Shell gearing up to remove Knarr FPSO from North Sea
Oil and gas major Shell is preparing for the removal of an FPSO and related subsea infrastructure from the Knarr field, which is located in the North Sea offshore Norway.
The Altera Infrastructure-owned Petrojarl Knarr FPSO is scheduled to leave the Shell-operated Knarr field in May this year. The operators are required to pay for and to carry out full or partial removal of facilities and equipment after the production period has ended. However, before the facilities and equipment are removed, the operator needs to secure consent from the authorities.
Therefore, Shell applied to the Norwegian authorities for consent for the removal and disposal of the FPSO and seabed structures on the Knarr field. As a result, Norway’s Petroleum Safety Authority (PSA) has now given Shell consent for the removal of and disposal.
Knarr is a field in the northern part of the North Sea, 50 kilometres northeast of the Snorre field, in water depths of 400 metres. The field was discovered in 2008 and the plan for development and operation (PDO) was approved in 2011.
The development comprises an FPSO vessel and two subsea templates, including six wells for production and injection. The vessel has a production capacity of 63,000 barrels of oil per day. The Knarr field consists of two segments, Knarr West and Knarr Central, with one template on each structure. Production from the field started in 2015.
The field had an estimated production life of at least ten years. However, due to declining production, Shell started planning for the closure and prepared an impact assessment statement for the field in late September 2019. A decommissioning plan was submitted in 2020. The cessation of production was planned for the first half of 2020.
Come April 2020 and Shell extended the contract with Altera for the Knarr FPSO until at least March 2022. The new agreement included a reduction in the day rate from March 2021 to March 2022 and the removal of the fee payable by the operator if the contract was not extended, in return for the introduction of an additional production volume and oil price-related tariff.
The amendment also terminated the operator’s purchase option for the vessel and provided for a mutual right to terminate the contract on six months’ notice without payment of penalty with such termination not being effective before March 2022.
While Petrojarl Knarr is scheduled to leave the Knarr field, chances are it will not go unemployed after the departure. As previously reported, Altera Infrastructure secured a deal for the FPSO redeployment on a project located West of Shetland.
Altera’s agreement with Equinor entails a front-end engineering design for the Rosebank development as part of Equinor’s work to mature and improve the project. It is worth noting that the FPSO was constructed to allow for electrification to be provided from shore, which would reduce operational CO2 emissions.
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