U.K.-based Wood Group was given a major boost with the recent award by U.S. player Noble Energy Inc. of a FEED and detailed design contract for a fixed platform on the Leviathan gas field development offshore Israel.

While the contractor has been busy with some smaller conceptual FEED and consultancy workloads, Wood Group said there were “limited large subsea capex projects coming to market,” with the future outlook for such contracts also looking rather bleak.

So winning the contract for the large-scale East Mediterranean Leviathan project was a welcome success.

High-rate subsea wells required

The Leviathan Plan of Development (POD) already has been approved by the Israeli government, which is keen to push the huge gas discovery forward to help its energy needs and maybe improve regional diplomacy in the process of export deals being brokered.

The POD aims to develop the field using a subsea production system that connects high-rate subsea wells to a fixed platform located about 6 miles (10 km) offshore Dor, Israel.

Noble told SEN that the subsea production system and fixed platform consist of modular components.

The initial module is combined with four production wells and will be designed to deliver up to 1.2 Bcf/d (34.0 MMcm/d) of natural gas to Israel via the Israeli distribution grid and to regional markets via exports.

An export expansion module uses four additional wells and will be designed to increase capacity by 900 MMcf/d (25.5 MMcm/d) up to 2.1 Bcf/d (59.5 MMcm/d) and service pipeline exports.

The water depth at Leviathan, which lies in the Levantine Basin, is 5,381 ft (1,640 m), and the field life is anticipated to exceed 30 years. Field reserves are estimated at 21.9 Tcf (620.4 Bcm) by the partners but the government recently set them at 17.6 Tcf (498.6 Bcm), although the authority said this could change after more drilling is completed. Leviathan is due onstream at year-end 2019.

“The selection by Noble Energy and partners to engage Wood Group Mustang to perform the FEED and detailed engineering work for the Leviathan production platform builds on recent momentum to advance the project toward a final investment decision (FID) and achieve our mutual goal with the Israeli government to deliver natural gas from Leviathan as quickly as possible,” Noble told SEN.

“Based upon our current schedule, we anticipate completing FEED toward the end of 2016. In this phase, we will fully define the cost and schedule of this world-class offshore development project,” Noble added.

“Timing of a FID will depend on completion of four critical workstreams, which we are working diligently to complete: regulatory approvals, finalization of gas sales agreements, technical work and financing.”

Noble and its partners already have agreed to sell about 100 MMcf/d (2.83 MMcm/d) of gas from Leviathan to new Israeli domestic customers. In addition, tentative gas deals have been agreed with Egypt and Jordon, although talks with Turkey will have been delayed, if not scuppered, by the recent failed coup.

“We continue to progress marketing for substantial additional volumes to customers in both Israel and the region,” Noble added.

The partners in Leviathan are: Noble Energy, 39.66%; Israeli conglomerate Delek Group, 45.34%; and Israel’s Ratio Oil Exploration, 15%.

Wood working around the world

In addition to the work on Leviathan, Wood Group said follow-on work in the upstream sector continues on Det Norske’s Ivar Aasen Field development project offshore Norway as well as on Hess’ Stampede development in the U.S. Gulf of Mexico.

Wood Group added that it has started the detailed design phase of the Peregrino II project offshore Brazil and this work will continue into 2017.

The company also is continuing work toward detailed design on the Tengichevroil automation scope in Kazakhstan.

“In subsea, we have seen activity on smaller conceptual FEED and consultancy work scopes benefitting from our catalogue of proven designs and solutions as customers look for efficiencies,” Wood Group said in a recent trading update.

Wood Group added that it remains active on BP’s Shah Deniz project in the Azerbaijan sector of the Caspian Sea and on the Greater Western Flank Phase 2 project offshore Australia for Woodside.

“However, there have been limited large subsea capex projects coming to market, and we continue to have lower visibility of future projects. Our recent frame and master services agreements with Eni and Statoil add to the agreements with BP signed in 2015 and further demonstrate customer support for our service offering,” the contractor observed.

“In the North Sea, the operating environment remains very challenging for both volume and pricing, but we are maintaining our leading position in brownfield operations, maintenance and modifications, having renewed contracts with Chevron, Enquest, Nexen, Shell, Talisman, Taqa and Total.”

Early signs of future projects

“Looking further ahead, we are seeing some early signs of our customers beginning to assess future projects, and we feel well positioned for FEED and detailed design work that may come to market in the U.S.,” Wood Group said.

“The current environment remains challenging; however, we are encouraged by the recent upstream awards and feel well positioned for future activity in brownfield maintenance and U.S. onshore. Overall, the outlook for the full year has not changed, and there is no change to EBITA guidance of about 20% down on 2015 as given in May.

“We remain confident that our asset life-cycle service offering, specialist technical solutions and geographic footprint position us well in the current environment and for when market conditions recover,” Wood Group concluded.

—Contributed by Steve Hamlen