However, the company is confident it can bring the field onstream via a one-well development during the fourth quarter of this year.

AED finally took delivery of the semi-submersible rig last week and moved it into exploration mode, spudding Puffin-9 instead of following the original plan of beginning the program with the Puffin-7 development well.

Managing director Ken Tregonning said the program was changed because test equipment needed to evaluate Puffin-7 would not be available until late this month.

But he was quick to say that Puffin-9 was not a stop gap measure. Indeed, it could have an important bearing on the overall field development plan.

“All the previous wells in the greater Puffin area have been drilled on horst features,” Tregonning said.

“Puffin-9 is sited in the downthrown Fairfield (Puffin South) feature, about 2km south of the main Puffin horst that was successfully evaluated by Puffin-2 back in the 1970s. It is the first well to be located in the graben, which some researchers believe may be the key fairway for oil migration through the region.

“The exploration well will drill to a planned total depth of 3100m, passing through all five Mesozoic-age reservoirs (Cretaceous to Triassic) already noted in the Puffin horst blocks.

“One of these reservoirs is a massive sand, up to 50m thick, with excellent permeabilities ranging up to five darcies. Any success could be readily tied into the development plan.”

AED has high hopes for Puffin-9 but realises the complex geology poses a risk. The field’s history bears this out.

Puffin lies in Ashmore Cartier permit AC/P22 within the Vulcan Sub-basin and about 80km south-west of the Jabiru and Challis fields.

Originally located by Arco in 1972, it was the first oil discovery made in the Timor Sea when Puffin-1 penetrated a thin column of oil in a sand of Upper Cretaceous age about 2000m below the seabed.

Arco went on to drill Puffin-2, about 9km from the discovery well, in 1974 and flowed oil from a similar age reservoir at rates up to 4600 barrels per day on test. But a short time later, the company’s Puffin-3 recorded residual oil only and was abandoned as a dry hole.

Puffin-4, drilled in the late 1980s by the Norcen/BHP/Santos consortium, also disappointed with residual oil. In 2000, the Alberta Energy/Norwest Energy/West Oil group moved back to within 1km of the initial discovery and recorded strong initial oil flows with Puffin-5.

But then in 2001, the same group was frustrated to find Puffin-6 resulted in another dry hole.

AED took over as 100% interest holder of the AC/22 permit in February 2005. With the benefit of modern interpretive techniques, the company reprocessed existing 3D seismic and decided to begin development work in the Puffin-5 horst block.

Upon completion of Puffin-9, the ‘Stena Clyde’ rig will be moved straight to the Puffin-7 location, which is up-dip from the successful Puffin-5 appraisal.

“We’ll be targeting what is known as the LK1A reservoir of Upper Cretaceous age, about 2000m below seabed,” Tregonning said.

“Puffin-5 found an oil column 10m thick in this massive sandstone, which flowed oil at very high rates in the initial stages before sand particles inflow clogged the test tools.

“That sand inflow was probably caused by the strong reservoir drive mechanism overcoming the relatively light mud in the hole.

“AED’s plan for Puffin-7 is to drill a 400m horizontal section through the LK1A reservoir so that we mitigate the water coning effect and its potential sand inflow to achieve a uniform oil depletion.

“Although Puffin-5 didn’t give complete test results, we know this particular reservoir has a high productivity index of 100 barrels a day per psi. So we are looking to produce oil from Puffin-7 at around 15,000 barrels a day.”

The schedule calls for drilling, completing and “flow proving” the well during April and May before suspending operations to await the arrival of the floating production, storage and offloading (FPSO) vessel and connecting the production equipment during the fourth quarter.

Meantime, AED will release the rig to other Timor Sea operators but retain an option to get it back on relatively short notice when the company is ready to drill the second development well, according to Tregonning.

“This will give us time to update our maps and geological data in the light of information from both Puffin-9 and Puffin-7,” he said.

“It may be that the results will prompt us to change our program and perhaps defer the Puffin-8 development well (on the Puffin-2 horst block) for a while.

“Success in Puffin-9, for instance, might provide more options to consider.”

Turning to the arrangements for the FPSO vessel, Tregonning says that AED has signed a two-year lease agreement plus four one-year options with a company called Frontline, an associate of shipping company Sea Tankers. Frontline, run by Norwegian shipping magnate John Frederiksen, will own and manage the vessel.

“AED bought a 112,000 dwt tanker called MT Gerrita last year and Frontline has now taken over payment of the vessel from us,” Tregonning said.

“It will be converted into a single-well intake FPSO, possibly in Singapore, and be ready to begin production from Puffin-7 before the end of the year.”

The vessel, to be renamed Front Puffin, has a 730,000 bbl capacity and will be equipped with a quick disconnect turret mooring so it can move off station to avoid cyclonic weather.

It will also be fitted with gas-lift equipment that Tregonning says will not be needed during early production, but is available as a back-up later in the field life.

“Puffin has a remarkably low gas/oil ratio of only 100 cubic feet per barrel,” he said. “We can use what little gas there is to power the FPSO and equipment without the need to flare.”

When the development project moves into Phase 2, the FPSO will be taken off-line and refurbished to handle two or more intake wells. There is also the possibility of using subsea manifolds to cope with a more extensive system.

But first things first.

“For Phase 1 (Puffin-7) production, the vessel will be able to handle a flow of up to 20,000 barrels per day and we will be looking to sell the oil in parcels of 600,000-650,000 barrels, which will be offloaded into shuttle tankers,” Tregonning said.

The markets have yet to be determined. But Puffin’s light (47-48 API degrees), sulphur-free oil can be sold at a premium to the regional Tapis marker crude.

“We will be doing detailed assays on samples from Puffin-7 and making them available to potential customers,” Tregonning said.

“That includes BP’s Kwinana refinery, but really we are open to any markets.”

The proved P90 reserve estimate for the Puffin field is currently close to 18 million bbls. If exploration is successful, the Fairfield (Puffin South) area could add a further 20 million bbls.