The recently completed pre-FEED studies have confirmed that the most economically attractive development concept for the Tui Area fields will involve four or five subsea oil production wells tied back to a floating production, storage and offloading facility ("FPSO").
The capital expenditure estimates for the project, allowing for contingency commensurate with this stage of engineering, is still considered to be within the range previously announced of US$120 – 150 million. This excludes the cost of an FPSO which is likely to be leased.
The estimate of proved and probable reserves also remain within the previously announced range of 20-30 million barrels of recoverable oil. Latest subsurface modelling work indicates that relatively long horizontal and/or multi-lateral wells will be preferred to optimize economic recovery. These are designed to allow high initial production rates, and initial oil rates in the vicinity of 30 thousand barrels per day are expected. The nature of the thin reservoirs will lead to a rapid rise in water production and the facilities will be designed to handle large volumes of water.
The FEED program will start immediately and is expected to run through to August this year. During this phase the Field Development Plan will be finalized and submitted to the regulatory authority in support of a Petroleum Mining Permit application. The engineering Basis of Design will also be finalized allowing a capital expenditure estimate to +/- 15% accuracy to be generated. Key areas that will be addressed during FEED include:
In parallel with FEED, suitable drilling rigs will be identified and priced. A commitment to a rig may be made during this phase to secure a 'slot' in the increasingly tight schedules of the available rigs in the Australasian region. Development drilling is currently scheduled to commence Q2, 2006. The possibility of drilling at least one exploration well in the permit, within tie in distance of the Tui Area facilities, ahead of development drilling, is also being considered.
The joint venture has also approved the acquisition of 72 km2 of 3D seismic data over the northern extent of the Pateke structure that falls outside the existing 3D coverage. This data is expected to be shot in early April this year in conjunction with acquisition in another adjacent permit. The data, when processed and interpreted, will assist the finalization of reserve estimates and development drilling requirements for the Pateke accumulation.
On the basis of the current development timetable, the joint venture expects to be in a position to make a Final Investment Decision ("FID") for the Tui Area development during 3Q 2005, leading to first oil in Q4 2006.
Participants in PEP 38460 are New Zealand Overseas Petroleum as operator with 45%; AWE with 20%; Mitsui with 12.5%; Stewart Petroleum with 12.5% and WM Petroleum with 10%.
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