Drilling of fourth well off Gabon in full swing
Houston-based Vaalco Energy has started drilling the fourth development well in its 2021/2022 programme offshore Gabon while the replacement of the existing floating production, storage and offloading (FPSO) unit with a floating storage and offloading (FSO) vessel proceeds on schedule with the FSO slated to arrive this week.
Back in June 2021, Vaalco hired a jack-up rig provided by Borr Drilling for its 2021/2022 drilling campaign focused on the Etame field. As a result, the Norve rig was expected to spud two development wells and two appraisal wellbores, however, the deal also left room for the drilling of additional wells.
Vaalco started its 2021/2022 drilling campaign in December 2021 with the drilling of the Etame 8H-ST development well, which came online in February 2022 with an initial production (IP) rate of approximately 5,000 gross BOPD. Afterwards, the rig moved to the Avouma platform to drill the Avouma 3H-ST development well. The well was completed and brought online in April 2022 with an IP rate of approximately 3,100 gross BOPD.
According to Vaalco, the third well was the South Tchibala 1HB-ST, which discovered two potential Dentale producing zones, the Dentale D1 sand and the Dentale D9. Furthermore, the U.S. firm exercised its options to extend the contract for the Norve rig and plans to add two additional wells to the program – the Ebouri 4H development well targeting the Gamba formation and a Northeast Avouma well that is a near-field exploration well also targeting the Gamba formation. If the drilling uncovers more hydrocarbons, these wells are expected to be tied into the Avouma platform at a later date.
In an update on its progress within its results for the second quarter of 2022, Vaalco informed that the Norve rig mobilised to the Southeast Etame North Tchibala (SEENT) platform to drill the ETBSM 2H-ST well, following the completion of the South Tchibala 1HB-ST well. This fourth well in the firm’s 2021/2022 drilling campaign is targeting the Dentale formation, which is “productive in other areas in the Etame license.”
Based on the company’s statement, the mobilisation of the rig was delayed by two weeks due to weather, thus, the rig started operations on the well in late July. Once the equipment was set up and operations to re-enter the well were completed, Vaalco began drilling the ETBSM 2H-ST well on 8 August.
Currently, the Houston-based player estimates the total cost of its 2021/2022 drilling campaign at the Etame field to be between $174.0 million and $213.0 million gross, or between $111.0 million and $135.0 million net to the firm’s 63.6 per cent participating interest.
As the operator of the Etame Marin field offshore Gabon, Vaalco holds 58.8 per cent working interest and 63.6 per cent participating interest. The company’s partners in the development of this field, which has produced over 126 million barrels of crude oil so far, are Addax Petroleum and PetroEnergy.
FSO vessel set to arrive in Gabon this week
Meanwhile, as part of the Etame Marin field reconfiguration, Vaalco is working on replacing the existing FPSO with an FSO unit. To this end, Vaalco signed a binding letter of intent (LOI) in August 2021 with World Carrier Offshore Services to provide and operate an FSO unit to replace the existing BW Offshore-owned FPSO Petroleo Nautipa, which has been operating on the Etame Marin field for Vaalco since 2002. The terms of the agreement, approved by the Etame joint owners, stipulated that World Carrier would provide and operate the 2001-built Cap Diamant double-hull crude tanker, as an FSO renamed as the Teli.
As the current FPSO contract expires in September 2022, Vaalco is currently working with the FPSO charterer regarding the timing for initiating the shutdown of production as well as the schedule for decommissioning and associated costs to ensure a smooth transition to the FSO. The company believes that all of the associated engineering, long-lead equipment and relevant contracts are proceeding in line with the anticipated timelines and expected delivery schedules for the deployment of the FSO in the third quarter of 2022.
Moreover, the Teli vessel left the shipyard in early July 2022 following the completion of sea trials and is due to arrive in Gabon this week. Vaalco underlined that modifications to the Etame platform to support the full field reconfiguration are also on schedule and the first of several short facility outages was completed recently to allow for flare system upgrades and the installation of tie-in points for the process equipment.
The U.S. company highlighted that all major deck components arrived in Gabon and additional major components are in transit while the installation of all equipment began in July and will continue through August, with final hookup and commissioning expected to occur in the third quarter, once the Teli is moored on location.
Vaalco confirmed that the preparation for the subsea reconfiguration is also underway with the first portion of the Bourbon/RANA dive programme which started in mid-July. To this end, the DOF Skandi Constructor vessel – which was hired in March 2022 – arrived in Gabon and will begin reconfiguration of the existing lines and installation of the new lines.
Furthermore, Vaalco pointed out that the new FSO is expected to significantly reduce storage and offloading costs by almost 50 per cent compared to the current FPSO agreement. In addition, the FSO will increase effective capacity for storage by over 50 per cent, and lead to an extension of the economic field life, resulting in a corresponding increase in recovery and reserves at Etame.
As the energy industry is experiencing inflationary pressures related to goods and services, these factors coupled with additional engineering requirements for the FSO conversion and field reconfiguration have increased current total field level capital conversion estimates to $55 to $70 million gross ($35 to $45 million net to Vaalco), explained the U.S. firm.
This capital investment is projected to save approximately $20 to $25 million gross per year ($13 to $16 million net to Vaalco) in operational costs through 2030.