Offshore Falklands Sea Lion costs at new low

Premier Oil continues to work with its four main contractors and prospective well services and logistics providers to optimize facilities design for the proposed Sea Lion oil field development in the offshore North Falkland basin.

Offshore staff

LONDONPremier Oil continues to work with its four main contractors and prospective well services and logistics providers to optimize facilities design for the proposed Sea Lion oil field development in the offshore North Falkland basin.

Recent achievements include optimization of the single drill center subsea layout to lower installation costs. As a result of this work, the company has downgraded its pre-first oil capex estimate from $1.8 billion to $1.5 billion.

Field support services costs are also coming down, including supply boats, helicopters, and shuttle tankers. As a result, field operating costs for Sea Lion are now estimated at $15/bbl, down from more than $20/bbl previously, while the total project breakeven cost has dipped below $45/bbl (against an earlier estimate of $55/bbl).

Premier has put together bid packages for the drilling and subsea production systems and various logistics items, which it plans to issue to the market when appropriate in order to enter into binding agreements.

Its overall strategy remains a phased development of its North Falklands basin discoveries, starting with Sea Lion Phase 1 which will recover 220 MMbbl from license PL032.

The subsequent Phase 2 development will recover a further 300 MMbbl from the remaining reserves in the license and satellite accumulations in the north of the adjacent PL004.

A further 250 MMbbl could be attained from low-risk, near-field exploration prospects – any discoveries might be included in either of the first two phases.

Phase 3 will entail development of the Isobel/Elaine fan complex in the south of PL004, subject to further appraisal drilling.

Offshore Mexico, the company and its partners have matured various prospects onblocks 2 and 7 in the Sureste basin following reprocessing of 3D seismic, some of which could be drilled during 2017-2018.

One of these, the amplitude-supportedZama prospect on block 7, has a well-defined flat spot, an indicator of potential hydrocarbons.

A rig has been contracted to drill Zama during 2Q. Premier estimates potential resources in the range of 100-500 MMboe, the majority of which is on block 7.

Last year, the company received 4,000 sq km (1,544 sq mi) of fasttrack seismic data across all three of its Ceará basin blocks off Brazil.

This data is being interpreted with a view to mapping promising plays and prospects for future drilling locations on the blocks.

Final processed broadband seismic data should be delivered next month, with well locations selected during the course of 2017.

03/10/2017

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