3D Oil and partner Hibiscus Petroleum Berhad have decided on the use of a leased Mobile Offshore Production Unit (MOPU) to develop their West Seahorse oil field in VIC/P57, offshore Victoria.
Front End Engineering Design (FEED) for the development has started with the contract awarded to Melbourne-based engineering giant WorleyParsons.
The joint venture had previously received favourable responses from early discussions with project financiers and will now proceed to formalise project funding arrangements.
These are expected to be predominantly project debt and some additional equity.
3D Oil expects the joint venture to make a final investment decision immediately after it receives regulatory approval, which is expected in the fourth quarter of 2013.
First oil is scheduled to begin in the first quarter of 2015.
West Seahorse
The West Seahorse development will consist of production via the leased MOPU in to a leased tanker serving as a floating storage and offloading vessel, enabling crude oil sales both locally and internationally.
Two production wells will be drilled prior to arrival of the MOPU, which is a modified jack-up drilling rig fixed to the seabed at the West Seahorse field location for the life of the project.
The MOPU will include processing facilities to remove associated gas and water, to stabilise the crude oil, and export the stabilised crude.
Produced gas will be processed and utilised for fuel gas and enhanced recovery (gas lift) with the remaining gas being flared.
Produced water will be treated to regulatory requirement quality and disposed overboard.
Field life is expected to be between four to five years, depending on factors such as operating costs and oil prices.
Initial production rates are expected to be as high as 12,000 barrels of oil per day.
West Seahorse has Best Estimate Contingent Resources of 9.2 million barrels of recoverable oil.
Drilling and Exploration
The joint venture is currently in advanced discussions with other operators in the region with the view of forming rig club to mobilise a jack-up drilling unit into Bass Strait in the coming summer season.
These will allow for shared mobilisation costs and improved rig service costs due to the increased efficiency of a multi-well/multi-operator drilling campaign.
3D Oil expects to drill the West Seahorse Field in either the first or second quarter of 2014.
The JV is also considering drilling an additional exploration well during this drilling campaign.
The current preferred prospect is Sea Lion due to its strong prospectivity and its proximity to West Seahorse, which could potentially allow a Sea Lion discovery to be produced via the West Seahorse infrastructure.
Sea Lion is estimated to hold Prospective Resources of 11MMbbl of oil.
Hibiscus
Hibiscus Petroleum is contributing a total of A$27 million towards development of the West Seahorse field to earn a 50.1% operating stake in VIC/P57.
The Malaysian company has also subscribed for 30.96 million 3D Oil shares for A$2 million, giving it a 13% interest in 3D Oil.
Upon production, Hibiscus Petroleum will preferentially receive 74.9% of Petroleum produced from the permit until the sale revenue equals the amount funded by Hibiscus Petroleum. Thereafter, each party will receive cash flows equivalent to their participating interest in the producing asset.
3D Oil had $2.86 million in cash as of 31 December 2012.
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