BW Energy secures ‘near-perfect fit’ FPSO to unlock oil from Brazilian field

E&P company BW Energy has decided to proceed with the Maromba development project, located offshore Brazil, and signed an agreement to buy the laid-up FPSO Polvo from BW Offshore for a price tag of $50 million with a plan to upgrade and redeploy it on the field.

BW Energy revealed on Friday that the development plan for the field is based on an initial drilling campaign of three wells with planned first oil in 2025 and a second campaign with a further three wells in 2027.

Furthermore, the investment decision for the Maromba project is subject to certain conditions precedent, including completion of the project financing.

As a reminder, BW entered the Maromba project in 2019 following the acquisition of interest from Petrobras and Chevron for a total of $115 million, of which $85 million remains to be paid to the sellers at predefined milestones.

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Carl K. Arnet, the CEO of BW Energy, said: “We have worked to optimise the Maromba development plan since the acquisition in 2019 and during the Covid-19 pandemic. This includes technical evaluations, full-spectrum analysis of geological, seismic and well data, as well as extensive reservoir modelling and simulations.

“Based on our findings, we have decided to proceed with development with six horizontal production wells connected to an FPSO to unlock significant oil production and long-term value generation for our stakeholders.”

According to BW, development in stages enables improved reservoir monitoring and optimisation of the second drilling campaign. Total oil production at peak is expected between 30-40,000 barrels per day. The technical evaluation revealed that water injection is not required for the first three wells and is a contingency for the second drilling campaign.

Extensive work has also confirmed that Dual Electric Submersible Pumps offer the best artificial lift solution with extended life and reduced workover frequency. The subsea layout has also been enhanced to reduce costs and facilitate future expansions.

BW Offshore’s Polvo FPSO

FPSO Polvo - BW Offshore
FPSO Polvo; Source: BW Offshore

BW has planned from the beginning to use one of its existing FPSOs for the Maromba development. While the FPSO Berge Helene had previously been identified as suitable for the Maromba project, the FPSO was sold for demolition and recycling in 2021.

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On the other hand, the FPSO Polvo has recently ended its charter with PetroRio on the Polvo field in Brazil and is currently in lay-up in Dubai. The final, one-year extension for the FPSO was agreed upon in January 2020, extending the charter from 3Q 2020 to 3Q 2021, with options until 3Q 2022.

The Polvo field is located close to the Maromba field and has similar oil and reservoir characteristics. An assessment of refurbishment costs has been completed and discussions with relevant shipyards are well underway.

BW Energy has signed an agreement to purchase the FPSO from BW Offshore effective no later than 24 July 2023, for a total consideration of $50 million. The valuation of the FPSO has been confirmed by an independent third party. The agreement to purchase the FPSO, instead of entering a traditional lease and operate contract, is a consequence of related- and associated-party tax legislation in Brazil.

BW Offshore also confirmed that the decision to divest the FPSO is due to regulatory challenges under Brazilian legislation.

As detailed by BW Energy, the FPSO will be designed for up to 10 production wells with 1.2 million barrels of storage capacity. The total liquid capacity will be 85,000 barrels per day with an oil production capacity of 65,000 barrels per day and a water treatment capacity of 75,000 barrels per day.

Financing Maromba

The final investment decision (FID) is subject to the completion of the financing for the project. Previously, the FID was planned for the first quarter of 2022. The Brazilian regulator, ANP, has approved the development plan and the company expects to receive full IBAMA environmental approval in due course.

“The FPSO Polvo is a near-perfect fit for Maromba. We know the vessel well and have extensive in-house competencies and capabilities in planning and executing such a repair and life extension project. Re-using existing energy infrastructure enables reduced investments, shorter time to first oil and significantly reduced CO2 emissions in the development phase as compared to installing new production assets,” said Carl K. Arnet.

“We are also mindful of the inflationary pressures affecting our industry as we progress contract discussions with the shipyards and for other long-lead items. We are also evaluating financing alternatives for the field development plan and see strong interest from various sources,” Arnet added.

Maromba is located off the Brazilian coast in the Campos Basin in approximately 160 metres of water depth. Nine wells were drilled in the license between 1980 and 2006, and oil was found in eight of these across various reservoirs. Gross 2C reserves in place are estimated at 467 million barrels with approximately 100 million barrels estimated as recoverable volumes.