United States oil giant, ExxonMobil Corporation, announced that its subsidiary, Esso Exploration and Production Nigeria Limited (EEPNL), has started oil production five months ahead of schedule at the Erha North Phase two project offshore Nigeria.
The world’s largest publicly traded international oil and gas company also noted that Erha North Phase two came on stream $400 million below the budget estimate, with Nigerian contractors accounting for more than $2 billion of project investment for goods and services, including subsea equipment, facilities and offshore installation.
To save costs, the company said subsea development was tied into existing infrastructure of Erha field to ensure capital efficiency
The Erha North Phase two project, which will add 65,000 barrels of crude oil to Nigeria’s daily crude oil output, is a deepwater subsea development located 60 miles offshore Nigeria in 3,300 feet of water and four miles north of the Erha field, which has been producing since 2006.
The Erha North Phase two project includes seven wells from three drill centers tied back to the existing Erha North Floating Production, Storage and Offloading (FPSO) vessel, reducing additional infrastructure requirements.
The project is estimated to develop an additional 165 million barrels from the currently producing Erha North field.
Peak production from the expansion is currently estimated at 65,000 barrels of oil per day and will increase total Erha North field production to approximately 90,000 barrels per day.
Commenting on the milestones, the President of ExxonMobil Development Company, Neil W. Duffin, stated that executing successful projects such as Erha North Phase two ahead of schedule and under budget resulted from ExxonMobil’s disciplined project management approach and expertise.
“We are able to create additional shareholder value by optimising existing infrastructure, which reduces capital spending requirements and improves capital efficiency,” Duffin added.
Duffin said the ahead-of-schedule startup was supported by strong performance from Nigerian contractors, which accounted for more than $2billion of project investment for goods and services, including subsea equipment, facilities and offshore installation.
“These contracts are bringing direct and indirect benefits to the Nigerian economy through project spending and employment, consistent with project objectives,” Duffin said.
ExxonMobil expects to increase its global production volumes this year by two percent to 4.1 million oil-equivalent barrels per day, driven by seven per cent liquids growth. The volume increase is supported by the ramp up of projects completed in 2014 and the expected startup of major developments in 2015.
The Erha North field was discovered in 2004 and initial production commenced in 2006. Operator, EEPNL, holds a 56.25 percent interest in Erha North Phase two, while Shell Nigeria Exploration and Production Company (SNEPCo) holds the remaining 43.75 per cent share.
The world-class Erha deepwater development is in Oil Mining License (OML) 133, about 97 kilometres offshore Nigeria in 1,200 metres of water.
The Erha and Erha North have a total crude oil production capacity of over 200,000 barrels per day.
The Erha and Erha North project consists of 32 subsea wells tied back to an FPSO.
The project also uses a Catenary Anchor Leg Mooring (CALM) buoy, which is reputed as one of the largest in the world, for docking of crude oil carrier and transfer of product.
EEPNL and its co-venturer, SNEPCO, had in May 1993 acquired the rights to explore offshore Oil Prospecting Lease (OPL) 209.
The field was converted to OML 133 in March 2006 after it came on stream, with the NNPC as the concessionaire.