9 Jul 2015 07:00
9 July 2015
Ophir Energy plc
Award of competitive FEED for Fortuna FLNG project
Ophir Energy announces that it has awarded Upstream Front End Engineering and Design (FEED) contracts for the Fortuna FLNG Project in Block R, Equatorial Guinea to two contractor consortia, (i) McDermott Marine Construction Ltd and GE Oil & Gas UK Ltd and (ii) Subsea 7 and Aker Solutions.
The Upstream FEED will be a competitive process with the scope of work including subsea development design that will enable the two competing FEED consortia to submit their EPCIC (Engineer, Procure, Construct, Install & Commission) tenders at the end of FEED, from which one will be selected for FID.
Key focus areas for the FEED process will be defining the number of wells required at first gas, the cost of the development and the delivery time of the long lead subsea items, such as subsea trees, that are on the critical path to first gas.
The FEED process will be completed at the end of 1Q 2016, which will allow a Final Investment Decision to be made in mid-2016 with first gas expected in mid-2019.
As announced in May, the midstream partner, Golar LNG, will build, own and operate the FLNG vessel, the Gimi, in return for a tariff. Golar will conduct a separate FEED study for the midstream element of the project, which will commence shortly. The Gimi is forecast to have a capacity of c.2.2 MTPA. With this throughput, and the installation of late-in-life compression facilities, the resources discovered in Block R to date are more than sufficient to deliver a production plateau of c.330 mmscfd (55kboepd) for over 30 years. Analysis of the drill stem test conducted on the Fortuna 2 well in late 2014 demonstrated that the well contacted over 800 Bcf of gas in the Fortuna field, highlighting the world class nature of the reservoir. As such, the first phase of the Fortuna FLNG project is economically under pinned by the 1.6 Tcf of contingent resource in the Fortuna and Viscata gas fields.
With an incremental 1 Tcf of 2C resources discovered and immediately available to be developed, and a further 900 Bcf of low risked prospective resource, Ophir is considering contracting a second FLNG vessel to develop these unallocated resources. A second vessel would both monetise currently unallocated resources and accelerate cash flows from Block R, thereby adding material value to the Block R FLNG programme. An investment decision for the second vessel is currently expected to be made once the Fortuna field has commenced production, with a view to it being operational by the middle of the next decade.
Commenting on the award, Nick Cooper, Chief Executive Officer of Ophir, said:
"The award of Upstream FEED is an important milestone as we continue to de-risk the Fortuna FLNG Project through the 'Define' phase. The FEED awards, to industry-leading contractors, follow a strongly contested first phase, reflecting the industry's grasp of the significance, and advanced prospects, of the Fortuna project.
"With the appointment of Golar as midstream partner, and the commencement of FEED, the project has strong momentum. Ophir's focus will now switch to securing buyers for the LNG offtake and to bringing in an equity partner prior to our mid 2016 FID. Numerous potential counterparties have recently expressed interest in the offtake and partnering opportunities.
"The selection of FLNG to monetise our Block R resource base has drastically reduced gross development capex to first gas from the c.$3bn estimates for a conventional LNG plant to c.$800mm for FLNG, and has also reduced development lead time; thereby accelerating first gas by 2-3 years to 2019. These improvements significantly enhance the Project's upstream IRR.
"The potential application of a second leased FLNG vessel in Block R is an exciting advance. This would accelerate the production of contracted resource and expand the total resources base to be commercialised. A second vessel would be synchronised with the cash flow from the initial trains, thereby minimising capex exposure to Ophir and materially increasing the Fortuna FLNG Project's overall value."
Ends
For Further Enquiries please contact:
Ophir Energy plc +44 (0)20 7811 2400
Nick Cooper, Chief Executive Officer
Bill Higgs, Chief Operating Officer
Geoff Callow, Head of Investor Relations
Brunswick Group +44 (0)20 7404 5959
Patrick Handley
Carolina Desmeules