UK oil and gas company EnQuest has downgraded its full year oil production forecast amid topside commissioning delays with the Armada Kraken FPSO in the Kraken field, offshore the UK.
The Kraken is a large heavy oil accumulation in the UK North Sea, located in the East Shetland basin, to the west of the North Viking Graben, approximately 125 km east of the Shetland Islands.
The company brought the Kraken field onstream on June 23, 2017, however, in an update on Wednesday, Enquest said the field had been producing below the expected levels due to technical issues with the FPSO topsides commissioning.
Commissioning of the FPSO vessel topsides equipment continues and, despite good well deliverability, has been constraining production so far, EnQuest said.
Whilst in Q3 2017, volumes are behind forecast as equipment is commissioned, we expect operational uptime to improve accordingly and to deliver plateau production of approximately 50,000 Bopd gross in H1 2018, the company added.
EnQuest CEO, Amjad Bseisu said: “EnQuest was pleased to bring the Kraken field onstream in Q2 2017 at a substantially reduced capex spend, having delivered excellent drilling and subsea programmes. The FPSO however is a complex vessel, designed and built to manage the heavy oil from the Kraken development, and it is taking longer than expected to commission during this initial period.
“Nonetheless, we have been very pleased with reservoir performance and the flow rates achieved on individual wells and, we expect the field to increase production in Q4 and to achieve plateau production of approximately 50,000 Bopd gross in H1 2018.
“While we have seen natural declines in EnQuest’s existing production base in H1 2017, Kraken is on course to drive a material increase in EnQuest’s production in 2018 and beyond.”
As for the production wells at the fields, Enquest said that to date, the four wells from drill centre 1 (‘DC1’) and two wells out of the three wells from drill centre two (‘DC2’), have produced at initial gross rates above expectations and with stabilised flow rates which confirm the Field Development Plan.
DC1 maximum individually tested well rates have been approximately 24,000 Bopd, with stabilised combined well rates at approximately 15,000 Bopd. One DC2 well has been tested at a rate above 10,000 Bopd, demonstrating excellent reservoir properties and completion efficiency. Injection wells have also surpassed expectations. The hydraulic submersible pumps, subsea production system and turret have all performed as expected. DC3 wells are now due to complete in Q4 2017, ahead of schedule, further facilitating the achievement of plateau performance in H1 2018, the company said.
“We expect to achieve a further c.$100 million of capex savings on the project as a result of the drilling of DC3 being completed 3 to 4 months earlier than planned and lower market rates for the subsea costs of DC4. Full cycle gross project capex is now estimated to be c.$2.4 billion, 25% down on the original sanctioned cost of $3.2 billion,” EnQuest said.
Production for the first half of 2017 was 37,015 Boepd. With prolonged commissioning leading to lower than expected operational efficiency from the Kraken FPSO vessel to date, production volumes have been lower than forecast and EnQuest’s overall average daily production for the full year 2017 is now anticipated to be as per the first half 2017 production rate, plus or minus 10%.
“This reduction in EnQuest’s short term 2017 production guidance, is consistent with EnQuest’s objective of bringing Kraken onstream in a phased manner in line with good reservoir management practices aimed at maximising long term productivity and value. We do not expect the current operational issues in the Kraken ramp-up to continue beyond 2017,” the company said.