Revised drilling plan lowers North Sea Kraken capex
EnQuest has issued an update on its heavy-oil Kraken development in the East Shetland basin.
Activity at drill centers one and two is ahead of schedule, despite a particularly harsh winter. This should ensure the planned four production and four injection wells will be available for first oil.
TheFPSO departed from dry dock last December, and work is continuing on the marine systems. The vessel is expected to leave Singapore later this year for commissioning and hook-up, with production set to follow during 1H 2017.
EnQuest has saved an additional $125 million inKraken’s capex following a revision of the development plan. This now calls for 23 wells from three drill centers, instead of 25 from four drill centers.
Overall project costs are now around $425 million lower than the originally sanctioned $3.2 billion.
Elsewhere in theNorth Sea, various programs continue at the company’s producing fields.
AtThistle/Deveron in the northern UK sector, the company has re-started production from the Deveron well following a workover and upgrades to electrical submersible pumps.
One of the power generation turbines on the Thistle platform has been overhauled; maintenance, integrity, and life extension projects will continue.
In the same sector, EnQuest plans well chemical treatment and routine maintenance at the Don fields and a pigging campaign on the Broom field, a subsea satellite to the Heather platform.
By mid-year, the company expects to have spudded the Scolty and Crathes development wells, both tiebacks to theGreater Kittiwake Area complex in the UK central North Sea, with related topsides construction work on the GKA platform.
EnQuest started production last year from theAlma/Galia fields through the EnQuest Producer. Six production wells and one water injector have so far been commissioned, and all six producers should be onstream shortly.
Last year EnQuest’s overall 2015 drilling campaign for all its projects ended up below budget, with strong operating efficiencies across its operated rigs and significantly lower spread rates.
In addition, the company centralized its procurement function, leading to efficiency improvements that included consolidation of purchasing volume and leveraged spend across assets, with reduced transaction costs.
Following the success of this project, the company has offered other North Sea operators use of its centralized procurement center to help them consolidate and leverage their spending volumes.Premier Oil is collaborating on the project and EnQuest is in discussions with numerous other North Sea E&P companies.
This year EnQuest is targeting average production of 44,000-48,000 boe/d, with total cash capex at the low end of the $700-$750 million range. Around $600 million relates to Kraken, including an increase due to the company’s recently acquired interest in the project fromFirst Oil.
As for opex, EnQuest’s forecasts $25-27/bbl this year, a 12% saving compared to 2015. The company continues to seek further costs reductions in production operations and services, import gas, logistics, maintenance, subsea, manpower, and activities related to the Sullom Voe Terminal on Shetland.
This involves cancelling some contracts, reducing the scope of various projects, and deferrals of cash payment.
Key focus is on:
- Lower unit cost rates, i.e. scale treatments, subsea inspection, repairs and maintenance, logistics, equal time rotas and reduced contractor rates
- Incentivized contract structures: KPI structures for service providers with payment is linked to performance
- Enhanced contract and procurement practices.
It plans further cost savings via the supply chain and logistics and improved efficiencies in operations.
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