Ghana’s world-class Jubilee field was discovered in 2007 by the Mahogany-1 (M-1) and Hyedua-1 (H-1) exploration wells.
The two wells were drilled some 5 km apart and intersected large continuous accumulations of light sweet crude oil. The M-1 and H-1 wells discovered large net pays of 95m and 41m respectively in high-quality stacked reservoir sands. The Jubilee field straddles the West Cape Three Points and Deepwater Tano licences.
In July 2009, the Minister of Energy approved the Phase 1 Plan of Development which included the use of an FPSO with a facility capacity of 120,000 bopd. In December 2010, the field came on-stream and production has gradually been ramping up. During the 2015 average production was 102,600 bopd.
The Jubilee Phase 1A development project, designed to increase production and recover additional reserves, was approved by the Government of Ghana in January 2012. Phase 1A consisted of eight additional wells which included five producers and three water injectors. During 2015, Jubilee Phase 1A drilling and completions continued with two oil producers coming on stream in September and December.
An issue with the turret bearing of the Jubilee FPSO Kwame Nkrumah was identified in February 2016. This has resulted in the need to implement new operating and offtake procedures, which utilise a dynamically positioned shuttle tanker and a storage vessel. These procedures necessitated the FPSO be shut down for an extended period in April with production resuming in early May. Since resuming production, these procedures have been working well and Tullow expects to continue operating the field under these new procedures for the remainder of 2016.
1H 2016 gross Jubilee production averaged 62,900 bopd (net: 22,300 bopd). Taking into account short periods of reduced production, gross average production from the Jubilee field in the second half of 2016 is expected to be around 85,000 bopd (net: 30,200 bopd). Tullow therefore expects average gross production for the Jubilee field in 2016 to be around 74,000 bopd (net: 26,300 bopd).
As announced in June, Tullow and its Partners have established that the preferred long-term solution is to convert the FPSO to a permanently spread moored facility, with offtake through a new deepwater offloading buoy. The first phase of this work will involve the installation of a stern anchoring system to replace the three heading control tugs currently in the field. This is anticipated to be completed around the end of 2016 and will require short periods of reduced production. The second phase of work, which is awaiting approval from the Government of Ghana, will rotate the FPSO to its optimal spread moor heading and is expected to be completed in the first half of 2017. The cost for these phases is expected to be up to $150 million gross and it is estimated that the Jubilee FPSO will need to be shut-down for around 12 weeks during 2017 to complete the second phase of work.
Upon completion of the spread mooring, the Partners will review opportunities to improve the efficiency of offtake procedures by mid 2017. This should allow production to return to levels seen before the turret issue occurred.
A deep water offloading buoy is anticipated to be installed in the first half of 2018. This will remove the need for the dynamically positioned shuttle and storage tankers and the associated operating costs. Market enquiries are ongoing to estimate the cost to fabricate and install the buoy which is expected to require a shutdown of 4-6 weeks to install. The additional gross operating expenditure of the revised procedures is currently expected to be around $115 million for 2016, $105 million for 2017 and $35 million for 2018.
Tullow has a comprehensive package of insurance policies in place. This includes Hull and Machinery insurance, procured on behalf of the Joint Venture, which covers relevant operating and capital costs associated with damage to the FPSO, and Business Interruption insurance for Tullow which covers consequent loss of production and revenue. Affirmation of claims under both policies has been confirmed by our insurers and the recovery of some past losses is expected before the end of 2016 and further costs are expected to be recovered as they are incurred.
In December 2015, Tullow submitted the Greater Jubilee Full Field Development Plan to the Government of Ghana. This project, to extend field production and increase commercial reserves, was redesigned given the current oil price environment, to reduce the overall capital requirement and allow flexibility on the timing of capital investment. In light of current circumstances, approval of the Greater Jubilee Full Field Development Plan by the Government of Ghana is now expected in mid-2017.