BMG Joint Venture revises BMG project development plan

Offshore staff

SYDNEY -- Following a detailed technical and commercial review, the Basker-Manta-Gummy Joint Venture (BMG JV) has decided to revise the development plan and schedule for the ROC-operated BMG project. In 2009 and 2010, the BMG JV will focus on enhancing the production performance of the Phase-1 oil project. Development commitments for the Phase-2 gas project have been reduced for this year.

The 2009 drill rig program has been reduced through the assignment of BMG JV commitments for the rigKan Tan IV and a recently completed rig swap with Shell Development (Australia) Pty Ltd., under which the rig Songa Venus has been swapped for the rig Ocean Patriot. These actions have reduced BMG JV cost commitments in 2009 by over $100 million and provided a more flexible drilling program for the project, the JV says.

Through assignments to existing consortium members, the rigKan Tan IV commitment has been reduced from 143 days (beginning in March 2009) to 30 days in late 2010.

The rigSonga Venus was contracted in July 2008 to drill development wells on the BMG field in early 2009. The rig swap for the Ocean Patriot, which is currently located in Bass Strait, has removed substantial mobilzation costs associated with towing the Songa Venus from the Timor Sea to Bass Strait and allows for better management of operational risks, the JV says.

The rigOcean Patriot program provides the BMG JV with the option to undertake operational workovers on existing B3 and B5 wells and the option to drill and complete the B7 development well. The 60-90 day Ocean Patriot work program on the BMG fields is planned to begin in May. In addition to the rig move savings, further cost savings could be generated by assigning the rig to third parties, the JV says.

Gas flaring conditions for the BMG project have been revised to allow production to continue while modifications are made to the FPSOCrystal Ocean that will remove the need for flaring during normal operations.

New topside facilities on theCrystal Ocean will include a low pressure flare recovery compressor package to supplement the re-injection of produced gas. The BMG JV anticipates that work on the upgrade of the FPSO facilities will be completed during the fourth quarter, before the gas flaring volume limit is reached. The total cost for the installation and commissioning of the new facilities will be approximately $6.9 million. Until completion of the upgrade, flaring volumes will remain well below the allowable daily average rate.

03/19/2009