While seeking cost and price alignment will be a key activity when finalising commercial terms with its contracting partners, we consider that the partnership arrangement that Xcite has put together could actually help facilitate negotiations with contractors during these volatile times. We suggest this as attempting to share risk and reward with its partners could help incentivise the contracting group and make negotiations easier (on both sides) during a period when we expect standard service contractor margins to be squeezed as low oil prices impinge on global investment activities.
Subsea wells and flowlines: Previous proposed development schemes for Bentley have included two separate platforms to develop reserves and resources in the north and south of the field using dry well-head trees. However, the EWT demonstrated both the feasibility of longer laterals and good mobility of the viscous Bentley crude through the 1.7km offtake flowline between the drilling rig and the offtake shuttle tanker. Xcite is therefore now favouring a simplified full field development scenario where all of Phase I is developed using extended laterals connected to the ACE platform, with Bentley West and Bentley South now bring produced during Phase II through subsea templates tied back to a separate SPD platform. This again will reduce the cost and complexity of the entire development.
Drilling capability: Xcite intends to develop Phase I of Bentley (first phase development or FPD) where circa two-thirds of the reserves are located using the COSL heavy-duty jack-up rig. However, in later years there will be a requirement for infill drilling in addition to developing
Phase II of the field (second phase development or SPD), starting approximately five years after first oil production from the FPD. By relocating the accommodation unit to the FSO, this will provide sufficient space on the platform to potentially retrofit a dedicated drilling unit at some point for follow-up drilling.
MOPU design: Xcite is proposing to use a self-installing platform for its mobile offshore production unit (MOPU) that is easy to install and, possibly more importantly, remove at the end of the field life. Xcite expects that drilling activities across the platform could start reasonably quickly after the platform and drilling rig are jacked into place, while the installation does not require any heavy lift or installation vessels to complete which removes a major schedule variable from the installation process. Decommissioning liabilities should also be reduced as the entire platform structure can be floated away at the end of field life rather than abandoned (at significant expense) as would be the case with a fixed platform jacket on piles. Finally, having simplified the FSO design, Xcite is now proposing to locate the accommodation facilities for Bentley on the FSO rather than the platform. This reduces the weight (and cost) of the platform and will leave space on the platform for potential expansion, including the possibility of adding a modular drilling unit at a later date.
"FSO vs FPSO: Prior to the 9/03b-7 EWT it was thought that Xcite would require substantial crude processing facilities either on the platform or on a dedicated FPSO to dehydrate the oil before offloading. However, Xcite has learned that the Bentley crude naturally dehydrated in-situ in the shuttle offtake tanker over a period of 10-12 days during the EWT. Xcite therefore has had the opportunity to simplify its development scheme and use only an FSO for storage and offloading, locating the simpler processing facilities on the platform that will be bridge-linked to the Sevan FSO. This obviously saves costs by using an FSO and adds flexibility to the design options between the FSO, platform and drilling operations. By using a cylindrical Sevan style FSO (rather than a retrofitted tanker design), this should also help natural dehydration as the Sevan style will be less prone to “bobbing” in rough seas."
Fantastic! That was a touch too spooky over the last few weeks but I hope most longs held their bottle we deserve a great outcome out of this! Hopefully next year will be transformational for Xcite. GLA and Merry Christmas
Falling prices could impact on the ability of some businesses to service their debt. Some such businesses are US oil and gas exploration firms, according to the minutes of the Bank of England’s financial policy committee’s (FPC) meetings on the 8 and 15 of December released yesterday.
US oil and gas firms account for 13 per cent of the total US high-interest bond market.
Come george wheres those tax cuts
“An increase in their perceived or realised credit risk could lead to sales by investors and potentially illiquidity in the broader high-yield bond market,” the FPC said. “A sustained lower oil price also had the potential to reinforce certain geopolitical risks.” However, the FPC said no immediate threat was present.
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