Impact of Brae 'Alpha' Shutdown
Due to a gas leak on the Brae 'Alpha' platform operated by Marathon Oil UK ('Marathon'), production from the Birch, Larch and Sycamore ('Trees') wells was shut-in on 27 November and has not yet been restarted. The Marathon investigation team has identified the cause and is working to isolate the precise location of the gas leak. Both companies are seeking to repair the leak and restore production as quickly as possible. The leak appears to be solely related to a multi-service line used to transport chemicals and lift gas from the Brae 'Alpha' platform to the 'Trees' subsea infrastructure.
At this point it is difficult to estimate exactly how long 'Trees' will remain shut-in, however, it is anticipated to be at least several weeks. At the time of the shut-in the 'Trees' wells were averaging 12,800 barrels of oil equivalent per day ('boepd'). Venture has customary insurance in place to cover both restoration costs as well as business interruption. If the wells were to remain shut-in until the end of December the impact upon 2004 calendar year average production would be around 1,200 boepd.
Current Production As the workover and maintenance program on Venture's 'A' Fields gas wells nears completion, the Company's total production for November, prior to the shut-down of 'Trees', was averaging 22,800 boepd, the highest monthly average in the Company's history.
The southern North Sea gas rejuvenation activity, carried out by the Noble Julie Robertson rig that is now off contract, has taken somewhat longer than anticipated and has resulted in longer than expected periods of well shut-ins. However, the benefits are now showing through and well deliverability from Venture's southern North Sea gas wells was in excess of 50 million cubic feet per day ('MMcfpd') (net) in November.
Asset Development Operations
In line with previous guidance, Venture's current project development activity remains on-track to deliver a step change in production rates during the first quarter of 2005.
Transocean's semisub, Sedco 704, which is on contract to Venture until mid-2006, is nearing the end of drilling activity on the Central Sycamore water injection well. This project is expected to complete in January 2005 and the new pressure support that will be provided to the Sycamore reservoir is anticipated to result in an additional 5 - 7,000 boepd (net) during the first half of 2005.
Once operations have been completed on Central Sycamore, the Transocean 704 will move on to carry out the re-entry and completion of the Gadwall discovery well as a producer. This additional production is expected to come on stream at around 6 - 8,000 boepd (gross) in the second quarter of 2005. Venture is currently mobilizing a diving support vessel ('DSV') to undertake the subsea construction and tie-in work ahead of the arrival of the drilling rig.
Finally, the offshore construction activities to tie-back the Annabel gas production well continue on schedule and first gas is anticipated during early March at around 80 MMcfpd and the pipe lay phase is currently underway.
Commenting on the latest developments, Mike Wagstaff, Chief Executive said:
'Venture's overall production growth rate remains unchanged despite the current short term interruptions. Our development program is in line with previous guidance and we remain confident of more than doubling average production during 2005. Provided that there is no extended shut-in of 'Trees', we reaffirm our previous 2005 guidance and we anticipate exiting next year at a production at a rate of 45,000 boepd during the fourth quarter.'
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