In January 2016, Rockhopper were delighted to announce that the Sea Lion Phase 1 development project had entered the Front End Engineering and Design (“FEED”) stage with a set of world-class contractors.
The Sea Lion Phase 1 development definition phase was completed in late 2015 and significant improvements have been identified to enhance overall project economics in response to the lower oil price environment.
Highlights of the Phase 1 development
- Recoverable resources to be commercialised increased from 160 mmbbls to approximately 220 mmbbls (operator’s estimate).
- Field peak production of approximately 75,000 bbls per day.
- Field life increased from 15 to 20 years.
- Despite the increase in scope, the estimate of pre-first oil capex requirement is now US$1.5 billion (August 2016), equivalent to approximately US$7 per barrel. Further cost reductions are expected given the current market environment.
- Significant improvement in project economics for both partners resulting in a materially lower break-even oil price for the project which is now estimated at US$45 per bbl.
On the basis of the improved project, a Floating Production Storage and Offloading (“FPSO”) FEED contract was entered into with SBM Offshore, with work anticipated to take between 15 and 18 months to complete. Subsequently, the FEED contract for SURF Transport and Installation was entered into with Subsea7, for Flexibles with National Oilwell Varco and for the Subsea Production System with One Subsea.
The Falkland Islands Government (“FIG”) has agreed to extend the licence for the Sea Lion Discovery Area in PL032 to 2020.
A draft Field Development Plan (“FDP”) has been prepared and submitted to FIG.
A project sanction decision point is now targeted for mid-2018, which if achieved would result in a target first oil date during 2021. The extensive pre-FEED project optimisation has enabled the FEED contracts to be fully matured with a significant impact on future costs.