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Tuesday, 12 September 2017 12:50

Statoil's Veslefrikk gets lifetime extension

Statoil and its partners have approved the lifetime extension for the Veslefrikk field in the North Sea until 2025, according to Industri Energi.

Veslefrikk platform. Image from Statoil.

In late summer, Statoil decided internally that it wanted a lifespan extension for Veslefrikk. On Monday (11 September), AU Sokkel received information that all licensees have also approved the lifetime extension with the investments it entails, according to the union.

“This means that the field will be operational in any case until 2025, and beyond that there will be an annual assessment of profitability,” Industri Energi said in a statement.

Veslefrikk lies in Norwegian North Sea block 30/3 in PL 52, about 30km north of the Oseberg field. The field came on stream in 1989 as the first development off Norway to use a floating production unit.

Prior to the extension, Veslefrikk was expected to produce until 2021, and had a cessation plan being prepared, according to the Ministry of Petroleum and Energy and the Norwegian Petroleum Directorate.

The field is developed with two facilities, Veslefrikk A and Veslefrikk B. Veslefrikk A is a fixed steel wellhead facility with bridge connection to Veslefrikk B. Veslefrikk B is a semisubmersible facility for processing and accommodation.

Veslefrikk B was upgraded in 1999 to handle condensate from the Huldra field. The plan for development and operation (PDO) for the Statfjord Group was approved in 1994. The PDO for the reservoirs in the Upper Brent and I-segment was approved in 1994.

The reservoirs consist of Jurassic sandstone in the Statfjord, Dunlin and Brent Groups with reservoir depths between 2800-3200m. The main reservoir is in the Brent Group and contains about 80% of the reserves. The reservoir quality varies from moderate to excellent.

Statoil is the operator of PL52 with 18% stake. Partners include Petoro (37%), Repsol Norge (27%), DEA Norge (13.5%), and Wintershall Norge (4.5%).

Tuesday, 12 September 2017 08:40

DONG's Hornsea Two cost cut in half

DONG Energy will build its Hornsea Project Two wind farm at the lowest-ever price for offshore wind in the UK, cutting its original price by half, in what the company is calling a "breakthough moment."

Map of Hornsea 2, from DONG.

At about US$76 (GBP 57.50)/MWh, the strike price for the contract for difference (CfD) is 50% lower than the previous round of CfD allocations just two years ago, demonstrating the rapid reduction in cost across the industry, DONG says.

Hornsea Two is set to become the world’s largest wind farm, surpassing its predecessor the 1200MW Hornsea One, which DONG energy is currently building.

Hornsea Two will have the capacity of 1386 MW, enough to power more than 1.3 million homes. It will be built 89km from the Yorkshire coast and is expected to be operational from 2022 with 25-year lifetime expectancy.

Hornsea Project Two will contribute significantly to DONG Energy’s ambition of reaching a total offshore wind capacity of 11-12 GW by 2025, the company says.

The Cfd is a 15-year contract that will be indexed for inflation. After 15 years, Hornsea Two will receive the market price for electricity. The project will be operated from DONG Energy's new operations hub in Grimsby, which is to be the largest facility of its kind in the UK when built.

With the allocation of the CfD, DONG Energy says it has now taken a final investment decision on Hornsea Project Two.

“We’re delighted to be awarded a Contract for Difference for Hornsea Project Two, which is another important step towards fulfilling our vision of making offshore wind the most competitive form of electricity generation,” says Samuel Leupold, executive VP and CEO of Wind Power at DONG Energy. “We have always promoted size as a key driver for cost. The ideal size of an offshore wind farm is 800-1500 MW, and therefore it is natural that Hornsea Project Two will deliver record-low costs to society. At the same time, the low strike price demonstrates the cost saving potential of developer-built offshore grid connections, which in the UK is included in the project scope.”

The project is expected to support more than 2000 during its construction phase with up to a further 130 permanent jobs for the operational phase of up to 25 years.

“This is a breakthrough moment for offshore wind in the UK and a massive step forward for the industry. Not only will Hornsea Project Two provide low cost, clean energy to the UK, it will also deliver high quality jobs and another huge boost to the UK supply chain,” says Matthew Wright, managing director for DONG Energy UK. “Costs are falling rapidly, long-term and highly-skilled jobs are being created across the North of England and the UK supply chain is going from strength to strength. We’re now really seeing the benefits of this commitment to offshore wind and there is still so much more to come. Indeed, it has the potential to play a key part in the realization of the UK’s industrial strategy.”

DONG Energy is already constructing Hornsea Project One and has started the consultation process for Hornsea Project Three, underlining the huge potential of this area of the North Sea for offshore wind. 

Cost drivers enabling the bid for Hornsea Two include scale, risk reduction, synergies, and mature industry and technology.

Read more:

DONG to exit oil and gas

DONG consults on Hornsea Three

300 turbine wind farm approved

CEFC China Energy is set to buy a 14.16% stake of state-owned Russian oil firm Rosneft in a US$9.1 billion deal with the consortium of Glencore and the Qatar Investment Authority (QIA).  

Image from Rosneft.

According to Glencore, CEFC will pay a premium of approximately 16% to the 30-day volume weighted average price of Rosneft shares today (8 September).

“Following the transaction, Glencore and QIA would retain an economic interest in Rosneft shares commensurate with their original equity investment announced in December 2016, which amounts to approximately 0.5% and 4.7%, respectively,” Glencore said in a statement.

In December 2016, Glencore and QIA bought 19.5% stake in Rosneft for $11 billion.

Christian Boermel, a senior analyst with Wood Mackenzie's Russia Upstream Oil & Gas team, says the deal intensifies the energy relationship between Russia and China.

“A direct stake in Rosneft will make CEFC China the main driver for the relationship of Rosneft with China, ahead of CNPC, Sinopec and Beijing Gas,” says Boermel.“Rosneft keeps its customers close to its heart – buy a stake, get an oil supply agreement.”

“CEFC China could soon take stakes in Rosneft projects, either in cash-intensive upstream projects, or in the downstream,” he says.

Read more:

Glencore, Qatar to buy 19.5% Rosneft stake

Friday, 08 September 2017 10:01

Azinor delays Agar after Partridge upset

Azinor Catalyst has failed to encounter hydrocarbon at its well on the Partridge prospect in the North Sea, leading the company to stall its plans to drill at the Agar and Plantain prospects.

Map of well 14/11a-2 in P1989. From Azinor.

Well 14/11a-2 was drilled with the Ocean Guardian semisubmersible to its target depth of 2443m, and while Azinor says it encountered excellent quality reservoir rocks, hydrocarbons were not present. The well has now been plugged and abandoned (P&A).

Before beginning P&A operations, the company performed wireline logging on the target formation. The rig is currently being demobilized having been on contract for a total of 27 days.

Last month, Azinor said the company intended to immediately drill an appraisal well at Agar, however, the company says it will now drill its appraisal well to test the Agar discovery and Plantain prospect in Q2 2018, to allow time to analyze the results of Apache’s adjacent Titan exploration well. Apache’s Titan is due to start in Q4 2017, and will test the same play as the Plantain prospect in the adjacent block.

“While we are disappointed with the result of the Partridge well, the very high quality sandstones which we encountered in the target reservoir both reinforces our geological model and de-risks key elements of the wider play, which we captured through the recent UK 29th Round,” says Nick Terrell, managing director of Azinor Catalyst. “With strong industry support for the Partridge Prospect, we were able to execute two transactions ahead of drilling, one of which was with a Major, resulting in very limited financial exposure to Catalyst,” he says.

The Partridge Prospect’s pre-drill recoverable volumes were estimated at 119 MMboe in the mid case, with an upside case of 260 MMboe.  

“Reservoir was one of the key risks for Partridge, but now that we have a better handle on this, along with its seismic signature, we are well-positioned to progress de-risking the wider potential of the Lower Cretaceous play – find the sands and the oil will follow,” says Henry Morris, Azinor technical director. “We continue to believe that there is huge potential both on and off the license, a previously underexplored area. Critical information that we have gained, such as reservoir insights, greatly aid our future exploration of the area, in particular on our new licenses to the north-east: P2316 and P2317.”

Azinor Catalyst holds 100% operated interest in blocks 14/11a, 14/12a and 14/16a, which contain the Partridge Prospect.

Read more:

Azinor spuds well on Partridge prospect