Horizon Oil (HZN) Advises Major Upgrade At Maari Field Underway

abarrelfullabarrelfull wrote on 01 Sep 2013 07:06
Tags: horizon new-zealand omv upstream

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The operator of the Maari oilfield, OMV New Zealand (“OMV”), has today advised that production at the field will be shut until December while a major facility and equipment upgrade is undertaken.

The FPSO Raroa, the floating tanker that processes and stores oil at the field, will be disconnected and towed to a suitable New Zealand port to refurbish and upgrade its process equipment. While off station, a new swivel, which allows the vessel to rotate around its mooring, will be installed. A bearing malfunction in the existing swivel was recently identified, requiring the Maari JV to bring forward plans for replacement of this equipment.

The Raroa is currently being prepared for disconnection from station, including removal of all
remaining crude oil on board. This task is expected to take several weeks.

At the same time, the opportunity will be taken to replace several of the mooring lines at the field. It had been identified that three of the eight lines were slowly wearing out, one of which was recently repaired. A specialised vessel for this task has been contracted and is being mobilised.

Construction activities in preparation for tie-ins of new wells and the upgrade of the wellhead platform are currently being undertaken, further utilising the extended shut-in period.

OMV has advised that while there will be a greater than expected short-term deferral of production from doing all the upgrade work together, the decision makes good sense in the long run.

“A scheduled annual shut down for maintenance and construction work was planned in September, and the wider Maari Growth investment programme had already included the purchase, refurbishment and upgrade of the Raroa. Bringing all the work forward into one package now ensures the field facilities will be fully upgraded prior to the first new wells coming on stream early next year.”

The jack-up rig Ensco 107 is expected to start work at the Maari field in the first quarter of 2014.

The Maari joint venture also has the semi-submersible rig Kan Tan IV on site in a separate program.

The first well, Manaia 2, is expected to be spudded today.

The approach taken by the Maari joint venture in bringing forward a major facility and equipment upgrade in advance of the commencement of the Maari Growth investment program is a strong indication of the longer term view taken in respect of the Maari/Manaia asset, particularly in the light of the very positive outlook for remaining reserves and prospective resources to be addressed by that program. The assumption of ownership of the Raroa by the Maari joint venture earlier this year has provided both flexibility and control, which are particularly important in terms of upgrades and refurbishment required to meet anticipated field life and production and to ensure integrity of the asset for purposes of safety and longer term operating efficiency.

The estimated costs of the remedial works to the mooring system and the swivel assembly replacement are approximately US$70 million (Horizon Oil share US$7 million), a proportion of which should be recovered through insurance. Taking into account the previously budgeted production rates, scheduled maintenance and timing of crude oil liftings, Horizon Oil’s share of deferred cashflow during the period in which the upgrade activities are undertaken is estimated to be approximately US$5 million.

Neither the resultant net cost of the refurbishment program nor the deferral of cashflow during the program will affect the funding of Horizon Oil's 2013/14 capital expenditure program.

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