BW Offshore to demolish laid-up FPSO despite previous re-use plans

FPSO operator BW Offshore has sold its laid-up FPSO Berge Helene for demolition and recycling despite previous plans to use it on a project development located offshore Brazil.

BW Offshore reported on Friday, 23 April that it has signed an agreement to dispose of the FPSO Berge Helene for environmentally safe demolition and recycling in compliance with the Hong Kong Convention at Priya Blue shipyard in India.

The FPSO Berge Helene is a floating storage/production unit of 274,333 deadweight-ton capacity built in France in 1976 and converted to an FPSO in Singapore in 2005.

The vessel is 372 meters long, 52 meters wide, and has a depth of 27.4 meters. It is flagged and registered in Singapore and classed by DNV GL.

The FPSO worked for Petronas offshore Mauritania until the end of 4Q 2017. It was demobilized from the field in 2018 and has been in lay-up in Singapore since August 2018.

According to BW Offshore’s latest update, the vessel has now been sold for a cash consideration of approximately $16 million.

BW Offshore is working to ensure that the FPSO is recycled in a safe and sustainable way and will be giving a bonus to ensure safe recycling.

BW noted that the recycling yard in India is certified to ISO standards and has been issued with a Statement of Compliance by Class NK in accordance with the IMO Resolution MEPC.210(63) and the Hong Kong International Convention for the safe and environmentally sound recycling of ships.

The recycling yard will provide a Statement of Completion of the recycling in accordance with the Hong Kong Convention.

Furthermore, the company has nominated Grieg Green as representatives to be on site at the recycling yard to monitor progress, compliance with environmental and safety regulations and that the ship recycling plan is being applied.

A recycling plan has been prepared and provided by the yard in corporation with Grieg Green to ensure strict compliance with regulations.

BW noted that, to ensure and incentivise safe recycling, the company will pay a safe recycling bonus upon completion.

BW Offshore had previously reserved the Berge Helene vessel, pending agreement, for use on BW Energy’s Maromba field offshore Brazil.

The BW Energy-operated Maromba field is located in the Campos Basin offshore Brazil in 160 meters water depth. BW Energy is the exploration and production arm of BW Offshore with assets in Gabon, Namibia, and Brazil.

The company entered the Maromba project in 2019 following the acquisition of interests from Chevron and Petrobras.

The Brazilian oil and gas regulator ANP granted BW Energy the oil and gas operator status in Brazil and BW received the go-ahead to acquire the Maromba license in August 2019.

The government approval satisfied the main condition for the closing of the Maromba field acquisition, allowing BW to submit its field development plan in December 2019. The plan was approved in August 2020.

BW used the same development approach for Maromba as for its Dussafu asset in Gabon, based on subsea wells tied back to an existing FPSO.

The FPSO Berge Helene had previously been identified as suitable for the Maromba project and there were plans to modify it to serve as the production hub for wells in the Maromba licence.

However, considering that the FPSO has now been sold and will be recycled, it seems that BW’s plans have changed.

Namely, IHS Markit reported in August 2020 that BW was considering using its FPSO Polvo for the project, considering it was likely to become available during 3Q 2021.

Offshore Energy has reached out to BW seeking further information about the project and the reason why it has now decided to sell the Berge Helene FPSO instead of using it for the Brazilian project. At the time of writing this article, BW has not responded to our enquiries.

According to the latest information, the final investment decision for the project is planned by the first quarter of 2022.

BW plans to develop Maromba in phases to minimize up-front capital expenditure, accelerate time to first production, and allow the production and the supporting organization to grow organically.

Phase 1 will consist of two or three horizontal subsea wells in the Maastrichtian reservoir that will be tied back to an FPSO. First oil from the project is expected in 1H 2024.

The gross peak production from Phase 1 is forecast to reach approximately 30,000 bopd.

Phase 2 development is expected to consist of three to four additional horizontal production wells and two water injectors.

It is also worth reminding here that, in the fourth quarter of 2020, BW recorded a $71.6 million impairment charge for the Berge Helene FPSO, in addition to charges for two other FPSOs.

The impairments reflected continued uncertainty around redeployment and extension for certain older units in the company’s fleet.