Second Falklands exploratory well under way

Offshore staff

LONDON – The semisubmersible Eirik Raude has spudded the 14/20-1 Isobel Deep exploration well on license PL004a in the offshore North Falkland basin.

Premier Oil is operator, in partnership with Rockhopper and Falkland Oil & Gas (FOGL).

According to Rockhopper, the well will provide the first test of the F3 fan system entering the basin from the South East margin and developed as a sequence of stacked reservoirs.

It will target the Isobel Deep fan in an area of maximum mapped reservoir thickness, with potential resources of 72 MMbbl, although the complex throughout this area could hold more than 500 MMbbl.

Drilling should continue for around 30 days; no coring or testing is planned.

A success, subject to partner agreement, could lead to a follow-on appraisal well on the wider Elaine/Isobel complex.

Earlier the Eirik Raude proved oil and gas at various intervals in the Zebedee structure in the same basin. Rockhopper believed recoverable oil in the Zebedee reservoir alone could be more than 50 MMbbl. Work continues to determine the upside in the Hector and Ninky South reservoirs.

At the moment, the planned drilling order for the rig is as follows:

Well

RKH%

Location

1. Zebedee

24.0%

NFB, License PL004b

2. Isobel Deep

24.0%

NFB, License PL004a

3. Humpback

0.0%

SFB, southern license area

4. Jayne East

24.0%

NFB, License PL004c

5. Chatham

40.0%

NFB, License PL032

6. Second Noble-operated well

0.0%

South or East FB, to be decided

Rockhopper says the current exploration campaign will have limited impact on the initial phase of the Premier-operated Sea Lion oil and gas field development. However, it will determine the shape of subsequent development phases in the area.

In particular, if the Chatham/West Flank gas cap well proves successful, Rockhopper expects to add at least 60 MMMbbl to the already discovered 160 MMbbl likely to be harnessed under Sea Lion Phase 1b.

The Phase 2 development would be impacted by success at Jayne East while a success at Isobel Deep would expand the development area.

In November 2014, Premier/Rockhopper announced a phased, lower-cost development solution for Sea Lion following the decline in the oil price, with the initial phase targeting around 160 MMbbl in the northeast segment of the field over a 15-year period.

Development will likely involve 14 wells (eight producers, five water injectors, and one gas producer/injector) linked to an FPSO, with 50-60,000 b/d of oil produced from a single subsea drill center.

Capex to first oil for the initial phase could be around $1.8 billion, much less than prior estimates for the TLP concept.

Around one-third of the project’s costs relate to drilling, and as Rockhopper points out, these have fallen across the industry by 30-40% since mid-2014.

The company expects to take advantage of the weaker supply/service market to negotiate further cost savings prior to project sanction.

Phase 1A cost estimates (November 2014)

$billion

Pre-sanction

0.1

SURF and installation

0.7

Project management

0.4

Pre-first oil drillex

0.6

Total (pre-first oil)

1.8

The Sea Lion partners have approved a budget for pre-sanction spend during 2015 of $70 million.

Later this spring they expect to award a front-end engineering and design contract followed by submission of a draft field development plan to the Falkland Island government around year-end.

They are targeting sanction for the first phase of development during mid-2016. The precise timing will be driven by not just by achievable cost reductions but also the long-term oil price outlook at that time.

Premier has confirmed that while it could fund its share of the project, it will continue to seek another partner for the development.

04/09/2015

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