Member Info for ZYX098

Hi Mirasol,

Not quite correct.

According to the spec sheet, the 35k BOPD is indeed the amount she can process per day and 604K is the amount she can store.

So they'll certainly have to increase the production capacity to handle the planed production rate.

You wouldn't want the storage capacity to be less than one days production - would bring in all sorts of complications with stopping and starting production (especially with a waxy crude) if rough weather meant the shuttle tanker couldn't stay connected (or couldn't connect in the first place) and the increased OPEX of having to have a shuttle tanker on the loading buoy all the time.

Hi Jaguar XKR2022 (great car!!!),

While Turnips tariffs will have no effect on the revenue from production, they may well cause issues with the equipment needed for production.

Don't forget that Navitas Houston seem to be dealing with a lot of the Production stuff.

Like many industries, the Oil Industry supply chain is global and I'm willing to bet that there are some components that have to be imported into the US to be installed into a piece of kit and then re-exported.

Hopefully won't have too big an effect on the overall cost, but nonetheless it's something they'll have to keep on top of.

Hi LTT,

That's highly likely.

The oil industry hasn't been replacing all production with new reserves for a decade.

We went into a severe downturn in the mid-2010's and were just coming out of it when Covid hit, setting us back again.

Then as we started recovering from Covid, the effect of Russia invading Ukraine caused many cost bases in the oilfield to jump by 40% or more, and the prices haven't come back down (yet - if they ever will).

There are wildly varying estimates as to how much underspend on new production went on during this period (I've seen as much a $3 TRILLION quoted) and there is no doubt that we will need this to happen.

In many major Countries (including the UK), the transition away from fossil fuels is being handled badly with new O&G production being curtailed before the grid is ready to completely pivot to renewables.

Those trying to stop new developments are completely ignoring the fact that there are no credible studies (out to the 2040's) that show global consumption doing anything other than either staying at current levels or decreasing slightly.

In the UK, even the Climate Change Commission says that we will use another 15 Billion bbls of oil by 2050, of which only around 4 Billion (a big overestimate with Mad Ed running the circus...) will be produced locally.

In the meantime, US Shale is looking like it has peaked (drilling isn't really increasing, gas production is increasing etc), so as well as current production areas, we need new basins like the NFB (and, hopefully SFB!), Namibia and the North Coast of South America to open up.

Hi LdC,

Hope I was able to answer your question ;)

Piper was a huge wake up call for the UKCS, as it was clear that many of the US Companies were essentially using the same safety policies and procedures that they used in the US - which were not far above "Cowboy" level - and to a large extent still are Onshore the US unfortunately......

Certainly back then, the oilfield was a small, tight community. I was offshore doing a rig visit at the time and there wasn't a single person on that Rig who didn't know someone that didn't make it off Piper Alpha.

But as a direct result of the Cullen Report recommendations, the HSE processes and the "Safety Case" system that have been introduced into the UKCS have resulted in step changes in safety, which means the North Sea has been, and continues to be, a World Leader in offshore safety.

Indeed, many other Countries have adopted the UKCS code of operating practice.

Unfortunately this is being somewhat eroded by "the great crew change" and IR 35 legislation, so a lot of the 'grey hairs' have either retired or gone Overseas.

As a result, there are quite a few people (mainly in the office) that have been promoted into positions that they really don't have the experience for.

It's a big concern that of something actually does happen, they won't have the knowledge or experience to deal with it.

Hi Hiram,

That's actually not correct - the decommissioning funding is working exactly as it was designed to.

It was put into the legislation right at the start of UKCS Development that the Oil Co's would pay additional production taxes during Production. This additional tax would go (metaphorically speaking) into a decommissioning fund to be used at the end of the field life, so that the UK Public wouldn't get lumped with the cost in the case of a Company going under or just walking away from it's responsibility.

These additional taxes were normally in the form of Petroleum revenue Tax (PRT) and was initially set at a high rate as the very large fields that were coming on stream would cost a lot to decommission if they went dry very early.

Remember, back in those days the Geology wasn't understood nearly as well as today, and there were examples like Texaco's Tartan field where the first five production wells all turned out to be dry holes....

So in the 1970's and early 1980's, most of the giant fields on the UKCS were paying over 90% tax! For many years, BP were paying 98% tax on Forties production!

During the Decom phase, the cash from this fund would then be rebated back to the Company, so essentially it was a giant, decades long loan to HM Govt.

And that is what is happening now - although some organisations (Greenpeace etc) and Media (The Guardian....) like to call it a tax "subsidy" instead of a rebate.

Unfortunately the continued imposition of the EPL, plus taking away the investment allowances, means that the lives of many fields are being cut short.

For example, Apache have announced that the Forties field will be shut down by 2029 and the Forties pipeline with it - almost a decade earlier than planned.

Not only does that mean that several other fields will have to be abandoned early, but that other satellite fields will now not get developed as they relied on the Forties pipeline to get their production back to shore.

As a direct result of the EPL bringing forwards the economical end of life of a field, it is likely that the UKCS will actually become net negative in terms of tax revenue by the end of this decade - and stay that way.

Incidentally, when operatorship of a field changed (e.g. when Apache took over Forties from BP), the cash in the field decom fund wasn't transferred across or refunded - it was kept by HM Treasury and the fund had to be started again by the new Operator! Also, the cash left over after the Decom program has completed isn't returned either - that's also kept by HM Treasury....

Brent is misleading in terms of timescale, as the FDP always called for it to be converted to gas production and blown down at the end of the field life.

This meant that a couple of the platforms could be removed early, while gas production was still ongoing.

But generally Decom programs are taking too long, mainly because it's taking so long to get all the permissions in place and the progr

Hi Croft,

A couple of things;

The AI does not recognise that SL crude is waxy, which substantially increases the risks, Capex and Opex costs in terms of flow assurance.

In a previous post, I compared it to a jar of honey. Put it on a windowsill on a hot sunny day (i.e. Reservoir temperature) and it's runny. Put the same jar into a fridge (i.e. seabed temperature) and it solidifies.

Once it solidifies, it's difficult to get it mobile again, so Navitas will have spent a lot of effort in the design of the Completion, flowlines and FPSO itself to try and ensure it doesn't happen. They'll likely also have purchased an extra flowline over normal requirements to make sure they can replace one quickly if it does get gummed up.

Mirasol is correct in that Navitas will learn a lot from the early phases of development drilling and production - there are still a lot of unkowns.

With respect to mitigations; that's not actually correct.

They are designing for horizontals, but not multi-laterals (which means two or more horizontal legs from the same well bore). They may well switch to mutli-laterals later in the field life, if the Geology and production profiles require it.

For example, if the F1 & F2 sand packages are not well connected, they could do a horizontal into each package from a single well bore, if necessary.

Also, we know that they are using open hole gravel packs, not smart completions. This means that any water encroachment is not as easy to control. They have to run production logs to see where the water is actually coming from and then work out if they can stop it be - for example - injecting resin across the water encroachment zone.

If extra Wells are needed, the yes, it could run to $50 Million per Well. But it would be much cheaper to seal off the original reservoir section and sidetrack to a new location from higher up in the well bore. This is often done with oil production wells anyway - I know of some Wells that have been sidetracked 4 or 5 times over their production lives because of this.

Thanks Rogue - interesting video.

EG777/JEBR - Agree!

Mogger,

Thanks for the link - I found the link for others, though they don't seem to reference Navitas / SL as much, if at all.

https://assembly.gov.fk/executive-council/pub-minutes/category/664-exco-minutes-2025

As LTT pointed out, the purchase of a Trommel is a good indication that SL will go ahead, as is the discussion on work on the Stanley Heliport.

A bit surprised at that, as I presumed the Heliport would be at the MPA, as that's where the Navitas charter will be landing. So lots of opportunity for a local coach company to make some money shuttling passengers back and forth!

Gus0,

HI100 is actually far nearer the mark than you are.

BOR needs a DW Drillship and even if Navitas get one for SL (they don't actually need one, but the current market means they may get one anyway), there is no chance of it being used in the SFB as it's going to be busy on SL for years.

So we are looking at around $50 Million just to Mob it and all the materials / consumables needed for any SFB drilling program.

Looking back at the previous campaign, we can expect a Well to take 90 days to drill and log. This time, the Wells would have to be tested and that's easily another 20 - 25 days on top.

The spread rate is going to be in the region of $1.25 Million per day, so we are already looking at around $140 Million per well, even before taking into account the consumables (Wellhead, Casing, Mud, cement etc).

He is also correct about the uncertainty in both production and injection rates - testing will be needed to be able to narrow down the potential ranges of those figures.

It is unlikely that an Appraisal Well will be used as a producer - they are drilled to delineate the field, which is often not the best place for a producer. Even so, the requirements for an appraisal well and a production well are different in terms of design lifespan and options for completion.

As for being "off the shelf tech", much of the drilling & completion equipment should be - although it certainly won't be available immediately, as the lead time is likely to be c. 18 months just for the Trees - which is why Navitas have already ordered them for SL even though the project hasn't been officially sanctioned yet.

The Production & injection manifolds certainly won't be - off the top of my head I can't think of a subsea gas/condensate development, so they'd have to be designed from scratch, as would the production and injection flowlines.

Similarly for the Floating Production system.

While there are gas/condensate fields that produce to fixed platforms, I can't think of one that produces to a floater - never mind one in the adverse weather requirements of the SFB.

The surface complexity of separating a high pressure gas/condensate stream shouldn't be underestimated, and neither should the surface requirements for injecting high pressure gas.

Then there are the offloading lines and mooring turret to the shuttle tanker which will need to be designed - again from scratch given the water depth.

So I'm willing to bet that there wouldn't be any change out of $1.25 Billion, just for the FPSO.

I doubt the original concept of just one gas injector and two producers will fly with the FIG, even if the appraisal program doesn't throw up any surprises.

They'll want to see an FDP that optimises production and recovery rates, which just three Wells is very unlikely to do.

As an LTH in BOR, I really, really hope they manage to pull something out of the bag.

But don't underestimate the significant challenges that lie ahead if they

Hmmm, interesting different viewpoints, each with their own merits.

My thinking is that because there is a (very) small risk that the project won't go ahead, so FID isn't fully reflected in the share price yet, so there will be a jump when (O.K., if!) FID is announced.

Will the shares/warrants held be enough to offset that increase? I have my doubts - but it could go either way.

Given the timespan between an FID announcement and any more hard news on the project, I would expect the share price to then slowly decline a little as some investors sell out to try and make quicker money elsewhere.

Then I think there will be a spike when drilling starts, another spike when the FPSO sails and another spike when 1st Oil is announced.

Which PI's could be selling after the FID announcement?

Well, in my case the increase in RKH share price has meant that RKH is now an uncomfortably large portion of my shareholdings, both inside and outside my ISA.

So I'll likely sell enough to recoup my original investment - but I'm certainly going to hang onto the rest for several years to come!

BB,

FWIW, I dumped my Tullow shares a while back and have no intention of getting back in.

Noml,

Thanks again for your thoughts.

Having read the papers you referred to, I can now see why the Sanson terrace would be a very interesting place to start poking holes into!

My thoughts exactly about BOR/JHI - although that was not well received when I pointed it out on the BOR board a while back!

Hadn't occurred to me that Navitas would let go of PL005 - putting a Well in in any decent time frame would be difficult given the development drilling requirements to make 1st oil at SL. Although I wonder if the FIG would accept the shooting of a certain volume of 3D Seismic as a work commitment, if Navitas wanted to keep it?

As you've pointed out, there is certainly scope for an extensive 3D program to be shot over the next few years - and that's not including the requirements of any new entrants.

As for new entrants, it will be very interesting to see who raises their head above the parapet.

Even though relationships between Argentina and the UK are improving, I can't see any of the majors with large investments in Argentina taking a chance on the Peronists getting back into power over the next few years.

Russian Companies are clearly out, and I don't see either the FIG or UK Govts being keen on letting the Chinese anywhere near the FI.

So my thinking is that likely applicants would be larger US Companies and/or some of the SE Asian NOC's, as they would be most interested in a waxy crude.

I didn't realise that all the licenses were up for renewal at the same time, so the newly elected FIG are going to have their work cut out next year!

Earlier I thought that the FIG would give priority in the next round to the SFB, but I think it's now clear they'll have to direct their limited resources at the NFB first.

What that means for RKH and BOR in the SFB, I don't know. Since neither can do anything without a substantial farm in which would essentially almost destroy any value for them, I wonder if the FIG will take the licenses back and announce a separate license round for the SFB a year later?

The grid isn't really "creaky" - it was built to service a system where the sources of Electricity Generation (primarily Gas and Coal fired power stations) were widely spread around the Country, so there was no need to transmit large amounts of power across long distances.

But now much of the power is generated in places far away from where it's needed - hence the increase in the requirement to move large amounts of power across long distances - and why curtailment payments have risen sharply over the last few years.

Amazingly enough, there is currently no independent check on how much Wind Companies claim for curtailment payments - they effectively just submit an invoice claiming they couldn't supply X GWh due to curtailment, therefore they are owed £YYYY,YYY and it's paid.

There is now an investigation going on into historical claims and payments because - shock horror!!! - they might have been over-claiming!

In reality, NIMBYs (who are being replaced by BANANAs anyway) have very little effect on Onshore Wind generation, as even the wind companies admit that there are very few decent sites left for installation that are in a good place for wind generation and are also reasonably close to the grid so they can be hooked up.

Miller is absolutely correct in what he said. The Scottish Govt in particular were issuing licenses (especially in the West Coast areas), at the same time over-ruling the objections of National Grid who forecast what would happen - and the NG were correct.

IIRC, last years curtailments payments were £1.2 Billion and NESOs report contained several caveats which essentially meant that the costs by 2030 could be far in excess of £8 Billion.

Advocating large scale battery storage is destined to be an expensive failure. Cannot possibly build enough battery capacity and what we can build is ruinously expensive - never mind the environmental damage from mining all the raw materials required.

Hydro is by far the best - but our byzantine planning system means it takes so long to get approval that no new ones have been built for several decades, though a couple now are.

Hydrogen has excellent potential, as do technologies like compressed air or liquid Sodium.

But the reality is we have nowhere near the amount of LDES that will be required and simply won't have by 2030.

The NESO 2030 report (which Mad Ed either didn't read, didn't understand, or did understand as is just ignoring it) makes all this clear.

I can't wait to see how Mad Ed is going to justify that prices in AR7 of £113/MWhr for static offshore wind and £271/MWhr for floating offshore wind, while increasing the contract length from 15 years to 20 years, are going to decrease our energy bills.

Tincan,

Sorry - that video is *ollocks from start to finish.

Saudi currently has around 230 Rigs running - not 16 as claimed.

It regulates production based on what it thinks the market can take based on the oil price it wants to see.

That's why it's recently been ramping production back up.

Have a look at the videos here;

https://www.youtube.com/@TROVE-1stSubsurface

There's a couple of videos that show just how much reserves are left in Ghawar (largest Onshore oil filed in the World) and Safaniya (largest Offshore oil field in the World).

Saudi isn't going to run out of reserves in our lifetimes....

As for the Israeli Govt "having a veto" - nah.

If Israel was at all worried about the political implications of the SL Development w.r.t. Argentina, they'd have stopped Navitas a long time ago.

Noml,

Thanks very much for your interesting and informative posts.

My thoughts about the RKH CPR were along similar lines.

At some point Navitas are going to have to commit to a major (20+ Wells) exploration / appraisal program in the SL area and the question is are they willing / able to wait until around 2031/32 for RKH to have the financial resources to join them.

Also, unless they are prepared for a 2 yr gap in development drilling between Phase 2 and Phase 3 (and I don’t see this being an option), then it will mean another Rig being mobilised to the FI.

It will be interesting to see how RKH will balance their priorities between paying down debt, dividends and further exploration / appraisal.

Unfortunately I don’t see RKH being able to hang onto their SFB licences. The FIG will know that they can’t do anything with them until 2031/32 (unless they can get someone to farm in) and I have my doubts that the FIG will be willing to wait that long.

There is still the potentially very prospective area to the north of SL that is as yet unlicenced. My feeling is that the FIG won’t want to put all their eggs in one basket and will award this to one of the bigger Companies with deeper pockets, who are no doubt poised and ready to come in when FID is approved.

Yes, the higher pressure at 14/20-1 is one of many locks that have yet to be picked in the area!

WRT the differences between SL and the “Isobel complex”, are the feeder channels for both coming from the same original source, or different sources?

I’m presuming from what you are saying that the 3D Seismic isn’t good enough to pick out potential flat spots that may represent OWC or GOCs?

Given the vintage of the seismic, would reprocessing with modern techniques be able to do that?

Thanks again!

Alma / MM,

Thanks for the links - lots of bedtime reading to catch up on!

Noml

You mention the Dec 2026 round of licences.

I thought that was just when a raft (or maybe all?) of the current licences expire, and not the start of a new licence round?

Do you know what the current licence relinquishment requirements are?

Reading the RKH and BOR websites, it seems that for the SFB it’s the entire licence.

Surely that’s not the case for the NFB?

If it is, presumably Navitas could enter into an agreed work program (outside the SL Development) for each licence they wish to retain?

In which case, as the cash flow analysis by Space Hoppa and others clearly shows, they will be limited by RKH’s finances as to what they could do until the 2nd year of SL production.

With respect to a new licence round, I would have thought that the FIG would want time to evaluate the acreage that has been relinquished first and then issue a formal licencing round, so maybe mid 2027 to open?

There is no doubt that SL has been a catalyst in getting the attention of those Companies with deeper pockets.

So I can easily see the likes of BOR and JHI losing their licences completely and not getting another one, as they don’t have the finances available to commit to any guaranteed work program.

Another thought I have is that to try and ensure a pipeline of projects in future years, the FIG may split the licencing rounds into two and alternate between the NFB and SFB.

Given the growing prevalence of LNG in the world markets and lack of exploration so far, I would prioritise the SFB.

Splitting the licence rounds would also put less strain on the FIG resources and smooth out the demand on local facilities.

Well poop.

Last sentence should have read "the Well didn’t start flowing until they were 24m into the formation, thus indicating that the permeability in the top 30 per cent is very poor."

Apologies for blitzing the board - been away, so just catching up.

Hi Ovets,

Agreed!

But a delay of a couple of weeks into November wouldn't kill us - as long as they get it done before the LA is dissolved!

Fingers crossed....

Mirasol,

Isn't the development of mineral resources in the FI a devolved power, so Mad Ed shouldn't be able to stop it even if he want to?

Going sideways, can't wait to see him try and explain how having a CFD of around £110/MWhr for static offshore wind and £280/MWhr for floating offshore wind in AR 7 is going to decrease our electricity bills....