two weeks to first oil, page-2

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AED ship comes in off WA coast

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Nigel Wilson, Energy writer | September 04, 2007

PRODUCTION hopeful AED Oil has given market sceptics cause to re-think after the arrival of its new floating production, storage and offtake vessel off the west Australian coast.

FPSO Front Puffin, operated by the British-owned group Aibel which has Norwegian headquarters, is being loaded with supplies and undergoing final engineering work and certification off the burgeoning exploration supply base at Truscott, a former World War II air base in the far north of Western Australia.

David Dix, chairman of AED Oil, believes initial oil will flow from its 100 per cent owned Puffin field in Australian waters in the Timor Sea about 700km west of Darwin by about the middle of September.

The field is about 80km south of the Challis and Jabiru oil fields and about 25km from the Skua field.

Puffin production will ramp up gradually to a design capacity of 30,000 barrels a day.

The leased Front Puffin is a converted oil tanker, which that has just been refitted in the Keppel yards in Singapore with a gas processing suite on its topside. It has a storage capacity of about 650,000 barrels, and aims to supply shuttle tankers to refineries in the Asian region.

It attaches to a swivelling buoy attached to a riser at Puffin through a "moon pool" in the bottom of the vessel's hull rather than more usual bow turret used in Australian FPSOs. The moon pool is a patented system involving a big steel cylinder with a central opening.

Both systems are designed to allow the vessel to disconnect from the field on the approach of bad weather.

AED Oil was listed in May 2005 and is operator of the Puffin field in Northern Territory permit AC/L6.

"The arrival of the Front Puffin represents a major achievement for the company," Mr Dix said. "It's involved a major effort by everyone associated with AED Oil and it's a tribute to them that we have got this far in such a short time."

AED Oil, though one of the best-performing stocks on the exchange in the past year, has attracted some scepticism because it has no track record as an oil or gas producer.

Puffin was found by ARCO in 1972 and has had a number of owners, before finally being bought by AED Oil for $3.5 million in vendor shares.

AED Oil believes that with Puffin and the Talbot field about 65km to the west, which it hopes to bring into production next year, it will recover more than 100 million barrels of oil.

Mr D!cks says marketing of initial production from Puffin has been sold to the French giant Total, which is increasingly active off northwest Australia in the Timor Sea and the Browse Basin.

The first cargo of the light sweet crude - rated at 44 API gravity, similar to the Asian benchmark Tapis - has been pre-sold by Total to Caltex and will be shipped to its refineries at Kurnell in Sydney and Lytton in Brisbane.

AED Oil anticipates that about 10 million barrels of oil will be produced in the first 12 months of the field's production life.

Currently the Puffin Oil can be sold for more than $100 a barrel.

Initial production from the Puffin field will be from the Puffin-7 subsea well in the north-east area of the field, with a second well, Puffin-8, being brought on later in the year.

AED Oil estimates proven and probable reserves from this area alone will be about 40 million barrels of oil.

Nigel Wilson visited FPSO Front Puffin as a guest of AED Oil