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20 Dec 2021 | 20:07 UTC
By Jeff Fick
Highlights
Yinson to adapt FPSO OSX-2
Enauta holds vessel option
Construction to cost $500 million
Brazilian independent oil and natural gas producer Enauta signed a letter of intent with Malaysia's Yinson Holdings Berhad to adapt the OSX-2 floating production, storage and offloading vessel, or FPSO, for the definitive production system at the Atlanta Field, Enauta said Dec. 20.
"The adaptation of this FPSO will be a pioneer project in terms of avoided emissions, which will optimize operational and environmental efficiency," said Carlos Mastrangelo, Enauta's operations director.
The deal will allow Yinson to start detailed engineering work and buy long-lead time equipment and services related to the project, Enauta said. Yinson will be responsible for engineering, procurement, construction and installation of the FPSO OSX-2 at the Atlanta Field, including a 24-month operating and maintenance agreement.
The deal was valued at about $500 million, Enauta said.
Enauta holds exclusive rights to buy the FPSO OSX-2, which was built SBM Offshore for Eike Batista's failed OGX Participacoes in 2013. The FPSO never entered production offshore Brazil.
Yinson will also have an option to buy the vessel via a financing arrangement, which would trigger a 15-year operations-and-maintenance lease, Enauta said. The lease could be extended for an additional five years. The 20-year contract would be valued at $2 billion.
The letter of intent marks the latest advancement in Enauta's efforts to install a definitive production system capable of producing about 50,000 b/d at Atlanta. Yinson and Enauta entered exclusive talks about the FPSO in August 2021. Enauta expects to make a final investment decision on the definitive production system in the first quarter of 2022.
Enauta, however, has been pushing forward with the project as if the final decision is a foregone conclusion.
The company has already launched tenders to buy subsea equipment and other services related to the project. Enauta expects to spend $500 million-$700 million on drilling and installation of subsea equipment in addition to costs related to the purchase and adaptation of the FPSO.
Enauta on Dec. 17 approved plans to drill a fourth production well at Atlanta as well as the second phase of a project to boost water-treatment capacity onboard the FPSO Petrojarl I, that is currently conducting an early production test at the field. Drilling is expected to start in the fourth quarter of 2022, with first oil in the first quarter of 2023, according to Enauta.
Water-treatment capacity, meanwhile, is expected to rise to 11,500 b/d from 8,500 b/d by the second quarter of 2022.
The early production system, meanwhile, was extended until 2023. First oil from the definitive production system is expected in mid-2024, according to Enauta.
The FPSO OSX-2, meanwhile, would mark Yinson's second major project offshore Brazil. Yinson is also currently building the FPSO Anna Nery for state-led oil company Petrobras. The FPSO will be installed at the offshore Marlim Field in the Campos Basin as part of a major revitalization project for the heavy, sour crude producer.
The FPSO Anna Nery will have installed capacity to pump 70,000 b/d, according to Yinson. First oil is expected in 2023.
Atlanta's heavy, sweet crude has been well accepted by the market, with the 14-16 API grade trading at a premium to dated Brent because of its low sulfur content. Atlanta and other Brazilian medium grades produced in the Santos Basin have proved popular with global refiners because they naturally contain 0.5% or less sulfur content, which makes them ideal for processing into ULSD and bunker fuel that meets IMO 2020 standards.
Enauta, however, has faced some technical difficulties at Atlanta because of the temporary nature of the early production system, which started in 2018 and was expected to last just three years. The field, for example, is currently producing from just two production wells because of issues with submerged centrifugal pumps and oil heaters that failed.
The pumps and oil heaters are needed to lift the field's highly viscous, 14-16 API crude from the seabed to the FPSO Petrojarl I on the surface. The equipment is frequently used at heavy oil fields in the Campos and Santos basins, with failures commonplace in the extreme marine environment. Repairs and replacements typically require well interventions.
Repairs to the third production well are currently underway, with the well expected to be restarted in the first quarter of 2022, according to Enauta.
Atlanta produced 13,300 b/d in November, down from 13,900 b/d in October, Enauta said Dec. 8. Enauta expects Atlanta to average output of 12,000 b/d in 2021, according to the company.
Enauta owns 100% of Atlanta.