UK oil company Premier Oil is planning to sanction its operated Sea Lion development, offshore the Falkland Islands, next year, while partners are working on securing the funding for the project.
Premier Oil is the operator of the North Falkland Basin license containing the Sea Lion discovery with 60% interest, while its partner Rockhopper Exploration has 40% interest.
Rockhopper said on Wednesday that the Front End Engineering and Design (FEED) process has substantially progressed and de-risked the Sea Lion development with focus in 2017 continuing on the commercial, fiscal and financing elements of the project.
To remind, FEED on Sea Lion phase 1 was completed during 2016. As part of this, Premier worked with its four main contractors – SBM Offshore for the FPSO, Subsea 7 for the subsea installation, NOV for the flexible flowlines and One Subsea for the subsea production system – and optimized the facilities design and installation methodology of the development.
As a result, Premier reduced its estimate for gross capex to first oil from $1.8bn to $1.5bn. The company saw the breakeven cost of the project lowered from $55/bbl to less than $45/bbl. The final investment decision (FID) was previously planned for mid-2017.
Back to the current status update, Rockhopper said that a number of contractors have now expressed interest in potentially providing funding for the project and the company is hopeful of reaching agreement in principle on key terms over the coming months with a view to being in a position to sanction the project during 2018.
Rockhopper added that discussions are also progressing with potential providers of export credit finance to the project.
Sam Moody, Rockhopper CEO, commented: “In the Falklands we are extremely encouraged by the progress made in securing the funding for Sea Lion where we continue to work very closely with Premier to progress the project to sanction in 2018.”
Offshore Energy Today Staff