Apache, on behalf of its joint venture with Inpex Corporation, signed the contract with a subsidiary of Prosafe SE, of Stavanger, Norway, for use of the tanker MT Kudam, which will be converted for FPSO service. Apache and Inpex will pay $40 million plus operating expenses per year for a seven-year term with options for an eight-year extension or to acquire the vessel. Apache owns 52.5 percent of the development; Tokyo-based Inpex owns 47.5 percent. Apache's net share of the drilling and subsea development project will be approximately $260 million.
The moored FPSO will be linked to two subsea drill centers with 10 production wells, two water injection wells, and one gas injection well. The MT Kudam will have processing capacity of 63,000 barrels of oil per day and storage capacity of 620,000 barrels of oil. The oil will be marketed in Asia. Development drilling at Van Gogh is expected to begin by June.
"Apache has a strong growth profile in Australia, with the Van Gogh and Pyrenees oil developments in the Exmouth Basin, the Reindeer gas discovery and, most recently, the Julimar-1 gas discovery," said G. Steven Farris, Apache's president and chief executive officer. "Drilling is under way on Apache's five-well exploratory program slated for the Exmouth Basin in 2007. In Australia and our other core growth areas -- Canada and Egypt -- we have an arsenal of maturing exploration prospects that will be drilled this year."
The Pyrenees development, operated by BHP-Billiton, is expected to receive a formal go-ahead in the near future. It is also expected to add 20,000 barrels of oil per day to Apache's net production during 2009. The Van Gogh and Pyrenees developments will provide production volumes equivalent to approximately 15 percent of Apache's current net worldwide oil production.
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