Petrofac Moves Forward on Don Fields: Hires Rig and Production Vessel

Petrofac's Energy Developments division has signed an agreement, as operator, on behalf of itself and its co-venturers, with Sea Production Limited, a wholly owned subsidiary of Northern Offshore Limited, for the provision of the Northern Producer floating production facility. The Northern Producer will receive and process production from the Don Southwest (Don SW) and West Don fields in the North Sea, before export via offshore tanker or nearby infrastructure.

The Northern Producer has a capacity of 55,000 barrels of oil per day and associated gas, water injection and export processing facilities. Modifications will be carried out in 2008 to extend the life of the vessel. The vessel will be deployed between West Don and Don SW, with first oil expected in 2009.

Field development programs for both fields have been submitted to the department of Business Enterprise & Regulatory Reform. Approval is expected to be received during the first half of 2008, pending environmental consultation.

Petrofac has contracted the John Shaw semi-submersible drilling rig for a seven well drilling program on the Don SW and West Don fields. It is expected that the rig will come on contract toward the end of the first half of 2008 and complete the program by the end of the first quarter of 2009.

The total cost of the Don SW and West Don developments are estimated at circa £360 million (gross).

"Petrofac's knowledge of the Northern Producer made this a compelling solution when combined with the innovative leasing arrangement which allows costs to vary with oil price and throughput, aligning all parties to maximise production. Securing the John Shaw rig for the development also gives us confidence in our project schedule and capital costs," Bill Dunnett, executive vice president, Energy Developments, said.

Amjad Bseisu, chief executive of Energy Developments, added: "This agreement has enabled Petrofac and its partners to secure a fast track and standalone solution utilising the Northern Producer. The joint Don SW and West Don development is another example of Petrofac creating value from fallow oil discoveries by delivering a low cost fast track solution."

Both Don Southwest and West Don Fields are located in the northern North Sea, approximately 150 km northeast of the Shetland Islands and 12 km north of the Thistle Field in a water depth of approximately 500 ft.

The Northern Producer floating production facility, which recently finished an assignment on the Galley Field, will be utilized for processing fluids from both fields ahead of export. It has been secured for field life under a lease arrangement, with lease cost based on an oil throughput tariff dependent on Brent oil prices.

Oil export from the Northern Producer will either be by offshore loading by tanker or subsea tie-back to a nearby platform. Discussions with potential service providers are ongoing.

Energy Developments assumed operatorship of Don SW after purchasing interests from former co-owners BP and Conoco in December 2006. Petrofac as operator now holds 60% equity in License P.236 with the sole partner Valiant North Sea Limited holding 40%.

Don SW is an oil field comprising 450ft thick Brent sequence sandstones, as producing in the nearby Thistle and South Magnus Fields. The undersaturated oil is held in a combination of dip and fault traps at a depth of 11,000 to 11,500ft.

The proposed development consists of two high angle producers and two water injectors tied-back to the Northern Producer. Development drilling is planned to start in the second quarter 2008 with first oil in 2009.

Total capital costs of the project are estimated to be circa £190 million (gross).

The Don SW appraisal well 211/18a-26 (Energy Developments 60%, Valiant 40%) drilled in the fourth quarter of 2007 confirmed the extension of the Don SW field to the west of the main field. Three reservoir intervals were penetrated in the well including the upper Brent section, the Statfjord and the Cormorant. All three reservoirs have been confirmed by wireline logs to be oil bearing and the Brent appears to be in pressure communication with the main Don SW field. However, the middle and lower Brent reservoir is missing in the well and early indications suggest the well penetrated a fault. Further appraisal of this area is planned for next year.

Responsibility for abandonment of the existing Don Field facilities and wells rests with the former co-owners.

Energy Developments assumed operatorship of West Don after purchasing a 40% equity interest in Block 211/18a from former co-owners BP and Conoco in February 2006. The West Don Field straddles Blocks 211/13b and 211/18a (licenses P.1200 and P.236 respectively). Owners of the two blocks have agreed a fixed field unitization which results in Petrofac owning 27.7% of the West Don unit.

The West Don field was discovered in 1975 by well 211/18-9 which contained oil in sandstones of the Middle Jurassic Brent Group. The West Don reservoir comprises circa 470 ft thick Brent sandstones.

The proposed development consists of drilling of two updip high angle producers and one down dip water injector well from a central cluster, tied back to the Northern producer, which will also handle Don Southwest production.

Total capital costs of the project are estimated to be circa £170 million (gross).