EnQuest, Delek Group End Kraken Stake Sale Talks

Israeli conglomerate Delek Group Ltd. and EnQuest have ended discussions about a potential sale of interest in the Kraken oil field development in the North Sea.

The news was delivered less than two months after the companies said they were in talks for Delek to buy a 20% interest in the field. Reuters reported the deal could have been worth $162 million.

EnQuest said the two were unable to reach a deal; however, the development continues to move forward.

Kraken is on track to reach first oil in first-half 2017 as the operator continues to reduce costs for the project. Gross full cycle project capex for the project is now about $2.6 billion after the operator added about $150 million in cost reductions to the approximately $425 million in reductions that were unveiled since the project was sanctioned, EnQuest said in its half-year 2016 report.

Sail away of the Kraken FPSO vessel, which has an 80,000-bbl/d production capacity, is expected sometime before year-end 2016.

If Kraken comes onstream in April 2017 as envisioned, it could bring about $100 million in operating cash flow with $45/bbl oil representing the forward curve, according to James Smith, CFO of project partner Cairn Energy. Plateau production will be about 50,000 boe/d.

Aker Solutions Lands Troll B Modifications Contract

Aker Solutions has picked up more work in the North Sea after securing a NOK 370 million (US$44.5 million) contract from Statoil and partners for Troll B engineering, procurement, construction and installation (EPCI) work.

The contract is an option in a FEED agreement awarded to Aker Solutions in January, the company said. The EPCI work aims to boost the gas treatment capacity at Troll B to increase oil recovery.

“The gas module is an important contribution to reaching the licensees’ IOR ambition for the Troll Field. It will raise production capacity on Troll B and help us recover as much as possible of remaining resources during tale end production,” Eric Normann Ulland, project director for Statoil, said in a news release. “From the module startsup in the autumn of 2018 until Troll B is shut down in 2025 it will increase recovery by around 4.7 million barrels of oil.”

Knut Sandvik, head of Aker Solutions’ maintenance, modifications and operations business, said “this project has targeted key cost savings to create the sustainability the industry depends on and is looking for during these challenging times.”

Aker plans to carry out engineering work at in Bergen and begin module construction in Egersund next year. The module, which weighs more than 500 tonnes, will be delivered in third-quarter 2018.

Subsea 7, Det Norske, Aker Form Subsea Development Pact

Aker Solutions, Det norske oljeselskap and Subsea 7 have formed a partnership to find cost-effective solutions for developing Det norske’s Norwegian subsea portfolio.

The companies’ combined expertise in front-end engineering, E&P, brownfield modifications and subsea systems for the partnership, which will enable them to work as one integrated team.

Senior management members from each company will handle the overall management of the partnership, according to a news release. The project management team will be led by a manager from Det norske.

The companies’ agreement to form this partnership comes after Det norske announced a four-year framework agreement with Aker Solutions to provide subsea production systems and services for Aker’s oil and gas developments in Norway and with Subsea 7 for subsea umbilicals, risers and flowlines in June.

The scope of these framework contracts has a total potential value of about NOK 2.8 billion (US$337 million), of which about NOK 800 million (US$96.3 million) is Aker Solutions’ share and NOK 2 billion (US$240 million) is Subsea 7’s. These values may change depending on how much work the operator calls for under the contracts, and Aker Solutions will book individual orders under the contract as they come in, the release stated.

Previously, field developments were typically managed on a project-by-project basis that curtailed the reuse of technology and solutions.

—Staff Reports