Australian operator Karoon Energy’s woes at its Bauna oilfield project offshore Brazil are not yet over, despite the company last week successfully completing remediation work on the Cidade de Itajai floating production, storage and offloading vessel.
Even so, the operator within weeks expects to decide whether to enter the concept select stage for its Neon oilfield — either as part of the Bauna development or as a standalone project.
Bauna produced a record 5.38 million barrels of oil last year —Karoon’s guidance had been between 4.5 million and 6 million barrels — however output towards the end of the fourth quarter was impacted by operational issues related to the gas lift dehydration unit on the FPSO. While remediation of the topsides and downhole hydrate issues was completed on 20 January, a deeper mechanical blockage was identified in the SPS-88 well, which will require a well intervention to replace the gas lift valve.
“We have assumed this will take place in the fourth quarter of 2024, based on internal estimates of the time required to identify and contract an appropriate [lightweight well intervention] vessel and receive regulatory approvals,” Karoon’s chief executive Julian Fowles said on Monday.
“On the basis that SPS-88 is offline for much of 2024, taking into account scheduled downtime in April 2024 and forecast FPSO efficiency of 90% to 95%, calendar year ‘24 Bauna project production is expected to be 7.2 million to 9 million barrels.”
A full shutdown for maintenance, which is expected to take approximately two weeks, is scheduled for April, as part of Karoon and Altera & Ocyan’s ongoing programme to ensure the reliability of the FPSO. The activities planned for April include inspection of tanks, valves and the hull of the FPSO, as well as further pipe inspections and integrity activities.
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Fowles added that while daily production from the Bauna asset would continue to fluctuate as part of normal operations and ongoing maintenance, the Bauna project’s reservoir performance continues to be in line with the company’s expectations.
The Bauna project has a dozen subsea wells including two at the Patola satellite field that came on stream in 2023 and it currently produces via the Cidade de Itajai that can handle around 80,000 bpd of oil and has crude storage capacity of more than 600,000 barrels.
The FPSO is currently operated by Altera & Ocyan and leased back to Karoon. Institutional investor EIG is acquiring Ocyan, the 50% owner and operator of the FPSO.
“We look forward to working with EIG and Altera, Ocyan’s 50% partner, on optimising the current operations of the Bauna FPSO as well as progressing the Bauna field life extension project,” added Fowles.
Neon feasibility studies
Karoon has almost completed the technical and commercial feasibility studies for its proposed Neon field development offshore Brazil and the operator intends by end-March to decide whether to enter the concept select stage depending on the results of these feasibility studies.
Development concepts under consideration include a standalone FPSO, a subsea tie-back to the Bauna FPSO and — interestingly — from Bauna to an FPSO at Neon.
Total production from BM-S-40 (the Bauna project) in the fourth quarter of 2023 quarter was 2.53 million barrels, down 11% from the previous three months. Although FPSO efficiency was higher than in the prior quarter (92.8% versus 91.6%), Q4 production was impacted by the formation of hydrates in two wells because of the operational issues in the gas lift dehydration unit on the FPSO.
The hydrate issue in one well was resolved within a week, but the second well — SPS-88 — remained offline beyond year-end, confirmed Karoon.
The company in the fourth quarter of 2023 spent US$60 million relating to Bauna’s production costs, including US$13.2 million on FPSO lease charter payments and US$21.9 million on royalties and other government take.
As of 31 December 2023, Karoon had a net debt position of US$103.7 million, which comprised US$170.4 million in cash and cash equivalents, and US$274.1 million of drawn debt.