Siri platform repair cost soars

DONG Energy says the cost of implementing a permanent repair to the Siri platform in the Danish North Sea has risen.

Offshore staff

COPENHAGEN, Denmark – DONG Energy says the cost of implementing a permanent repair to the Siri platform in the Danish North Sea has risen.

During a routine inspection in August 2009, the company discovered cracks in the nose of the platform’s subsea oil tank. No pollution occurred, but the production was shut down for five months as a safety measure and re-started in January 2010 after implementation of a temporary solution.

DONG originally budgeted $352 million for a longer-term solution, but has now revised its estimate upwards to $617 million, of which $105 million was incurred in 2011. Work should be completed in 2013.

Flemming Horn Nielsen, VP responsible for DONG Energy’s Danish oil and gas activities, maintains that the chosen repair solution and continued operation of the platform Siri are both valid, despite the cost increase.

“The Siri area still holds valuable reserves and offers further upside opportunities for new reserves in the wider area. The repair project has been necessary to maintain a high safety and environmental standard for the Siri platform, which will function as a host for a number of fields in the area for many years to come.”

The problem is the required solution is not an “off-the-shelf” repair, but a complex task involving application of new techniques in offshore settings. Changes to the detailed design and engineering have also impacted fabrication and installation.

Production from the Siri field and processing of oil from the satellite Nini, Nini East, Stine, and Cecilie fields should continue at normal levels during the repair. However due to heightened safety measures there may be more outage time in 2012 and 2013.

Insurance claims continue in relation to labor and permanent repair work. DONG has not included any impact of insurance claims in the cost estimate.

4/18/2012

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