Offshore staff
GODALMING, UK – Hurricane Energy has issued an update on its joint E&P program with Spirit Energy in the basement Greater Warwick Area (GWA) west of Shetland.
Under Spirit’s original farm-in arrangement in September 2018, the companies approved a phased work program that included a tieback of a GWA well to the FPSO Aoka Mizu (currently performing an extended production test on the Lancaster oilfield); modifications to the vessel; and a gas export tie-in to the West of Shetland Pipeline System (WOSPS).
This work was to be split across Phase 1, with Phase 2 dependent on a final investment decision on a GWA tieback to the Aoka Mizu. But so far this phase has not been sanctioned.
The partners have now agreed on a new cost allocation agreement, under which they will build-out the equipment and materials required for the single-well tieback on a 50:50 basis, with an additional net cost to Hurricane of $20.5 million.
On completion, these items will be held in storage until the partners approve the tieback and secure associated regulatory consents.
Hurricane can also opt to continue commissioning long-lead for the tie-in of the Aoka Mizu to WOSPS on a sole basis, at a cost of around $28 million.
If a decision is taken to proceed with the WOSPS installation, Hurricane would take on 100% of the associated costs, currently estimated at around $62 million, and would also reimburse Spirit for related gas export past costs up to Jan. 31, 2020 if the installation occurs prior to approval of Phase 2.
In the event of approval for Phase 2 and a GWA tieback to the FPSO, Hurricane would benefit from the original terms of the 2018 farm-in through retrospective application of the carry arrangement.
03/06/2020
