Tullow Oil PLC has said a turret bearing fault suffered by the FPSO Kwame Nkrumah in the Jubilee oil fields in February this year, has had a negative impact on its oil output.
In a recent update, Tullow said in the first half of this year, oil production averaged 51,900 bopd in Ghana, its West Africa operations.
“This is below previous guidance due to lower production from the Jubilee field in Ghana, following issues with the FPSO turret identified in February”, Tullow said.
Tullow said production has gradually been ramped-up since then, with gross production in June averaging around 90,000 bopd.
The Group expects to continue producing from Jubilee at similar levels through the remainder of 2016 with the exception of short periods of reduced production to commence work on the long-term turret solution.
As a result, Tullow said Jubilee’s gross average production in the second half of 2016 is expected to be around 85,000 bopd (net: 30,200 bopd).
Tullow, therefore, said it expects average gross production for the Jubilee field in 2016 to be around 74,000 bopd (net: 26,300 bopd).
“As a consequence, Tullow’s West Africa oil production guidance range is revised to 62-68,000 bopd net. Tullow, however, has a comprehensive package of insurances in place which includes Business Interruption insurance which covers consequent loss of production and revenue from Jubilee,” the update said.
Meanwhile, Tullow has announced that the FPSO, will be shut down for between eight and 12 weeks in 2017 as the oil firm and its partners explore measures to find a permanent solution to the vessel’s turret bearing fault.
Tullow said the fault resulted in the need to implement new operating and offtake procedures.
This necessitated the FPSO be shut down for an extended period in April with production resuming in early May. Since then, Tullow said 18 offtakes to the storage tanker have been successfully completed using a dynamically positioned shuttle tanker.
Tullow said it expects to continue operating the field under these new procedures for the remainder of 2016 and anticipates average gross production to be around 85,000 bopd in the second half of 2016.
Tullow said it has made good progress together with its partners towards establishing the “best long-term solution and, based on the work undertaken over the past four months, now see converting the FPSO to a permanently spread-moored facility, with offtake through a new deepwater offloading buoy, as the preferred long-term solution”.
It added that the partners are working with the Government of Ghana to seek their approval for this option.
“The first phase of this work will involve the installation of a stern anchoring system to replace the three heading control tugs currently in the field. This is anticipated to be completed by the end of 2016 and will require short periods of reduced production.
“Tullow then plans a second phase of work to rotate the FPSO to its optimal spread moor heading in the first half of 2017. The work programme covering these phases, which requires Government approval, is expected to cost $100-150 million gross and it is estimated that the Jubilee FPSO will need to be shut-down for 8-12 weeks during the first half of 2017,” the update added.
Tullow noted that upon completion of the spread mooring work programme in mid-2017, the partners will review opportunities to improve the efficiency of offtake procedures, which may include the use of a larger dynamically-positioned shuttle tanker, and seek to return production to levels seen before the turret issue occurred.
The additional gross operating expenditure of the revised procedures is currently expected to be around $115 million for 2016 and $80 million for 2017.
The oil firm said a deep water offloading buoy is anticipated to be installed in the first half of 2018. “This will remove the need for the dynamically positioned shuttle and storage tankers and the associated operating costs. Market enquiries are currently ongoing to estimate the cost and schedule for the fabrication and installation of this buoy”.
Tullow said it has a comprehensive package of insurances in place. This includes Hull and Machinery insurance, procured on behalf of the Joint Venture, which covers relevant operating and capital costs associated with damage to the FPSO, and Business Interruption insurance for Tullow which covers consequent loss of production and revenue. Claims under both policies have been notified to our insurers.