Shell to develop Appomattox in GoM, Statoil suspends North Sea rig contract, Technip to deliver topside for Brazil-bound FPSO

A selection of news from the last month.

Shell's Perdido deepwater platform in the Gulf of Mexico

Shell gives go-ahead for Gulf of Mexico Appomattox field

Royal Dutch Shell has taken the final investment decision (FID) to develop the Appomattox deepwater field in the Gulf of Mexico, it said July 1.

This decision authorises the construction and installation of what will be Shell’s eighth and largest floating platform in the Gulf of Mexico.

Oil will be produced from the Appomattox field and the neighbouring Vicksburg field. Shell said it expected average peak production to reach some 175,000 barrels a day.

Shell will own 79% of the platform and the fields and Nexen Petroleum Offshore, a subsidiary of China’s CNOOC, will hold 21%.

First oil is expected to be produced by 2020 and Shell said it had reduced the total project cost for Appomattox by 20% through supply chain savings, design improvements and by reducing the number of wells required.

As a result, the project break-even price is estimated to be as low as $55 per barrel Brent equivalent.

Appomattox’s infrastructure may be used to develop nearby discoveries at Gettysburg and Rydberg by means of tiebacks to the floating platform. Shell estimates that if that is achieved, proven resources in the area may be more than 800 million barrels.

The Shell Pipeline Company also made a final investment decision on the Mattox Pipeline, a 24 inch line that will transport crude oil from the Appomattox platform to an offshore structure in the South Pass area and then to an onshore facility through an existing pipeline.

“Appomattox opens up more production growth for us in the Gulf of Mexico, where our production last year averaged about 225,000 barrels a day, and this development will be profitable for decades to come,” said Marvin Odum, Shell’s Upstream Americas Director.

Shell is currently the only operator in the Gulf of Mexico with commercial deepwater discoveries in the Norphlet Jurassic formation.

Last year in the Gulf of Mexico, Shell started production from the Mars B development, through the new Olympus tension leg platform, and from the Cardamom subsea tie-back to the Auger platform. Shell is also developing the Stones project, which is expected to produce 50,000 barrels a day.

Statoil suspends second drilling rig due to overcapacity

Norwegian oil operator Statoil has decided to suspend its contract with Italian contractor Saipem for the Scarabeo 5 drilling rig due to “overcapacity in its rig portfolio,” the company said July 1.
The firm said the suspension would take effect once the rig had completed the drilling of a well on the Kristin field in the middle of August, and it would last until 1 March 2016.

“We regret the need to suspend Scarabeo 5, but we will do our utmost to resume our drilling operations earlier than planned at the time of suspending the rig,” Jon Arnt Jacobsen, the Senior Vice President of Procurement at Statoil, said.

The announcement came a week after Statoil announced that it was cancelling its contract for the COSL Pioneer 13 months before its expiry date. This semi-submersible rig had been idle since October 2014.

On 16 June Statoil said it planned to cut 1,500 full time jobs and around 500 consultant positions by the end of 2016. The job losses and the reduction in exploration activity are intended to save $1.7 billion per year from 2016.

Technip wins FPSO topside design work for Brazil’s Libra field

French contractor Technip has been awarded an engineering and procurement contract by Jurong Shipyard in Singapore. The project involves the topside design for the conversion of a Suezmax shuttle tanker into a floating production, storage and offloading (FPSO) vessel.

The FPSO will be chartered to Petrobras on a 12 year lease, and will be based in the Libra field off the coast of Brazil, where it will produce oil at a water depth of 2,500 meters. Once completed, the vessel will be able to receive up to 50,000 barrels of oil and 4 million cubic meters of natural gas per day.

Technip’s operating center in Kuala Lumpur, Malaysia, will carry out the work, which is scheduled for completion during the second half of 2016.

Jurong was awarded the $700m order for the Suezmax conversion in October last year by OOGTK Libra GmbH & Co KG, a joint venture between Odebrecht Oil & Gas and Teekay Offshore.

Petrobras had nominated OOGTK Libra GmbH & Co KG as the lead commercial bidder on the conversion project.

The FPSO unit is expected to be owned and operated by OOGTK Libra GmbH & Co KG and will service the Libra pre-salt field in the Santos Basin offshore Brazil, which is expected to start operations in late 2016.

The ship is to be renamed the Pioneiro de Libra when the work is completed.