Rockhopper, Navitas Look to Reboot Falklands Project
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Mon, Mar 27, 2023
A pair of independents are working to pull a long-delayed deepwater oil project in the Falkland Islands off the shelf, with a final investment decision (FID) targeted as soon as 2024, a partner said.
UK-based Rockhopper Exploration said last week that Tel Aviv-listed Navitas Petroleum presented it with a new development plan for the Sea Lion development that would cut costs and tackle the project in phases. If realized, the new plan — with a total price tag of $2.2 billion — could lead to 80,000 barrels per day of production (up to 100,000 b/d at peak) via a leased floating production, storage and offloading unit.
The Sea Lion development plan would spread out investment over time, with 18 wells to be drilled in the first phase, followed by five more over three years to help maintain the project’s production plateau.
‘More Confident’
Sea Lion has been on the radar since its discovery over a decade ago, but has struggled to move into development amid multiple industry downturns and the Covid-19 pandemic. Rockhopper CEO Samuel Moody hopes this time is different.
“We are delighted with the revisions Navitas has made to the previous Sea Lion development plan,” Moody said. “To reduce up-front estimated capex by such a significant amount and reduce life-of-field costs to under US$30 per barrel while increasing recoverable resources … is hugely encouraging progress.”
He added that the partnership is making “real progress technically and commercially” and expressed his belief that the project is “eminently financeable” despite “well-known political challenges.” The partners are now pushing ahead with “refining” their financing plan for the project.
“Although risks remain … following a very strong 2022 for the business, we are more confident on positive progress than for a number of years,” said Moody.
Navitas’ scheme, per an updated resource estimate, would aim to develop some 269 million barrels of proven and possible resources at a per-barrel cost of $27.60. The partners also see the potential for more resources in nearby areas.
Rockhopper envisages 30 months from FID to first oil, with drilling to start about 12 months post-FID.
Project Reboot
Navitas farmed into the Sea Lion project in 2020, bringing fresh momentum.
The Israeli company emerged on the industry landscape late last decade through partnerships in US Gulf of Mexico projects, including helping shepherd the long-delayed Shenandoah project to an FID.
Navitas became an important ally in Sea Lion when Harbour Energy, which acquired Rockhopper’s original partner Premier Oil in 2020, opted to exit the venture a year later.
The project must also navigate political tensions in the Falklands with Argentina, which waged a brief yet bloody conflict in 1982 over control of the British territory after claiming the nearby “Las Malvinas” islands should be under its control. Argentina threatened to sanction the companies at work in the islands in 2021.
