UK-based oil company EnQuest has further reduced capital expenditure for its Kraken project in the North Sea and is now expected to be more than 25% lower than originally sanctioned cost of $3.2 billion.
The EnQuest-operated 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.
EnQuest said in an operational update on Monday that, following first oil from Kraken on June 23, 2017, production increased throughout the second half of the year as both production and injection wells performed in line with expectations. The second processing train, which was brought online during November, resulted in gross production rates of over 40,000 Bopd being achieved.
Since late December, all DC3 wells have been brought online and operational efficiency has significantly improved, the company said.
Average gross production in January was over 35,000 Bopd, and has reached 50,000 Bopd with improving operational efficiency as the company continues to optimize performance.
Following the excellent delivery of the DC3 drilling program and lower market rates for the remaining subsea campaign, full cycle gross Kraken project capital expenditure was further reduced during 2017.
In early 2018, EnQuest agreed renegotiated terms for the drilling rig, reducing both the contract duration and day rates, saving c.$60 million of net cash payments for capital expenditure in 2019.
According to the company, full cycle gross project capital expenditure has been reduced by approximately $100 million and is now expected to be c.$2.3 billion, more than 25% lower than originally sanctioned. The DC4 well campaign, which was not anticipated to impact 2018 production, is expected to start in the second half of 2018, with first production in 2019.
A scheduled shutdown of approximately two weeks is planned for April, primarily to undertake performance improving work scopes and minor commissioning activities. A further maintenance shutdown of approximately one week is currently planned for September.
EnQuest CEO, Amjad Bseisu, said: “Performance at Kraken continues to improve, and along with the full year impact of Magnus underpins our expectations for material production growth in 2018. The resulting increase in operating cash flow combined with lower capital expenditure will enable us to begin reducing our debt.”
Offshore Energy Today Staff