Karoon Gas Australia has approved the development concept for the Echidna prospect offshore Brazil following a year and a half of work on subsurface evaluation.
The project, planned to be developed using an FPSO unit, and located in the Santos Basin, will progress to the next phase of the development, Front-End Engineering and Design (‘FEED’).
According to Karoon, the concept selection milestone is a result of 18 months of subsurface evaluation including reservoir modelling, production scenario analysis, well construction feasibility studies and development optimisation.
“The optimisation work has been focused on delivering a capital efficient, risk-weighted development concept for the Echidna oil discovery that is economically robust in the current oil price environment,” the company said.
The Echidna development concept consists of a leased floating production, storage, and offloading facility and two extended horizontal production wells, and one gas injection well. The expected peak production is approximately 28,000 bbl/day (14,000 bbl/day per well)
FID in 2018
FEED is expected to take approximately 9 months and cost less than A$10 million, with completion planned during the March quarter 2018. A final investment decision (‘FID’) is targeted for the June quarter 2018.
During the FEED process Karoon will issue a Request for Tenders to select suppliers with the intention of contracting an Engineering Procurement Construction and Installation (‘EPCI’) work package for the Echidna development.
“The dramatic oil industry pull back over the past 3 years has led to lower vessel utilisation rates and higher equipment inventory levels, globally and in Brazil. This cyclical downturn has presented a window of opportunity in which Karoon expects to receive tenders that provide significant funding flexibility,” Karoon said.
Karoon said that, based on recent supplier discussions, it expects to receive tenders that substantially reduce upfront capital commitments including deferred payment structures, equipment financing solutions, subsurface risk / reward sharing and equity ownership.
Also, the company said it remained committed to farming down equity in the 100% owned Santos Basin blocks prior to FID.