Jadestone Shuts Down Montara FPSO Over Tank Issues

Jadestone Shuts Down Montara FPSO Over Tank Issues
Jadestone has decided to shut down its Montara field FPSO in the Timor Sea, offshore Australia, to repair a leaking tank.

Oil and gas company Jadestone has decided to shut down its Montara field FPSO in the Timor Sea, offshore Australia, to repair a leaking tank.

A small leak of oil from a crude oil tank on the Montara Venture FPSO occurred in June this year. This was followed by an interim repair and a subsequent restart of production from Montara.

The company has been working to complete a permanent repair to tank 2C, but during preparations for this repair, an additional internal defect in water ballast tank 4S was detected and this will also be included in the work scope of repairs.

Jadestone said that there it also focused on the remaining scheduled inspection and repair activities to the FPSO crude oil tanks and production facilities which were delayed by limitations on available personnel during the Covid-19 pandemic.

Over the past several weeks, Jadestone developed the permanent repair to tank 2C. But the company experienced further delays and complications during FPSO repairs due to weather, manpower, and logistics issues. These mounting issues resulted in an inability to simultaneously accommodate the increased number of inspection and repair crews alongside production operations.

As a result, Jadestone decided to temporarily shut-in production from Montara and reorganize offshore manpower on the FPSO enabling priority and focus on maintenance and inspection crews. It is currently anticipated that these inspection and repair activities will result in production being shut in during the remainder of August and potentially through September 2022. It is currently anticipated that prioritizing the activity referenced above will result in incremental costs of $2-4 million.

The Montara shut-in and the performance of the wider production portfolio year-to-date means that Jadestone’s 2022 production will average between 13,000 and 14,000 boepd. This is a decrease from the previously announced production average of 15,500 boepd. The revised 2022 production guidance reflects the company’s assumption that production from its non-operated assets offshore Peninsular Malaysia will now remain shut in for the remainder of 2022, due to ongoing delays in reinstating operations.

“The company is confident that by taking this approach at Montara, the necessary work required to deliver long-term asset integrity can be safely and efficiently completed. The impact is short-term and there is no reduction in reserves. As a result, and given its strong balance sheet, the company intends to continue the share buy-back program announced on August 2, 2022,” Jadestone explained.

The Company provides the following operational and financial metrics ahead of its first-half 2022 results, which are scheduled for release on 20 September 2022.  This information has not been audited and may be subject to further review.

“Safety to personnel and facility integrity are key foundational principles at the heart of our operating philosophy, and after experiencing ongoing delays to the permanent repair on tank 2C, and the wider inspection and repair program on the Montara Venture FPSO, we believe we had to approach this work scope differently.”

“A temporary shut-in of Montara production, to replace production crews with maintenance and inspection teams, is the most practical solution which will allow us to apply the necessary additional manpower to accelerate key maintenance and repair activities and restore facility integrity.”

“There can be no shortcuts, and while we have made very significant progress in restoring the FPSO to the standard which we expect, the limited FPSO accommodation, as well as other factors such as Covid-19, have been impeding our progress. Our decision will reverse this trend. This represents production deferred, rather than barrels lost, and we are working hard to restore Montara production as soon as possible,” Paul Blakeley, President and CEO of Jadestone, said.

To contact the author, email bojan.lepic@rigzone.com

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