The Exmouth Sub-basin is characterised by heavy oil, with most discoveries being between 19 and 22 degrees API. Van Gogh and another Apache project, the Pyrenees development, fall into this category.

When it comes online in 2009, Van Gogh is expected to add 20,000 barrels per day to Apache’s net oil output. Apache owns 52.5% of the development and is the operator, while Tokyo-based Inpex owns 47.5%.

Apache signed the contract with a subsidiary of Norwegian company Prosafe for use of the tanker MT Kudam, which will be converted for FPSO service.

The moored FPSO will be linked to two subsea drill centres with 10 production wells, two water injection wells, and one gas injection well.

The MT Kudam will have processing capacity of 63,000bopd and storage capacity of 620,000bbl of oil. The oil will be marketed in Asia.

Apache and Inpex will pay $US40 million plus operating expenses per year for a seven-year term with options to acquire the vessel or to extend the contract by eight years.

Development drilling at Van Gogh is expected to begin by June. Apache’s net share of the drilling and subsea development project will be approximately $US260 million; Inpex will pay about $US235 million.

Drilling is now underway on Apache’s five-well 2007 Exmouth Basin exploration program, according to Apache president and chief executive G Steven Farris.

“Apache has a strong growth profile in Australia, with the Van Gogh and Pyrenees oil developments in the Exmouth Basin, the Reindeer gas discovery and, most recently, the Julimar-1 gas discovery,” Farris said.

The Pyrenees development, operated by BHP Billiton, is expected to receive a formal go-ahead in the near future.

The “Pyrenees Development Area” includes several finds in two adjacent permits with estimated oil reserves totalling more than 120 million barrels.

These finds are located in WA-12-R, where BHPB still operates with 71.43% interest while Apache Energy has 28.57%, and in WA-155-P(1) where BHP operates with 39.99% in partnership with Apache (31.51%) and Japanese major Inpex (28.5%). They include the Pyrenees discovery itself, Ravensworth, Crosby, Stickle, Harrison and Moondyne.

The Pyrenees Development Area is also expected to add 20,000bopd to Apache’s net production during 2009.

The Van Gogh and Pyrenees developments will provide production volumes equivalent to about 15% of Apache’s current net worldwide oil production.