UK oil firm Alpha Petroleum has entered into a Front-End-Engineering and Design (FEED) study agreement with Teekay, over a potential FPSO charter deal.
The company plans to use Teekay’s Varg FPSO to develop the Cheviot oil field in the UK. The plan is to use the FPSO for the entire expected life on the field.
The expected sanction of the development is the third quarter of 2017. First oil is expected in 2018, with an expected rate of at least 30,000 barrels per day.
Alpha Petroleum, established back in 2000, and backed by Investment firm Petroleum Equity, said the Cheviot development program will consist of a minimum of 18 wells: 13 production
wells, two water injection wells and two gas injection wells.
It also includes one production well established in the satellite Peel oil reservoir. Options exist to use additional processing capacity on the Varg FPSO, which will be considered during the FEED process, the company said.
“This would allow for infill wells to increase ultimate recovery. Development of the Cheviot field is predicated upon rigorous evaluation of historical production data and new 3D seismic
surveys. Alpha Petroleum has concluded that maximum recovery would be achieved via re
injection of produced gas and water and use of horizontal wells to minimise drawdown,” Alpha Petroleum said in a statement on Friday.
As for the FPSO, the Teekay Petrojarl Varg has been laid up since Repsol decided to stop production at the Varg field last year.
Repsol decided to shut down the Varg field as it was no longer considered profitable. Repsol had taken over the operatorship of the Varg field following its 2015 buy-out of Talisman, which had been the operator since 2005.
The field was developed using the Varg A wellhead facility, subsea structures and the Petrojarl Varg FPSO. Production from the field began in 1998.
Petrojarl Varg is a ship-shaped, turret moored, FPSO delivered in 1998. The FPSO has a storage capacity of 470,000 bbls and accommodation for 77 persons.
To remind, the Cheviot field, in the UK North Sea, was owned by ATP Oil & Gas. It was to be developed via an unconventional Octabuoy offshore production platform built by Cosco in China.
In 2008, Cosco secured a contract to build the platform’s hull and the topside for ATP Oil & Gas’ UK subsidiary. The U.S.-based ATP Oil & Gas in 2012 filed for bankruptcy.
Petroleum Equity, a private equity firm focused on the upstream oil and gas market, then bought ATP UK from its US parent company ATP Oil & Gas Corporation for $133 million.
On that occasion, Bernhard Schmidt, a Founding Partner at Petroleum Equity and former Head of E&P at Wintershall, said: “As part of the restructuring, the expensive and overdue Octabuoy development concept for the Cheviot field has been shelved.”
He then said added that the most likely development solution for Cheviot would be a conventional FPSO.