The first phase of the Sea Lion development in the North Falkland Basin is on track toward a final investment decision (FID) by year-end 2018 as Rockhopper Exploration and partner Premier Oil bring down costs and draws more financial support.

U.K.-headquartered Rockhopper provided an update on April 19 on the $1.5 billion development, which is operated by Premier. About $300 million has already been shaved off the project’s estimated capex.

Plans are for the field to be developed using an FPSO-based scheme similar to the one used on Premier’s Catcher development in the North Sea. A revised field development was submitted to Falkland Islands authorities in March and it is “considered substantially agreed,” according to Rockhopper.

Now focus is on getting the remaining financial support needed to reach FID.

“With Brent oil prices currently above US$70 per barrel (bbl), combined with the cost efficiencies secured through FEED and engagement with the contractors, the economics for the project are highly attractive,” Rockhopper Chairman David McManus said in a company statement.

Altogether, the capex, opex and FPSO vessel lease—life-of-field costs—have been brought down to less than $35 per barrel, the company said. This comes as talks continue with potential senior debt providers such as export credit and commercial bank lenders, Rockhopper said.

Field operating costs for the project have also fallen to about $15/bbl from more than $20/bbl as the total project breakeven costs have dropped by about $10/bbl to less than $45/bbl, Premier said in March.

“Following a comprehensive commercial bank engagement process, a number of banks have indicated their desire to support the project and the appointment of a lead bank is expected shortly,” the company said. “In order to support the lender due diligence process, technical advisers for subsurface and environmental matters have been selected.”

If developers reach FID this year it will join a growing list of sanctions expected this year as market conditions improve following the downturn.

RELATED: Outlook: FIDs For Oil, Gas Projects On The Rise

Earlier in April, Wood Mackenzie said it expects about 30 major projects to reach FID in 2018. Six of these projects were sanctioned in first-quarter 2018 in areas that included China, Israel, Malaysia, the Netherlands, Norway and the U.K.

Rockhopper expects financial close for Phase 1 of Sea Lion in first-half 2019 after reaching FID by year-end 2018.

The company said its Falkland Islands spend in 2017 was $22 million, most of which went toward the 2015-2016 drilling campaign and Sea Lion pre-development activities.

This year could be “transformational” for Rockhopper, the company said, given the pace of development for Phase 1.

Located about 200 km north of the Falkland Islands, Sea Lion sits in about 450 m water depth on the eastern margin of the basin.

Developers plan to commercialize between 160 MMbbl to about 220 MMbbl of recoverable resources from the field during Phase 1 with a daily peak production of 80,000 bbl. But Rockhopper said it doesn’t anticipate generating cash flow from the project until 2021.

About 300 MMbbl of reserves would be developed during the second phase, focusing on resources in satellite accumulations north of PL004 and the rest of PL032.

A third phase would target resources of the Isobel/Elaine fan complex south of PL004, Premier has said.

Velda Addison can be reached at vaddison@hartenergy.com.

Offshore