshore resources remains FIG guiding policy”

The Falkland Islands Government notes the update provided by Premier Oil today (Thursday) regarding the progress of the Sea Lion oilfield development in the North Falkland Basin, and “supports the proposed phased development concept which will help mitigate local infrastructure and capacity pressures during peak development activity”.

The news emerges following a comprehensive meeting to discuss the Sea Lion Project and the progress of Premier Oil’s offshore exploration and development activity in the Falkland Islands.

Stephen Luxton, Director of Mineral Resources, said: “Premier continues to advance the Sea Lion development concept with a target for project sanction and gaining FIG approval towards the end of 2014. The proposed phased development concept has been discussed extensively with FIG and its advisers. We are confident that it appears to be the optimum solution to deliver a successful project. Maximum economic recovery of offshore resources remains FIG guiding policy”.

The Director of Mineral Resources attended a regular Sea Lion project meeting on 15th and 16th August in London together with representatives from the British Geological Survey, the Department of Energy and Climate Change and the Health and Safety Executive.

In its Half-Yearly Results for the six months to 30 June 2013, Premier reports in its operational review on the Falklands that a considerable amount of work has been undertaken on the Sea Lion project in the first six months of the year.

A sub-sea development tied back to a floating production, storage and off-take vessel (FPSO) has been confirmed as a viable scheme and a phased drilling programme selected. Initial development will start with the major part of Sea Lion in the north followed by a subsequent southern development which will access the remaining part of Sea Lion and other discoveries. Premier is targeting project sanction for the end of next year. Progress has also been made in securing a rig for an exploration campaign starting next year.

Development

On 1 November 2012, Premier formally became operator of all of the licence interests previously operated by Rockhopper, thereby becoming the operator of the Sea Lion development project. Since then, Premier’s newly formed dedicated project team has been focused on evaluating the options for the development of the field.

During the half year, the project team, in collaboration with third party specialists, has progressed a comprehensive set of studies as part of the pre-FEED (front end engineering and design) phase to refine the development concept. These have included detailed work in areas such as metocean studies, FPSO design (including turret design and topsides layout), flow assurance methodologies, subsea equipment layout and installation methods, reservoir studies and well trajectories. These studies have now either been concluded or are nearing completion.

A phased approach to development drilling has been selected. It is envisaged that drilling will initially target the northern part of the field, and is estimated to recover 284 million barrels (mmbbls), with the southern area subsequently tied back to the host facilities and estimated to recover a further 110 mmbbls. The second phase of development will be optimised to incorporate any additional exploration or appraisal success. Premier is working to participate in a multi-operator exploration programme starting in the second half of 2014 which will include a well to confirm the presence of a gas cap in the west of Sea Lion.

Premier has confirmed that an FPSO is a viable host facility for the Sea Lion project, however conceptual studies have indicated that a Tension Leg Platform (TLP) with an integral drilling rig may offer significant cost savings while providing better motion characteristics and flow assurance options. Work is now ongoing to optimise the design specifications (such as capacities and construction methods) for both the Half-Yearly Results for the six months to 30 June 2013.

FPSO and the TLP schemes and to prepare the documentation for FEED: A final decision between the two is expected to be made at the end of this year with project sanction targeted for the end of 2014. The timing for first oil will depend on the final scheme configuration.

Exploration

During the first half, Premier has continued to work closely with Rockhopper to define and mature the lead and prospect inventory within its acreage in the North Falklands Basin. As a result of this work, an exploration programme of at least three wells with multiple stacked targets is planned. The exact timings for this programme are still being firmed up in conjunction with other operators in the area.

This exploration program will include the Zebedee well, which will test the extent of the proven F2 sequence towards the south as well as the older F3 sequence. The well, testing the gas cap on the western flank, will also test the deeper potential Chatham prospect. The results of this work will be incorporated into the planning for the Sea Lion development.