Petroleum Africa
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Tuesday, November 8, 2016
According to the latest quarterly report from Kosmos Energy and partners on the Jubilee field offshore Ghana, they saw gross sales volumes average approximately 91,000 bpd. Production during Q3 was impacted by downtime associated with the turret bearing issue identified on the Jubilee FPSO in February 2016.
This issue required the implementation of new operating procedures, including the use of tug boats for heading control and a dynamically positioned (DP) shuttle tanker and a storage vessel for offloading. Kosmos said the new operating procedures are working effectively, underpinning Tullow Oil’s guidance for gross sales volumes from the Jubilee field of 85,000 bpd H2 2016.
Kosmos and its partners have made good progress towards converting the Jubilee FPSO to a permanently spread moored facility. The first phase of this work involves the interim spread mooring of the FPSO, and includes locking the turret and the installation of a stern anchoring system. In early September locking of the turret was completed, and the remaining interim spread moor work commenced in early October. The first phase of work is on schedule and is expected to be complete by year-end 2016, eliminating the need for tug boats currently being used for heading control.
The partners then plan a second phase of work to permanently spread moor the FPSO at its optimal heading, subject to government review. This phase of work is expected to be completed in H1 2017 and would require an 8-12 week shutdown. Upon completion of the second phase, production is expected to return to the levels achieved before the turret bearing issue occurred. These two phases of work are expected to cost up to $150 million gross which will be accounted for as facilities insurance modifications expense. A deepwater offloading buoy, anticipated to be installed in H1 2018, is intended to restore full offloading functionality and remove the need for the DP shuttle and storage tankers and associated operating costs.
Kosmos anticipates that the financial impact of lower Jubilee production as well as the additional expenditures associated with the repair to the FPSO and the additional costs of the interim operating procedures will be mitigated through a combination of the Hull and Machinery (H&M) insurance, procured on behalf of the partnership, and the Loss of Production Income (LOPI) insurance procured by Kosmos. During Q3, Kosmos made good progress on advancing the insurance recovery process, and coverage under both policies has now been confirmed by the insurers. Over $40 million in claims was accepted as of October 31, 2016. Currently, the partnership is working on a similar agreement for claims and reimbursements under the H&M policy.
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