FPSO BW Opal; Source: BW Offshore

‘Great’ construction progress made in bringing BW Offshore’s Australia-bound FPSO to life

Norway’s FPSO operator BW Offshore has tucked in new construction milestones under its belt for a floating production storage and offloading (FPSO) vessel, which is expected to be deployed on a gas field in Commonwealth waters offshore Australia.

FPSO BW Opal; Source: BW Offshore

Back in March 2021, BW Offshore got its hands on a contract for the construction, connection, and operation of an FPSO destined for the Barossa field, which is located 300 kilometers off the coast of Darwin, Australia. The FID for the project was taken days after the company won the contract award. A couple of months later, Dyna-Mac was hired by BW Offshore to build the topside modules.

When September 2021 rolled in, the FPSO operator completed a $1.15 billion project debt financing for the construction and operation of the FPSO Barossa, known as the FPSO BW Opal. The combined construction and long-term debt facility was provided by a syndicate of nine international banks. During the same month, a partnership was announced, consisting of BW Offshore, ICMK Offshore Investment, and Macquarie Bank.

However, the completion of the agreement was subject to certain customary regulatory approvals, which were granted a few days later. At the end of 3Q 2023, the hull for the FPSO Opal was en route to Singapore with topside integration slated to begin upon arrival in November 2023. While cost inflation continued to be a factor, long-term project economics remained intact.

“Our team is making great progress on our newbuild asset, BW Opal! With one of the largest FPSO hulls ever built and delivered from SKOP in South Korea on October 28 last year, the team is now working hard to complete construction of the topside modules in Dyna-Mac and the turret modules in Profab whilst integration and commissioning activities have started in the Seatrium Tuas Boulevard Yard,” highlighted BW Offshore in the latest update on the FPSO’s construction progress.
 
The FPSO operator further explained that nine of the topside modules, including the E-house, were lifted. The first shipboard turret module was integrated into the hull on February 4, 2024. BW Offshore underscored that the milestone represented “a very critical lift, flawlessly executed” using the Asian Hercules III floating crane. The company describes the module itself as “an extra source of pride” since the shipboard turret was designed and managed completely in-house.

Upon completion, the FPSO BW Opal will produce natural gas from the Barossa project, which is a joint venture between Santos (50%), SK E&S (32.5%), and JERA (12.5%). This development is on track for the first gas in H1 2025 with a fixed 15-year firm FPSO contract for BW Opal, which contains additional ten-year extension options. The contract for the initial production period of 15 years is valued at $4.6 billion.

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Recently, Santos won a court case, which enabled it to continue with its planned work on the Barossa gas field. The FPSO BW Opal will be a large vessel with a processing capacity of up to 800 million standard cubic feet per day (mmscfd) of gas and a design capacity of 11,000 barrels per day of stabilized condensate. The Barossa project is estimated to contain P50 reserves of 5.1 Tscf gas and 50 MMstb of condensate.

A ten-year offtake agreement has been secured with Diamond Gas International, a subsidiary of Mitsubishi Corporation. The Barossa field development entails an FPSO vessel, subsea production wells, supporting subsea infrastructure, and a gas export pipeline tied into the existing Bayu-Undan to Darwin LNG pipeline. The first LNG production is on course to start in the first half of 2025.

As oil and gas are anticipated to remain a vital component of the global energy mix for the foreseeable future, BW Offshore claims that a prolonged oil and gas investment upcycle is underway to ensure long-term energy security. With an increasingly tight FPSO market, thanks to growing demand for new units, extensions, and redeployments, the company identifies a trend towards EPCI plus O&M models for newbuilds.

Since gas is perceived to be an important transition fuel, which provides flexible low-carbon electricity, BW Offshore points out the growing need for investments in new offshore energy infrastructure to ensure energy security. In line with this, the tightening of the global FPSO market is giving rise to profitable lease-and-operate opportunities.