BPC sees increase in costs of Perseverance #1 well over virus mitigation measures

London-listed oil company Bahamas Petroleum Company (BPC) has raised the cost estimates for the drilling operation of its Perseverance #1 off the Bahamas citing Covid-19 mitigation measures.

BPC said on Friday that the sustained impact of Covid-19 means that the company and offshore driller Stena Drilling decided to implement enhanced mitigation measures including heightened isolation and testing measures for all crew and personnel, extended mandatory quarantine in secure hotel facilities, and private charter flights

According to the company, enhanced Covid-19 mitigation measures and associated operational impacts means the cost estimate for Perseverance #1 is revised upward by approximately 15 per cent, to between $24 million to $28 million (from $21 million to $25 million). The contingency element was expanded to $7 million from $5 million.

Simon Potter, CEO of BPC, said “Given the ever-evolving and escalating Covid-19 situation around the world, the sobering reality is that preventing the Covid-19 virus spreading onto the Perseverance #1 drilling installation in the first place is dramatically more cost-effective than having to deal with it once it has arrived offshore. Hence the considerable efforts put in by BPC, Stena, and participating contractors and service companies to develop even more stringent measures to detect and diminish the risk of infection, which are now being implemented, but which will come at a cost.

“Fortunately, given the flexible range of funding options the company has developed over the course of the last two years, we have successfully agreed an increase to the size of our conditional convertible note facility by £4.75 million ($6.3M) to offset this increased cost.

“We are aiming to assess what hydrocarbon resource potential lies within the territorial waters of The Bahamas, for the mutual benefit of the nation and people of The Bahamas, the shareholders of BPC, and all other stakeholders.

“Safe, responsible, and uninterrupted operation is our key objective in the ever-changing global Covid-19 environment, and these additional costs and increased funding arrangements reflect a prudent approach to achieving this objective“.

To remind, the company hired Stena Drilling’s Stena IceMAX drillship to drill the Perseverance #1 exploration well, in the far southern territorial waters of The Bahamas.

The well will be located in water some 520 metres deep and will be drilled to a target depth of 4,822 metres, but with the capability to reach 5,600 metres – affording the ability to evaluate multiple reservoir horizons throughout the entire stratigraphic column below the Tertiary cover.

The drilling is expected to take between 45 and 60 days. The well is targeting recoverable prospective resources of 0.7 billion barrels of oil, with an upside of 1.44 billion barrels.

The well was designed specifically as an exploration well, with the sole objective of establishing the presence of hydrocarbons through a range of tests that will be conducted as the well is drilled.

Perseverance #1 has not been designed to ever operate as a production well, so the well will be permanently sealed and then abandoned at the end of the drilling program.

According to current AIS data, the Stena IceMAX drillship departed from Las Palmas on Tuesday and is on its way to the Bahamas. It is expected to reach Freeport on December 15.