UK and Norway

Cairn has built a strong position in the UK and Norway that provides a platform for mature basin exploration and future sustainable cash flow from development projects.

2017

First oil targeted in 2017 from development projects

~25,000 boepd

targeted peak production net to Cairn

Activity

Activity

Cairn has built a strong position in the UK and Norway by acquiring exploration, appraisal and development assets and participating in licence rounds.

During 2016 Cairn expanded its UK & Norway team and added 13 new licences and four licence extensions. 

Developments

Kraken and Catcher are two of the largest ongoing development projects in the UK North Sea. Both are core development projects along with the Skarfjell discovery in Norway, where the development concept has been selected. These three projects are a key part of Cairn's strategy to build steady future cash flows to sustain the business model and fund future international exploration.

Cairn has made significant progress on the UK developments in 2016 and both the Kraken and Catcher projects are below budget and remain on schedule to target first oil in 2017.

Kraken

In 2016, the Kraken development progressed well, finishing the year ahead of budget and the Operator targeting first oil in Q2 2017. Most significantly, through a combination of release of contingencies, contract re-negotiations and some reduction in scope, the Operator is now forecasting total gross capex at US$2.5b which is ~22% lower than the sanctioned estimate.

At the year end, four producers and five injectors had been satisfactorily drilled and completed. The 2016 subsea scope was completed without any issues. The FPSO was essentially mechanically complete with the vast majority of systems commissioned. The vessel left the deep water anchorage of Singapore and arrived in the North Sea in early 2017, having completed its journey as scheduled. The vessel berthed in Rotterdam to make final preparations prior to sailing offshore to hook up the Submerged Turret Production (STP) buoy mooring system, risers and umbilicals. Handover of FPSO systems from commissioning to operations continued in Rotterdam prior to sailing away.  On arrival at the field, the hook up of the STP buoy mooring system was completed and a full rotation test performed to ensure the vessel was on station and securely moored. Commissioning work will continue on the topsides. Reconstruction of the turret area pipework and connection of the risers and umbilicals to the swivel stack is being undertaken followed by commissioning of the subsea infrastructure.

Catcher

The Catcher project progressed well in 2016, with the Operator targeting start-up and first oil in Q4 2017. The Operator is now forecasting total project capex at US$1.6b which is ~29% lower than sanctioned estimate.

The drilling programme made excellent progress in 2016; efficient execution together with a well-executed subsea installation campaign, were key factors in the project capex reductions. To minimise rig moves during the winter months, the schedule was adjusted so that at the year end, four wells on Catcher, two wells on Burgman and two wells on Varadero were successfully drilled and tested with all wells coming in at, or better than, prognosis in terms of reservoir quality and well deliverability. Due to these good well results and well placement optimisation, the well count required to deliver the base plan has reduced to 20 firm wells, delivering further significant reductions to the forecast development capex.

Very good progress was made with the FPSO in the second half of the year, with the joining of the two hull ‘mega blocks’ and installation of the living quarters in Singapore. All of the topside modules were also safely lifted on and very good progress made with the topsides integration.

The majority of the project’s subsea installation scope was also completed in 2016. Only short subsea campaigns will be required in 2017-19 to tie-in the new wells drilled and to support the hook up of the FPSO. The project focus is now on final mechanical completion of the FPSO and the pre-commissioning/commissioning work scopes. FPSO sail-away from Singapore is expected to be around mid-year 2017.

Skarfjell

The JV has selected a development concept for the Skarfjell field. Under the proposed solution, the reservoir will be connected to the nearby Gjøa platform via a subsea tie-back. The Operator has submitted the development concept to the Norwegian Ministry of Petroleum and Energy and now enters the define phase of the project, refining the technical and economic plan before committing to a final investment decision, planned for Q1 2018. Based on the proposed plan, hydrocarbons from the Skarfjell reservoir will be developed with two subsea templates tied back to the Gjøa platform for processing and export. Gjøa will also provide lift gas to the field and water injection for pressure support. Several studies will be conducted before the final investment decision and the plan for development and operation can be submitted to the Ministry.

Exploration

In 2016, Cairn secured three licences in the Barents Sea, including one as Operator. Cairn believes the Barents Sea is a potential core exploration opportunity and our experience from operations in the Arctic will be relevant in the region. According to the Norwegian Petroleum Directorate, the region may contain as much as half the country’s unexplored resources with yet-to- find hydrocarbon potential of 8.8 billion boe. In 2016, Cairn participated in two non-operated exploration wells (Aurelia in the Barents Sea 10% WI and Laverda in the UK 36% WI). Aurelia was unsuccessful in finding commercial quantities of oil at the primary horizon. Laverda did find potentially commercial quantities of oil at the primary horizon but was unsuccessful at the secondary target of the well.

 

Key contact


Brita Holstad

Brita Holstad

Regional Director - UK & Norway

Contact

Stavanger Office

Jåttåvågveien 7
Block C, 2nd Floor
4020 Stavanger
Norway

T:+47 417 89 560

London Office

6th Floor
20 Berkeley Square
London
W1J 6EQ

T:+44 (0)207 647 0120