BW Offshore is on the hunt for a new home for its innovative Floating Drilling, Production, Storage and Offloading vessel FDPSO Azurite after Murphy Oil formally decided to call time on the disappointing Azurite development offshore West Africa.

Complex reservoir production issues have made the field one of the most problematic in the region since it came onstream amid a rousing fanfare in August 2009, with a planned field life of up to 15 years. However the development has failed to get anywhere close to the FDPSO’s designed production capacity of up to 40,000 b/d.

Norway’s BW confirmed it had received, as expected, notice of early termination of the contract with Murphy West Africa Ltd. for the unit offshore Congo-Brazzaville. The termination is to be effective from 1 May 2014, although the fixed term of the contract runs until 2016.

The prospects for BW’s pioneering floater – which after all was the world’s first FDPSO vessel – are however already looking good, according to the company’s CEO, Carl Arnet. Speaking during the company’s latest results presentation Arnet said: “We are looking at several opportunities for Azurite. We have so far identified four prospects that we are pursuing for redeployment of her.”

He added: “On Azurite the fixed contract is until 2016. So this [the cancellation] will have no immediate effect on BW Offshore. We expect to have the unit released in May next year. We are looking at opportunities but its early days to talk about what kind of dayrates to expect.

“But we are very pleased to have so quickly identified four very tangible prospects for the unit. So we are very optimistic about our chances to get a very timely redeployment.”

That redeployment could well see the unit stay offshore West Africa, DI hears, although it is also understood to be under consideration for opportunities in SE Asia.

The FDPSO has a storage capacity of 1.3 MMbbl of oil and can process 40,000 b/d of oil, inject up to 60,000 b/d of water, and of course has the rig dayrate-saving ability to drill and complete exploration, production and injection wells.
Arnet added that the company was not at liberty to discuss the details of the termination agreement with Murphy, related to any compensation or dayrates on the remainder of the fixed contract.

The Azurite field sits in 1,372 m (4,500 ft) of water in the Mer Profonde Sud (MPS) block. The FDPSO was originally contracted until 2016, with options to extend until 2024. However the field’s disastrous reservoir productivity has been known about for some time, with the accumulation much more complex than first believed.

The writing was on the wall as far back as early last year when Murphy West Africa, Ltd. took a non-cash charge to earnings of approximately US $370MM in its Q4 2011 results related to the field as the result of an asset impairment “due to lower than expected production rates and ultimate oil recovery from the field”.

Earlier this year Murphy was still taking a loss on its offshore Congo operations, and had only being selling around one oil cargo per year, compared to earlier periods where it was at least once a quarter.

Partner PA Resources stated separately earlier this month that “production from the Azurite field has ceased as planned, and field abandonment has commenced. The final lifting for the joint venture took place on 1 November”.

Offshore