Tullow Oil PLC has indicated that it will shut down the FPSO in the Jubilee Oil Fields in Ghana’s Western region between five and eight weeks in the later part of this year.
Tullow said in its half-year update, that the Interim Spread Mooring of the Jubilee FPSO was successfully completed in February and the vessel is now anchored to the seabed with the turret bearing locked and the vessel held on a constant heading.
The statement said the Joint Venture Partners and the Government of Ghana have agreed on the need to stabilise the turret bearing and a shutdown of between five and eight weeks is planned for late 2017.
“Work continues to further reduce the length of this shutdown. Planning for the rotation of the vessel to its optimum heading and the installation of a deep water offloading system is ongoing and it is anticipated that this work will be executed in two stages in 2018 and 2019. The total shutdown duration for stabilisation, rotation and offloading system installation is not expected to exceed 12 weeks,” Tullow said.
Below is the full statement:
Tullow Oil plc (Tullow) issues this statement to summarise recent operational activities and to provide trading guidance in respect of the financial half year to 30 June 2017.
This is in advance of the Group’s Half Year Results, which are scheduled for release on Wednesday 26 July 2017. The information contained herein has not been audited and may be subject to further review and amendment.
Commenting today, Paul Mcdade, chief executive, said: “Tullow continues to make good progress despite tough market conditions. Our recent Rights Issue and free cash flow from our low cost, producing assets have resulted in a significant reduction in our debt and provided the Group with greater financial and operational flexibility. Since I became CEO in April, I have reviewed our medium-term plans and remain satisfied that we are making the right investment decisions with regard to our producing, development and exploration portfolio. Financial discipline and efficient capital allocation will be a key focus of my tenure as CEO as we seek to deleverage the Company and return to growth even at low oil prices.”
OPERATIONAL UPDATE
PRODUCTION
Tullow’s first half 2017 West Africa oil production has performed in line with guidance, and is expected to average 81,400 bopd including production-equivalent payments received under Tullow’s Business Interruption insurance policy for the Jubilee field. In Europe, half year net production is expected to average 5,600 boepd.
West Africa working interest oil production full year guidance of between 78,000 and 85,000 bopd for 2017, including production-equivalent insurance payments, remains unchanged. Europe full year gas production guidance for 2017 is now expected to average between 5,500 and 6,000 boepd.
WEST AFRICA
GHANA
Jubilee
Gross production from the Jubilee field is expected to average 83,900 bopd (net: 29,800 bopd) in the first half of 2017. Tullow’s corporate Business Interruption insurance is expected to reimburse Tullow for approximately 5,000 bopd of net production-equivalent payments in 1H 2017 increasing Tullow’s effective net production to 34,800 bopd. Full year net production guidance from Jubilee, including production-equivalent insurance payments, remains around 36,000 bopd.
The Interim Spread Mooring of the Jubilee FPSO was successfully completed in February and the vessel is now anchored to the seabed with the turret bearing locked and the vessel held on a constant heading. The Joint Venture Partners and the Government of Ghana have agreed on the need to stabilise the turret bearing and a shutdown of between five and eight weeks is planned for late 2017. Work continues to further reduce the length of this shutdown. Planning for the rotation of the vessel to its optimum heading and the installation of a deep water offloading system is ongoing and it is anticipated that this work will be executed in two stages in 2018 and 2019. The total shutdown duration for stabilisation, rotation and offloading system installation is not expected to exceed 12 weeks.
Work is progressing with the Government of Ghana and JV Partners to update the Greater Jubilee Full Field Development Plan (GJFFD). The JV Partners remain on track to re-submit the GJFFD Plan by the end of July 2017 with approval expected later in the year, allowing drilling to commence in 2018. A 4D seismic survey was completed in the first quarter of the year and data acquired will be used to optimise the location of GJFFD wells and to assist with ongoing reservoir management.
TEN
During the second quarter, trials to optimise the fields and facilities throughput have resulted in production levels regularly in excess of 50,000 bopd. In June 2017, a final commissioning capacity test and facility blowdown was completed demonstrating that that FPSO can operate in excess of its design capacity of 80,000 bopd. The testing however identified an issue with the FPSO’s flaring system which has been addressed but required a 10-day shutdown of the facility. Production in the first half of 2017 from the TEN fields is therefore expected to average 48,000 bopd (net: 22,700 bopd) while full year gross production guidance remains unchanged at 50,000 bopd (net: 23,600 bopd). The TEN gas manifold has also been installed and commissioned and a gas export trial to GNGC facilities has been successfully completed.
The final oral hearings at the International Tribunal for the Law of the Sea (ITLOS), with regard to the maritime border dispute between Ghana and Côte d’Ivoire, took place in February 2017. During the proceedings the Chairman of the Tribunal indicated that a final ruling was expected around the end of September 2017.
The Joint Venture Partners are currently progressing a rig tender process that would, subject to the ITLOS decision, allow drilling of the remaining wells to resume around the end of the year.
NON-OPERATED PORTFOLIO
Production from the West Africa non-operated portfolio is expected to average 23,900 bopd in the first half of 2017. Full year production is expected to average 22,500 bopd which is in line with full year guidance.
Full year gas production from Europe averaged 5,600 boepd in the year to date, which is slightly lower than expectations due to deferment and delays in some activities. Tullow expects full year 2017 European gas production to now average between 5,500 and 6,000 boepd.
EAST AFRICA
KENYA
Exploration and Appraisal
The exploration and appraisal campaign in Kenya has progressed to schedule with important results from the successful Erut -1 exploration well, which extended the proven oil limits to the northernmost end of the South Lokichar basin, and the Emekuya-1 exploration well which demonstrated oil charge across a significant part of the Greater Etom structure. The Group also drilled the Amosing-6, Ngamia-10 and, most recently, Etom-3 appraisal wells, the results of which are being incorporated into ongoing field development planning activities.
As previously disclosed, the Joint Venture Partners have decided to extend the current exploration and appraisal campaign by a further four wells. The additional wells will further explore prospects adjacent to the Greater Etom structure and test an undrilled fault block adjacent to the Ekales field. In addition to these wells, a further well, Ngamia-11, will be drilled and completed for use in an extended water flood pilot test in conjunction with the Early Oil Pilot Scheme (EOPS).
Water injection testing on the Amosing and Ngamia fields has been successful and demonstrated the feasibility of water injection for the development of these fields. The results from the exploration and appraisal program will be integrated into ongoing field development activities
Field development
In addition to the drilling and operational activities to support FID for the Kenya Full Field Development, engineering studies and contracting activities are under way in preparation for the start of FEED, which is expected to commence in late 2017. In parallel to the upstream development work, the Joint Venture Partners and the Government of Kenya continue to progress commercial and finance studies for the proposed export pipeline, and preparations are under way for the Environmental and Social Impact Assessment (ESIA).
The EOPS Agreement between the Joint Venture Partners and the Government of Kenya was signed on 14 March 2017 allowing all EOPS upstream contracts to be awarded. The first stage of the EOPS will be the evacuation of the stored crude oil, which was produced during extended well testing in 2015, to Mombasa by road. This will be followed by an extended water flood pilot test in Ngamia and EOPS production of 2,000 bopd which is expected to commence in late 2017. Results from the Ngamia water-flood pilot will assess sustainable production levels to inform the overall resource and Full Field Development Plan.
UGANDA
Field development
Key work programme activities, such as the FEED, ESIA and Geophysical and Geotechnical surveys are under way. Based on the progress with these activities, Tullow and its partners are working toward project FID around the end of the year.
