Shell fires starting gun on major HA gas project

Shell has started a bid process covering engineering and construction work on its major HA gas project off Nigeria, which is set to involve a significant three-platform complex in shallow water linked to a floating storage and offloading vessel.

The Anglo-Dutch giant aims to take a final investment decision on the HA project in the fourth quarter of 2020 or earlier, with first gas due to flow in 2023 or 2024 at up to 250 million cubic feet per day.

In addition, the development in OML 77 will produce about 30,000 barrels per day of oil and condensate.

Shell Petroleum Development Company (SPDC) — the lead party in a joint venture with state-owned Nigerian National Petroleum Corporation, Total and Eni — is pre-qualifying players to participate in a design contest covering pre-front-end engineering and design work.

After submitting responses by 19 August, contractors who are chosen for and come through a pre-FEED competition will then undertake FEED studies and will later be involved in project execution.

Shell’s schedule calls for pre-FEED and FEED to be completed by the second quarter of 2020 ahead of a final investment decision.

The supermajor said it will only consider companies that have worked on engineering, procurement and construction in a similar environment and with a similar workscope, adding that these contracts must have had a headline size of at least $600 million.

“Tenderers without demonstrable experience covering the entire chain of activities from pre-FEED through FEED and to full execution will not be considered,” according to SPDC’s pre-qualification documents.

In addition, Shell said “bidders will be expected to demonstrate their capability and capacity to accept and deal with the financial and technical complexities” associated with the HA contract.

As a result, interested players must provide a confirmation letter from financial institutions that have provided them with short-term financing of up to $900 million, together with details of existing third-party loans or guarantees.

Sources suggested European companies such as Saipem and TechnipFMC will be interested in bidding, alongside US players such as McDermott and maybe KBR, while Chinese contractors also likely to chase this work as could others including WorleyParsons.

At least 90% of engineering hours must be done in-country so local companies such as Netco, Dover and Aveon are seen as potential contenders for at least some of the work.

Shell has worked up a base-case development solution for HA, which lies in OML 77 in 17 metres of water and about 20 kilometres offshore.

At the heart of its proposed scheme is a central processing platform able to handle 250 MMcfd of gas, 40,000 bpd of liquids and 30,000 bpd of oil and condensate.

This CPP will be bridge-linked to a wellhead platform with at least nine drilling slots, plus a 70-man accommodation platform.

The field will be tapped by three gas production wells plus six oil producers, with the gas wells targeting three reservoirs and the oil wells set to penetrate one oil rim and three oil-bearing zones.

Oil and condensate will be piped to a new FSO vessel via a 25-kilometre, 12-inch pipeline for export to markets via shuttle tanker.

Shell expects the vessel to have a storage capacity of between 700,000 and 1 million barrels.

HA’s gas will be processed, compressed and exported via a new 24-kilometre, 14-inch gas line to Shell’s existing Offshore Gas Gathering System (OGGS) pipeline.

Once cleaned up, produced water will be transported along a 33-kilometre, six-inch pipeline to a disposal site in 200 feet of water.

A dozen or so exploration and appraisal wells were drilled in the 962 square-kilometre OML 77 between 1969 and 1985, resulting in discoveries such as HA as well as other finds including HB, HD, HM and Hobobo.

The proposed development plan for HA is remarkably similar to Snepco’s HI project in shallow-water OML 144, for which it contacted contractors last quarter.

HI aims to tap 1.6 trillion cubic feet of gas and 15 million barrels of condensate in a block where Shell’s partner is local player Sunlink.

Targeting first production by 2025, HI calls for about 500 MMcfd of gas to be fed to the yet-to-be-sanctioned Train 7 of the Nigeria LNG project.