|
Forget and forgive in Newfoundland Hebron partners file regulatory application for region’s 4th commercial offshore project, leaving rifts with government in the past Gary Park For Petroleum News
It will be 12 years behind the original startup date, but Newfoundland’s fourth commercial offshore oil field will come on-stream in 2017, contingent on the usual regulatory and corporate sanctioning.
In a filing with the Canada-Newfoundland and Labrador Offshore Petroleum Board, the ExxonMobil-led consortium estimates the Hebron-Ben Nevis field will yield 120,000-176,000 barrels per day over 30 years, initially drawing on an estimated 566 million barrels of heavy crude reserves.
The application does not provide an updated cost projection which was pegged by Chevron Canada nine months ago at C$5 billion-C$7 billion.
ExxonMobil is operator with a 36 percent interest, Chevron Canada has 26.7 percent, Petro-Canada 22.7 percent, StatoilHydro Canada 9.7 percent and the remaining 4.9 percent is held by Nalcor Energy, created by the Newfoundland government to take equity positions in all future offshore projects. The government paid C$110 million for its stake as part of a royalty agreement with the companies.
The project description targets regulatory approval in early 2011 and final approval by the partners by mid-2012.
Rocky road Hebron has traveled a rocky road to reach this milestone, including a bitter parting of the ways three years ago between the government and the consortium, with each side accusing the other of making unreasonable demands, culminating with Newfoundland Premier Danny Williams blaming ExxonMobil for the collapse of talks over royalties and his government’s demand for an equity stake.
Soaring world oil prices last summer raised projected revenues for both government and industry, resulting in an agreement in principle.
At an oil price of $87 per barrel with a 2 percent inflation allowance, provincial revenues were estimated last August at C$20 billion over a 20-year operating life, with an additional C$8 billion destined for the Canadian government.
The deal also extended the existing generic royalty of 1 percent of gross revenues until project costs are recovered to include a super royalty of 6.5 percent after net royalty payout when the price of WTI crude exceeds an average $50 per barrel per month, translating onto a royalty rate of 36.5 percent above the $50 threshold.
The Hebron offshore area is 205 miles offshore from the Newfoundland capital of St. John’s and about six miles north of the existing Terra Nova project and 20 miles southeast of Hibernia.
Three discovered fields It contains three discovered fields — Hebron with three discovery wells, Ben Nevis with two and West Ben Nevis with one, in water depths of 290-335 feet.
For the base development, ExxonMobil said it anticipates drilling 35 to 45 wells, with about 13 likely to be pre-drilled to assist with the ramp-up of production.
The project provides for water injection as the primary-drive mechanism to improve overall oil recovery.
At the core of the project, the Ben Nevis pool is expected to account for 80 percent of total oil from the project, although ExxonMobil concedes the reservoir is of a lower quality than that of the producing Hibernia and terra Nova projects.
It said the “medium 20 degree API crude in this pool presents production challenges as the viscosity can be 10 to 20 times higher than that of water.”
The application said the Jeanne d’Arc and Hibernia pools within the Hebron field are also part of the Hebron project, but compared to the Hebron-Ben Nevis pool they have high oil quality, poorer reservoir quality, lower recovery factors and higher development costs.
ExxonMobil said further development of resources within Hebron’s four Significant Discovery Licenses is expected over the longer term.
Gravity-based structure Development will involve a standalone concrete gravity-based structure like that used at Hibernia, with reinforced concrete to withstand the North Atlantic challenges of sea ice, icebergs and wild storms.
Current plans point to a total liquid production rate of 190,000-284,000 bpd to accommodate the high volumes of produced water for disposal overboard or possibly re-injection into the subsurface, if that is feasible.
Gas compression will be required to accommodate the re-injection of 56.5 million to 71 million cubic feet per day of produced gas and provide about 102 million to 173 million cubic feet per day of lift capacity, but ExxonMobil said those rates may change over time as a reservoir depletion strategy and plan is completed.
The production platform will have several storage compartments with capacity of 1.13 million to 1.45 million barrels each and an offshore loading system with a looped pipeline and two separate loading points for tankers to deliver crude to the Newfoundland Transshipment Terminal or directly to market.
The operator said that although the Hebron field fluids have a relatively low gas-to-oil ratio, it expects there will be more than enough gas to facilitate oil production.
The gas plan will also allow for the injection of excess produced gas into secondary project-area reservoirs and into primary producing intervals to improve oil recovery.
| 