Woodside Energy is evaluating offers from contractors battling to provide a floating production, storage and offloading vessel and subsea hardware for the $2 billion SNE project, Senegal's first offshore oil and gas development.
Industry sources said technical and indicative prices were submitted earlier this month for a groundbreaking deep-water project set to involve about 25 subsea wells tied back to a 100,000 barrels per day FPSO.
It is understood that FPSO bidders, including Modec, SBM Offshore and BW Offshore, are offering new conversions, although their offers will have to compete with Woodside’s base-case solution of re-deploying an existing FPSO.
As well as a 100,000-bpd processing capacity, the unit will have to store 1 million to 2 million barrels of oil and have topsides equipped for water injection and gas injection.
One source familiar with the floater market suggested that in terms of existing units, Woodside is eyeing the OSX-2 and one other vessel.
OSX-2 — which has been in lay-up in Indonesia and never entered operations after it was delivered in 2013 — can handle 100,000 bpd and store 1.3 million barrels of oil.
The next step in the FPSO bid process could see front-end engineering and design work starting later this year — possibly in the form of a design contest — concluding in time for a final investment decision due to be taken in mid-2019, targeting first oil in 2022.
FEED work could start in September or October and run for about six months.
For the subsea production system and umbilical, riser and flowline packages, Woodside was set to issue bid documents for separate SPS and SURF packages.
However, there is growing belief among the contracting community that Woodside — which is due to assume operatorship of SNE from partner Cairn Energy this month — will select an integrated SPS-SURF contractor.
Among the contenders are TechnipFMC, Subsea 7, OneSubsea, McDermott, Baker Hughes, Saipem and Aker.
Speaking to investors late last month, Woodside chief executive Peter Coleman said he expected stiff competition for all the packages. “It’s a very competitive market at the moment, particularly for subsea production systems and umbilicals, risers and flowlines. There are 25 wells in the initial development so it’s a very highly competed package,” Coleman said.
He also remarked on the floater market that “there are not too many FPSOs going into service at the moment and there are a lot of FPSOs (available) around the world”.
SNE is a phased development, initially focusing on less complex reservoirs — comprising the field’s Lower S500 and the core Upper S400 zones — which hold about 240 million barrels of 31 degrees API oil.
The next development stage will tackle more complex pay zones which house a further 320 million barrels of resources.
SNE’s proven, probable and possible contingent resources are estimated to be close to 1 billion barrels, with in-place resources of up to 3 billion barrels of oil.
The offshore infrastructure will include options for potential gas export to shore and for future subsea tiebacks from other reservoirs and fields.
SNE houses about 1.3 trillion cubic feet of associated and non-associated gas, with gas sales opportunities being explored to support incremental gas export to shore.
One potential satellite tie-back could result from a successful exploration well to be drilled — as part of SNE’s two-rig development drilling programme — on the Spica prospect.
SNE is located in water depths of 650 to 1400 metres in the RSSD blocks.
Woodside has a 35% stake in the asset — after acquiring ConocoPhillips’ stake in 2016 — with Cairn on 40%, Australia's Far Ltd on 15% and state-owned Petrosen on 10%.
However, Far asserts it had the right to pre-empt ConocoPhillips’s sale to Woodside and its case is now before the International Chamber of Commerce as part of arbitration proceedings.
Woodside’s Coleman was asked last month by an analyst about the effect this arbitration case is having on the project.
He said: “With respect to the dynamic in the joint venture, it is really not changing it at all. We’re working with Cairn on assuming operatorship. Cairn has introduced us to the government and to the President (Macky Sall) as the next operator. I find it noise out to the side, to be frank. It’s not affecting the joint venture at this point. It’s a commercial dispute between Far and ConocoPhillips.”
He pointed out that the partners are “obligated... to submit a development plan in the first half of next year and that goes for all joint venture partners — it’s a snooze or lose situation”.
Coleman thought it very unlikely that Far would “risk its only asset and not go through that particular gate (a final investment decision)”.
Far chairman Nic Limb wrote in an address to shareholders on 30 May that the arbitration hearing is final.
“If the tribunal determines that Far’s pre-emptive rights do not or no longer exist,” he wrote, then Far will retain its 15% stake in the Senegal asset.
If the tribunal supports Far’s claim for “declaratory relief”, added Limb, then it will have the right to purchase ConocoPhillips’ 35% interest under the same terms and conditions as Woodside.
“The arbitration process holds no fears for Far and should not cause shareholders any real concern either,” Limb wrote.
FAR Price at posting:
11.0¢ Sentiment: Buy Disclosure: Held
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