Wellington-based New Zealand Oil & Gas and Australian Worldwide Exploration have told the ASX and NZX that FEED work has been approved with the aim of rapidly developing Tui.
The current development timetable means the partners expect to be in a position to make a final investment decision during the third quarter of 2005, with first oil in the last quarter of 2006.
Recently completed pre-FEED studies confirmed the most economically attractive development concept for the Tui area fields would up to five subsea completions tied back to a FPSO. Capital expenditure for the project was still considered to be US$120–150 million, excluding the cost of the FPSO which was likely to be leased.
The fields contained P2 reserves of 20-30 million barrels of recoverable oil, with latest subsurface modelling work indicating long-reach horizontal and-or multi-lateral wells would optimise economic recovery, with initial oil rates in the vicinity of 30 thousand barrels of oil per day.
But the nature of the thin reservoirs would lead to rapid rises in water production and so the facilities would be designed to handle large volumes of water.
The FEED programme was expected to run through from now until August, during which time a field development plan would be finalised and a petroleum mining permit application made. The engineering basis of design would also be finalised allowing a capital expenditure estimate to within 15%, the partners said.
Key areas to be addressed during FEED included: establishing the functional specification for the FPSO so that firm lease quotes can be obtained; optimising the number of development wells, their configurations, and definition of the engineering requirements for drilling; finalising production profiles and reserves; and defining subsea equipment requirements (flowlines, manifolds, umbilicals) sufficient to tender for the detailed engineering design, manufacture and installation of these facilities.
Suitable drilling rigs would also be identified and priced and a commitment might be made given increasingly tight rig availability in Australasia.
Development drilling was scheduled to begin second quarter 2006, together with the possibility of at least one exploration well elsewhere in the permit, but within tie-in distance of Tui.
The PEP 38460 partners have also approved the acquisition of 72 square kilometres of 3D seismic over the northern extent of the Pateke structure, which was expected to be shot in April.
Interests in PEP 38460 are New Zealand Overseas Petroleum Limited (operator) 45%; AWE New Zealand Pty Ltd (“AWE”) 20%; Stewart Petroleum Company Limited (“NZOG”) 12.5%; Mitsui E&P New Zealand Limited (“Mitsui”) 12.5%; and WM Petroleum Limited (“Pan Pacific”) 10%.
