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Shell set to switch on the Lite at Bonga
Doris to lead off on FEED work for FPSO and mooring while IntecSea handles the subsea aspects for 800-million-barrel project
Anglo-Dutch giant Shell is set to kick-start fully-fledged engineering studies within weeks on its delayed Bonga South West ‘Lite’ project off Nigeria, which aims to develop 800 million barrels of recoverable oil.
Two contractor groups, according to sources, are ready to start front-end engineering and design studies on a scaled-down ‘lite’ version of the 225,000-barrel-per-day floating production, storage and offloading vessel originally selected for the deep-water Bonga SW development.
Project watchers said France’s Doris Engineering will lead the FEED work on the FPSO and mooring facilities, while IntecSea of the US will look after the project’s subsea aspects. To satisfy local content demands imposed by the Nigerian government, Doris will be working with Lagos-based Netco, a subsidiary of state-owned Nigerian National Petroleum Corporation
Similarly, IntecSea will be working with Delta Afrik Engineering, a joint venture established by its parent company WorleyParsons and Delta Tek Engineering, another Lagos contractor.
A well-placed source said the two contracting groups were due to be awarded a pair of FEED contracts in early December, but that placing these orders is now only expected late this month or perhaps in early February.
This delay has pushed back the proposed completion date of the two studies from late July or early August this year to September or October.
On completion of FEED studies, Shell is set to release invitations to tender for main fabrication contracts in the fourth quarter of 2017 — nine months later than originally planned — with a final investment decision targeted for 2018 and first oil flowing in 2021 or 2022.
Market players said Shell is currently eyeing an FPSO with a production capacity of about 150,000 bpd, a major decrease on the previous vessel specification as the operator seeks to reduce costs.
At this stage, there is a feeling among most contractors that Shell will opt for a newbuild vessel, although there are also suggestions that a conversion might pass muster with the supermajor.
The newbuild option would leave the FPSO to the likes of South Korean rivals Hyundai Heavy Industries and Samsung Heavy Industries, with Shell also looking to yards in China to stir up competition.
To satisfy local content obligations, Samsung had bid with Ladol although Hyundai, working with Nigerdock, ultimately emerged as the preferred bidder in the previous 225,000-bpd incarnation of the project.
If a conversion is required, the project would open up to companies such as SBM Offshore, Modec, BW Offshore and Bumi Armada. Shell may even decide to pit newbuilds directly against converted vessels in the tender process.
One market source said a major influence on which option Shell chooses will come from the ongoing converted FPSO bid process on Eni’s Zabazaba project off Nigeria, in which the Anglo-Dutch company is a 50% partner.
In 2015, after Shell received bids from Hyundai and Samsung, Bonga SW’s total costs stood at $16 billion, at least $4 billion higher than it wanted at that time.
As well as the submitted FPSO prices, Shell was also very unhappy with the commercial offers for the subsea umbilical, riser and flowline package.
A retender will take place, covering the revised Surf workscope with the previous rivals set to do battle again.
Italy’s Saipem was competing against a consortium of NigerStar 7 — a joint venture of Subsea 7’s Globestar subsidiary and Jagal — and Lagos-based West African Ventures for the original Surf work.
Commenting on Bonga SW two months ago, Shell’s chief financial officer Simon Henry painted a positive picture, although he was cautious about its future schedule.
“We are seeing potential costs come down, not just because of supply chain but because of different changes in the scope and the design. The actual economics look very attractive.” However, he said that because the development licence is due to expire in the coming years, the project will need support from the government.
“While it looks like an attractive project it is not likely to be approved, I don’t think, in the near term. Let’s see how it goes forward.”
The bulk of Bonga SW is located in OML 118 and also extends into OMLs 132 and 140, operated by US supermajor Chevron, where it is called Aparo.
The remaining partners are US giant ExxonMobil, France’s Total, Italy’s Eni and South Africa’s Sasol Petroleum.
The field’s total oil in place resource estimate stands at about 3.2 billion barrels held in eight reservoirs.