Rockhopper, an independent oil and gas company working in partnership with Premier Oil to bring online the Sea Lion field, located offshore the Falkland Islands, has said the costs have been cut down significantly at the project.
As the partners are working through the front end engineering design (FEED), they have managed to reduce the estimated cash needed to reach first oil to $1.5 billion gross, down from $1.8 billion. This reduces the project’s break-even price to $45 per barrel.
Further cost reductions are being targeted as the FEED progresses, Rockhopper said.
To remind, the company in January announced that FEED work had started on the Sea Lion Phase 1 development. FEED contracts were awarded to an aligned partnership of SBM Offshore for the FPSO, Subsea 7 for the subsea installation, National Oilwell Varco for the flexible flowlines and One Subsea for the subsea production system
While Rockhopper shared the project-positive news, it couldn’t give the date for the final investment decision for the Sea Lion project, as this depends on Premier Oil as the operator.
“Whilst the spot price for Brent crude is around $50 per barrel today, Premier has confirmed that, given their financing position, any final investment decision on Sea Lion will be subject to the successful conclusion of a farm-down process. Rockhopper is actively assisting Premier in this initiative,” the company said.
David McManus, Chairman of Rockhopper, said: “We continue to make very good progress in advancing the Sea Lion development, taking advantage of the current industry backdrop to reduce costs and the break-even oil price required to sanction.
“The results of the highly successful exploration campaign and the subsequent independent resource audit further supports Rockhopper’s view that the North Falkland Basin has the potential to deliver multiple future phases of development and, ultimately, a billion barrels of recoverable oil.”
Also, Rockhopper on Thursday noted the joint statement issued by Argentina and the UK on areas of mutual cooperation including the oil and gas industry between the British Government and the Government of Argentina.
Both countries agreed the first positive statement on South Atlantic issues since 1999, which set out a commitment to work together on issues affecting the South Atlantic and the Falkland Islands. They agreed to work toward removing restrictive measures around the oil and gas industry, shipping and fishing affecting the Falkland Islands “in the coming months.”
This can be seen as a kind of a reassurance to the oil companies doing business in the Falkland Islands.
To remind, an Argentine judge in October last year ordered the seizure of assets of oil companies operating in the Falklands Islands including Premier Oil Plc, Falkland Oil and Gas Ltd, Rockhopper Exploration, Noble Energy Inc and Edison International Spa.
UK then deemed the move an unlawful assertion of jurisdiction over the Falklands Islands’ continental shelf. The tensions, however, eased soon after the elections in Argentina, when the opposition candidate Mauricio Macri took office in December 2015.
Britain and Argentina fought a brief war in 1982, after the Argentine military dictatorship at the time briefly took over the islands, and tensions have escalated again in recent years with the discovery of oil.
Offshore Energy Today Staff