Offshore Europe

Jeremy Beckman
London

The Douglas accommodation platform enroute from Consafe's Glasgow yard to BHP's Liverpool Bay development.

Methanol ship for Norne?

Halliburton has proposed a methanol production ship to Statoil as a way of exploiting the Mid-Norwegian Norne Field's gas reserves. The field is being readied to produce oil through a 160,000 b/d FPSO from 1997. But, but the northerly location, remote from infrastructure, means that there are no plans for the 15.6 bcf of gas in place currently, apart from reinjection into the reservoir.

The ship would be able to convert gas from the seabed injection manifold into methanol, offloading supplies to a shuttle tanker. Evaluation of this concept - known as Total Energy Preservation System - should be finished by year-end. Five shipyards have reportedly been shortlisted to build the vessel, which in theory could be working on Norne by mid-1998.

Halliburton has persuaded Statoil to hire another of its production vessels, the Crystal Sea (jointly owned with Broevig) to Smoerbukk in Mid Norway for an extended well test. Then it will head south for further tests on the Statfjord satellites. Staying with vessels, Statoil has also announced plans to commission a further six newbuilds for offshore loading and production in the North Sea.

Settlement reached on
construction projects

Settlement has finally been reached on two major construction projects which also developed major cost overruns.

At the time of issue, the EPIC job for Agip (UK)'s Tiffany Field was the largest single contract let in the North Sea. Unfortunately, it also became one of the more expensive, due to design changes necessitated by the incoming UK Safety Case requirements. These delayed first oil from the 44,000-tonne platform several months beyond the planned schedule.
Disagreements over the project costs were finally resolved last month, two years after the field came onstream. A settlement was reached between Agip, acting for a four-company group, and Tiffany Contractors, the joint venture between Amec and Saipem.
No final development figure has been issued, although Amec did report notification of a cash receipt which it said would have virtually eliminated its first-half net borrowings of around $90 million. Apparently, Amec and Agip are still willing to work together on other offshore projects.
Also all but resolved is the compensation claim from Norwegian Contractors over the Heidrun platform. This related to cost increases resulting from changes to the design of the concrete hull introduced after the contract was signed in 1991. Subject to approval from the Heidrun Field partners, NC will receive a further NKr 330 million from Conoco.
Both these projects were drawn up before the new era of cost reduction and risk-and-reward contracts. A trio of contractors on BP's high profile Foinaven project are veering towards risk, with the modified FPSO for this field said to be at least a month behind schedule at Astano's yard in northern Spain due to design changes and late equipment deliveries. Designer Golar-Nor, McDermott, Astano and BP have already discussed a realignment of costs, in dialogue claimed to be non-confrontational.

Nevis development to be phased

Subsea projects dominate the latest batch of new developments in the UK North Sea. Mobil has finally gone public about Nevis, a 21-year old discovery lying in 100 meters-plus of water in blocks 9/12 and 9/13. Reserves are put at 50 million bbl of crude and 175 bcf of gas.

This will be a multi-stage development, the first of which - Nevis South - should produce 13,500 b/d of oil a year through two subsea wells tied back 7 km to the processing facilities on the Beryl A platform. The wells will be maintained using a diverless ROV intervention system developed by Mobil and Kvaerner FSSL.

Future stages will depend on analysis of the reservoir's performance. Current Mobil thinking is that an eight-well cluster would be needed to boost production to 23,000 b/d in 1999.

Enterprise Oil is taking its first subsea plunge with the 36 million, Nelson South Phase II project. Two new wells (one horizontal, one deviated) were due to be completed this month via a manifold four miles from the Nelson platform. Eventually, this should boost production from the southern satellite to 40,000 b/d. However, an originally planned water injection well has been canceled following a review of the reservoir. Installation and recovery of the subsea trees will be diverless.

Other subsea projects in the offing are Kerr-McGee's small oilfield Janice (with a number of platforms as potential hosts); Shell's oil and gas prospect, Kingfisher; and Enterprise/Marathon's Sedgwick and West Brae oil and gas fields.

Mixed reaction to takeover bids:

Another of Enterprise's growth plans was confounded last year when fellow independent Lasmo resisted its takeover bid. Enterprise built up a 9.8% stake in Lasmo, but this was recently sold to fund a new round of E & P activities, which include forthcoming drilling programs off Vietnam and the Seychelles.
At time of writing, Aran Energy was committing its funds to self-preservation documents necessitated by ARCO's takeover bid. Aran has numerous interests in UK frontier regions which ARCO believes would slot well into its portfolio. These include a stake in BP's Schiehallion oilfield west of the Shetlands; shares in six Chevron-operated blocks off Wales; and ownership of the 100 million-bbl-plus Connemara oilfield in Ireland's Porcupine Basin.
ARCO's initial 161 million bid for Aran appeared generous, but ARCO claims it undervalued the true worth of the Schiehallion stake, where further oil was recently proven following an appraisal well. It also points out that an extended flow test is planned on Connemara next year. However, Aran shareholders might wonder why their investment has sat so long on Connemara, development of which has allegedly been delayed in the search for an alternate FPSO concept.
One amicable assimilation that has gone through is the sale of Neste's UK interests to Sweden's Sands Petroleum, which includes small stakes in the Bray, Nelson and Ninian fields. More attractive aspsects of the deal, possibly, were Neste's interests in key oil and gas transportation systems Brae-Forties and SAGE. Neste has hung on, however, to its 50% stake in the southern gas basin venture Sovereign Exploration.