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Dana selects Cosco for $1.5 billion UK Western Isles FPSO

Cosco to build Sevan-designed cylindrical Dana FPSO

The UK-based Dana Petroleum (Dana), a subsidiary of the Korea National Oil Corp (KNOC), and its partner Cieco (Itochu Oil Exploration Corp. LTd), awarded to the Chinese Cosco Shipyard Group
the engineering, procurement and construction (EPC) contract for its Western Isles Floating Production Storage and Offloading (FPSO) unit.

The Western Isles project is to develop two oil fields called Harris and Barra in the Northern North Sea, 160km east of the Shetlands Islands and 12km west of Tern field.

The Harris and Barra oil fields lie by 165 meter water depth with a total depth of 2000 meters.

Dana and Cieco estimate the Harris and Barra oil fields to contains 100 million barrel of oil equivalent (boe) out of which 45 million boe are recoverable reserves.

At plateau production Dana and Cieco expect around 40,000 boe/d, adding more than 26,000 boe/d to Dana’s UK production

In the Western Isles project, the working interest are shared between:

 – Dana from South Korea 65%, is the operator

 – Cieco from Japan 35%

With all the major contracts being awarded in 2012, Dana and Cieco are planning to:

 – Drill production wells in 2013

 – Install subsea, umbilical, riser and flowlines (SURF) in summer 2014

 – Anchor the FPSO in summer 2015

– Produce first oil in 2015 with and estimated field life of 15 years.

Dana and Cieco budgeted $1.5 billion capital expenditure for the Western Isles development Project out of which 50 to 75% should remain in the UK as local content.

Dana and Cieco to minimize risks with Sevan design and costs with Cosco execution

Dana and Cieco selected the conceptual cylindrical design of the FPSO proposed by Sevan Marine as the base of the Western Isles development to include:

 – A new-build FPSO

 – Five production wells

 – Four water wells

 – Three exploration wells to be tied-back later

 – Two eight-slot subsea production manifold

 – Associated flowlines

Then the oil will be exported by shuttle tankers.

Designed by Sevan, the Western Isles FPSO will have a storage capacity of 400,000 barrels of oil.

Then Dana selected the Shanghai-based Cosco Shipyard Group to construct this Sevan FPSO in its Qidong facility near Shanghai.

Dana in brief

Dana Petroleum plc is a $3 billion oil and gas business with operations in the UK, Egypt, Norway, The Netherlands and Africa, producing 60,000 b/d of crude oil.

Dana was acquired in 2010 by the Korean National Oil Company (KNOC) from South Korean by a $2.8 billion hostile takeover. 

In this new context, Dana‘s ambition is to grow to become a leading international oil and gas company operating in Europe, Africa and the Middle East.

Dana is planning to invest more than $5 billion over the next five years to more than double the size of the company.

From an average annual production of 33,000 boe/d of oil, Dana is currently running at 62,000 booe/d in 2012 and is targeting 100,000 boe/d by 2016.

Endorsed by KNOC, Dana is adjusting its strategy towards longer term projects developments with the full upstream value chain including exploration, appraisal, development and production.

Cieco in brief

Cieco is the brand name of Itochu Oil Exploration Corporation Ltd, the upstream branch of the Itochu Corporation.

Headquartered in Tokyo, Japan, Cieco is known for its technological expertise in all aspects of oil and natural gas exploration, development, and production.

Cieco has operations in 10 countries.

Cieco started Exploration & Production activities in Indonesia in the 1970s.

Today Cieco has working interest in Algeria, Australia, Azerbaijan, Georgia, Russia, Turkey and UK.

Well supported by the crude oil price around $100 per barrel, and by the new tax incentive in the UK, the Western Isles project fits perfectly with Dana’s ambition to double its daily production at low risks in selecting well proven FPSO Sevan design and a costs effective execution from Cosco.

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