Cairn Energy has conceptual development plans on the drawing board for a leased FPSO (Floating Production, Storage and Offloading) vessel to be sited on its deepwater SNE discovery offshore West Africa’s Senegal, with the operator expected to start sounding out the market for expressions of interest to bid from floater contractors before the end of the year.
It is also expected that its main partner in the discovery, ConocoPhillips, will take over the reins and become operator when the project is defined as commercial and enters the development phase during the course of 2016, it is understood.
Cairn has made two discoveries from its first two deepwater wildcats off Senegal in the Atlantic Margin, the SNE find and nearby FAN, with the former believed to be the frontrunner for a standalone FPSO hub. Although FAN also has the potential for a standalone project, DI hears that Cairn is eyeing the more complicated reservoir as a likely subsea development tied back to the FPSO. SNE sits in 1,100 m (3,609 ft) of water while FAN is in 1,427 m (4,682 ft) of water.
Although it is still relatively early days for SNE, which was only discovered last year (see DI, 24 November 2014, page 4), Cairn is focusing its attention on converting the discovery into a commercial standalone project, and carrying out an evaluation programme aimed at firming up enough discoveries and productivity in the surrounding area to give it the minimum reserves it needs – 200 MMbbl gross.
Cairn said in its latest results presentation that it would also use gas reinjection and/or water flood techniques to enhance oil recovery and hit the required field size. It added that the minimum economic size for any tiebacks within a 25 km radius of SNE would have to be around 75 MMbbl gross reserves. The FAN discovery is approximately 25 km south-east of SNE.
Richard Heaton, Cairn’s exploration director, said in the company results presentation last week: “The concept is pretty standard really for a deepwater discovery, in this part of the world. It’ll be an FPSO hub that’s being considered, it will have integrated gas reinjection, water flood, and it will have the potential of course to add in new discoveries as well. So whilst the standalone economic field side is 200 MMbbl, then the follow-on fields around it potentially can be a good deal smaller.” Cairn wants to confirm the commerciality of the project during the course of 2016.
ConocoPhillips farmed into the three Senegal blocks in 2013 and has so far paid Cairn US $20 million in back costs related to the deal. The permit area featuring the Sangomar Deep, Sangomar Offshore and Rufisque blocks covers 7,490 sq km, with Cairn holding 40%, ConocoPhillips 35%, FAR Petroleum (15%) and the state company Petrosen (10%).
Partner FAR added in a separate presentation earlier this month that both SNE and FAN were potentially of sufficient scale for a standalone development, and that an evaluation programme will be submitted to the Senegalese government by early or mid-May, with appraisal drilling to get underway in the fourth quarter of this year.
Cairn plans to drill three firm wells plus three option wells this year, as well as shooting some 3-D seismic.
According to Heaton, the SNE find is “a well-defined structural trap on very good seismic data. The pressure data that we obtained from and measurements through the reservoir are probably as sharp as any as I’ve ever seen in a discovery well, that’s allowed us to get a very, very good definition on the oil water contact and the gas oil contacts which are fundamental to estimating the size.”
He added the discovery had very good reservoir quality, better than was originally expected, and that “you couldn’t really want for a better discovery well in that respect, it’s very good”.
The SNE discovery well hit an oil-bearing column of 95 m (312 ft) and net oil and gas-bearing reservoirs of 36 m (118 ft), with the oil having an API of 32 degrees. The FAN well hit a hydrocarbon-bearing interval of 500 m (1,640 ft) with a net oil-bearing reservoir of 29 m (95 ft), and oil with a gravity of 28-41 degrees API (see DI, 27 October 2014, page 6).
Chief financial officer James Smith also said, in response to a question from one analyst, that in the current cost environment Cairn believes the breakeven price for the development would be in the $40/bbl range, “…and you can infer from that what you want about development cost assumptions. On the other hand, if the oil price were to fall to $40/bbl and stay there for another few years then the cost environment probably falls and the breakeven falls commensurately”.
In response to another question regarding ConocoPhillips’ current 35% stake in the block and whether Cairn felt the US major would want to operate with a majority equity stake, chief executive Simon Thomson said: “You’d have to ask them. But I think, like us, they are incredibly excited by what they see in front of them.”
Operators around the world announced several huge discoveries with a total combined resource of over 13 trillion cubic feet of natural gas and 1 billion barrels of oil.
India-headquartered Vedanta Ltd. said March 27 that its second exploration well in the Krishna-Godavari Basin’s KG-OSN-2009/3, offshore India, struck oil.
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