BP signs up for all crude oil from Cliff Head field
Oil major BP has entered into an agreement to buy all the crude oil produced from the Cliff Head field, located offshore Australia, from the Cliff Head Joint Venture (CHJV).
The Cliff Head Joint Venture is composed of Triangle Energy with 78.75 per cent and Pilot Energy with a 21.25 per cent interest. The two companies said on Thursday that they had entered into a binding offtake agreement with BP Singapore for the sale and purchase of its crude oil produced at the Cliff Head oil field.
Under the terms of the offtake agreement, BP Singapore will buy 100 per cent of the crude produced from the Cliff Head oil field, commingled with crude and condensate of other producers on FOB Kwinana terms. Triangle Energy will act as the operating agent on behalf of all of the designated seller groups in relation to each of their offtake agreements and has entered into an agreement with each of the designated seller groups to govern the provision of these services.
This offtake agreement will operate in tandem with the already executed product storage and services agreement with BP Kwinana and is based on the terms of the non-binding offtake term sheet.
The designated seller groups have each entered into a storage agreement with BP Kwinana, operating together, under which the designated seller groups have leased tanks at Kwinana, Perth, Western Australia for storing the groups’ crude oil and condensate on a commingled basis.
The initial term of the offtake agreement is aligned with the term of the storage agreement. The offtake is for the entire production quantity from the Cliff Head oil field, and pricing is at a fixed discount to Brent. BP Singapore has been granted a right to match any offers for the sale of Cliff Head product sold on a standalone basis for a period of three years following the delivery period. The producers may be subject to penalties and liabilities if they, or another designated seller group member, delivers the off-specification product.
Based on current storage levels, the CHJV expects that the first lifting will take place in October 2021.
TEG Managing Director, Robert Towner, said, “This provides certainty to the CHJV regarding upcoming oil production and continues the significant contribution to the West Australian community. The Cliff Head oil field, together with its significant infrastructure, is now capable of continuing to take oil to the market, as well as providing the base upon which further exploration and development success in the permit areas may be exploited.”
The Cliff Head oil field is located in the Perth Basin about 270 kilometres north of Perth and 12 kilometres off the coast of Dongara in Western Australia. The field resides in the Production License WA-31-L which covers 72km², and the oil field covers 6km² in the Commonwealth Exploration Permit WA-286-P. It is located at a water depth of 15-20 metres.
Oil is produced via five electrical submersible pump production wells, with produced water reinjected into three injection wells at the offshore platform. The platform is connected to the onshore Arrowsmith Stabilisation Plant by twin 14km production and injection pipelines. The crude oil is then trucked to BP at its Kwinana refinery south of Perth.