Operator BHP Petroleum Pty. Ltd. and partner Canadian Occidental Petroleum Ltd. have flashed a green light for development of Buffalo oil field in the Timor Sea off Australia.
The field, on permit WA-260-P about 560 km northwest of Darwin, will be developed with an unmanned fixed steel wellhead platform linked to a floating production, storage, and offloading vessel (FPSO).
Proven and probable reserves are estimated at 22 million bbl, and production is expected to begin late in 1999. Peak production will be about 40,000 b/d, and the field life is pegged at 3 years.
Development costs are put at $88 million. Canadian Petroleum, a subsidary of CanOxy will contribute most of this sum in accordance with a 1997 farmout agreement in which it acquired its 50% interest in the permit (excluding Laminaria East field).
Buffalo was discovered 7 km south east of Laminaria East in October 1996 just outside and to the west of the Timor Gap Zone of Cooperation between Australia and Indonesia. Buffalo 2 confirmed the discovery in May 1997.
In other development news off Western Australia, Cultus Petroleum NL is negotiating to replace Shell Australia as operator of the disappointing Cornea oil project.
Development details
The Buffalo development will consist of three wells connected to a five- slot, unmanned wellhead platform in a shallow bank area in 30 m of water. The platform will be remotely controlled from the FPSO, about 2 km away in 250 m of water.The oil, at 53.3° gravity with a very low gas:oil ratio of 120 cu ft:1 bbl, will be stabilized in the 850,000-bbl capacity FPSO, which is designed to separate oil, gas, and water. Gas lift will be provided to the production system.
The wellhead platform fabrication contract has been let to ASCE of Adelaide, and the wells will be drilled using the Reading & Bates Ron Tappmeyer jack up. Contracts for the flowlines and offshore installation have yet to be finalized. The FPSO will be leased but operated by BHP. The contract for this vessel remains to be finalized.
Cornea
The Cornea discovery was originally expected to contain up to 1 billion bbl of oil but is now struggling to pass the economic threshold for development. Cultus believes it is a much lower-cost operator than Shell and hence more suited to the changed economics of the project.The company says that further appraisal drilling has to be commercially based. Appraisal drilling of 10 wells has revealed the structure to be highly fractured and geologically far more complex than first thought.
Cultus has written off $37.5 million (Australian) from the value of its Cornea interests to cover exploration capital already spent as well as likely future exploration write-offs.
Cultus announced an overall $32.5 million loss for the fiscal year ended June 30. Nevertheless, the company counts 1997-98 as a successful year with the discovery of Tenacious oil field in the Timor Sea. This is likely to be rapidly developed and tied into the Jabiru field FPSO BHP recently sold to Gulf Australia Resources Pty. Ltd. Tenacious could be on stream within 18 months.
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