Contract for development Papua New Guinea's first offshore gas field which is seen as a new model to help producers adapt to a world of low oil prices, related to a wide range of services to be provided has been won by Baker Hughes, a GE Company.
Traditionally, a company awards various parts of field development separately to different providers and the contract, worth several hundred million dollars, contrasts with the traditional model.
In the last three years there has been intense competition among oil service providers for contracts as the three-year rout that brought new field development to a near standstill, and the contract comes as the global oil and gas sector slowly emerges from that rout period.
Executives of the two companies said that services ranging from the initial stages of well-drilling and appraisal through to production and gas processing would be provided by BHGE to Australian exploration and production firm Twinza for the development of the offshore Pasca A gas condensate field under the contract.
Bringing together traditional drilling and pumping gear with technology such as software, sensors and three-dimensional printing and becoming the world's second largest oilfield services company, General Electric completed its acquisition of Baker Hughes last month.
According to BHGE Chief Executive Officer Lorenzo Simonelli, in a sector where projects often involve billions in investment, companies can save up to 5 percent with the application of the integrated suite of services together with advanced technology.
"The price of oil continues to fluctuate. Capex spending is a moving target at the moment so productivity cost per barrel has to be the focus to get projects to a final investment decision," Simonelli told Reuters in an interview.
According to Visal Leng, head of BHGE Asia Pacific, the "fullstream" model removes logistical delays such as late arrival of vessels, the need to hold several tenders or adapt to different equipment standards, in an industry historically plagued by cost overruns and project delays.
While not providing an exact figure for the contract, Simonelli said there are "hundreds of millions (of dollars) associated with the development of the project".
Simonelli said that with regards to using its integrated services, including a large project with BP in the Gulf of Mexico, BHGE is already working with some of the world's top oil companies.
After drilling one more appraisal well this year, Twinza is expected to make a final investment decision (FID) for the Pasca A project in early 2018.
Twinza Managing Director Huw Evans said that the first phase of the field development will produce 14,000 barrels per day of liquids extracted from gas.
According to Evans, a profitable "way below the current oil price" of around $52 a barrel would be the Pasca A development.
In order to fund the appraisal of the field ahead of the final investment decision, BHGE will also extend a credit line to Twinza.
"There was a lot of optimism at the end of 2016 with the actions OPEC took. Some of the optimism is being pushed to the right and you're seeing a progressive shift in some of the projects and people waiting a little longer for stability in the context of lower for longer (oil prices) or simply lower," Simonelli said.
(Source:www.reuters.com)
Traditionally, a company awards various parts of field development separately to different providers and the contract, worth several hundred million dollars, contrasts with the traditional model.
In the last three years there has been intense competition among oil service providers for contracts as the three-year rout that brought new field development to a near standstill, and the contract comes as the global oil and gas sector slowly emerges from that rout period.
Executives of the two companies said that services ranging from the initial stages of well-drilling and appraisal through to production and gas processing would be provided by BHGE to Australian exploration and production firm Twinza for the development of the offshore Pasca A gas condensate field under the contract.
Bringing together traditional drilling and pumping gear with technology such as software, sensors and three-dimensional printing and becoming the world's second largest oilfield services company, General Electric completed its acquisition of Baker Hughes last month.
According to BHGE Chief Executive Officer Lorenzo Simonelli, in a sector where projects often involve billions in investment, companies can save up to 5 percent with the application of the integrated suite of services together with advanced technology.
"The price of oil continues to fluctuate. Capex spending is a moving target at the moment so productivity cost per barrel has to be the focus to get projects to a final investment decision," Simonelli told Reuters in an interview.
According to Visal Leng, head of BHGE Asia Pacific, the "fullstream" model removes logistical delays such as late arrival of vessels, the need to hold several tenders or adapt to different equipment standards, in an industry historically plagued by cost overruns and project delays.
While not providing an exact figure for the contract, Simonelli said there are "hundreds of millions (of dollars) associated with the development of the project".
Simonelli said that with regards to using its integrated services, including a large project with BP in the Gulf of Mexico, BHGE is already working with some of the world's top oil companies.
After drilling one more appraisal well this year, Twinza is expected to make a final investment decision (FID) for the Pasca A project in early 2018.
Twinza Managing Director Huw Evans said that the first phase of the field development will produce 14,000 barrels per day of liquids extracted from gas.
According to Evans, a profitable "way below the current oil price" of around $52 a barrel would be the Pasca A development.
In order to fund the appraisal of the field ahead of the final investment decision, BHGE will also extend a credit line to Twinza.
"There was a lot of optimism at the end of 2016 with the actions OPEC took. Some of the optimism is being pushed to the right and you're seeing a progressive shift in some of the projects and people waiting a little longer for stability in the context of lower for longer (oil prices) or simply lower," Simonelli said.
(Source:www.reuters.com)