Rough weather among the many ordeals for oilfield off New Zealand
INSTALLING a floating production vessel in New Zealand waters to deliver profitable light crude oil has not been all plain sailing for fast-growing Australian petroleum company AWE Ltd. ‘‘ Marketing and planning shipping from a new crude oil project is always a headache,’’ says AWE’s New Zealand development and production manager Ian Palmer, because refiners need to fill their slate two months ahead of delivery, and are understandably nervous about committing to a new field with its inherent risk of start-up problems and crude quality uncertainty.’’
Operator AWE holds a 42.5 per cent stake in the Tui oilfield, 50 km west of the southern tip of the North Island, and in water 125m deep. Other shareholders are Mitsui (35 per cent), New Zealand Oil and Gas (12.5 per cent) and Pan Pacific Petroleum (10 per cent). When fully commissioned, the project will be New Zealand’s largest oil producer.
Tui, which began operation in August four years after oil was discovered, is one of the few developments in New Zealand using a floating production, storage and offloading (FPSO) vessel and the first using sub-sea wellhead technology. Tui is AWE’s first offshore oil project operator.
Technically, the development has been complicated by the oil reservoirs containing large volumes of water which have to be separated from the crude and returned to the sea. The Tui development FPSO vessel Umbra has been designed to handle 120,000 barrels of fluid a day, coping with water levels of up to 118,000 barrels a day.
To add to the stress, weather conditions during the construction phase have been some of the worst seen in 25 years.
AWE, which took over operations in February last year, estimated the cost of bringing Tui to production at $US225 million, but, in line with construction price pressures around the world, this has blown out to $US275 million. It could have been higher, but the joint venturers signed the major construction contracts before costs escalated even higher. Upstream petroleum project development charges are now 50 per cent higher than they were two years ago.
The upside for the joint venture is that the product from Tui — and the adjacent Amour and Pataki fields in the Taranaki Basin linked to the FPSO Umbra — is light sweet crude, which sells at a premium to the international
role as an benchmark West Texas Intermediate oil, and that global prices remain at historically high levels — well above the level assumed when the project was given the go-ahead.
The oil is finding a ready market in refineries in New Zealand, on Australia’s east coast and in Asia.
Despite all the planning and development pressures, AWE succeeded in making Tui’s first oil offload to the shuttle tanker almost exactly on schedule, 19 months from the decision to proceed with the project. It is now producing crude at close to the design rate of 50,000 barrels a day.
‘‘ Achieving this first offtake on schedule so soon after start-up is very encouraging,’’ said Ian Palmer. ‘‘ Now that the refiners can see we are stable producers and we can provide samples for assaying to them, we expect that the job of our marketing agent, Mitsui & Co, will get a little easier.’’
Other divisions of AWE and its partners are focusing on locating further reserves to feed the project. AWE has begun a four-well exploration program, with drilling to continue for most of this year. Two of the wells to be sunk are thought to have potential to each contain more than 100 million barrels of oil.
In production: Tui’s floating processing vessel was a first for New Zealand’s offshore oil industry