$1.2billion Alvheim within ace of first oil

Within the current quarter, Marathon expects to start production from its much-delayed Alvheim cluster development on the Norwegian Continental Shelf.

The company describes it as “the largest active oil development on the NCS”. Mid-February saw the 252m Alvheim production ship, formerly the multipurpose tanker, MST Odin, depart Haugesund under tow for Amoyfjord, near Stavanger, for final fitting out and pre-commissioning works prior to towing offshore.

The workscope included a lifeboat launch test, fitting of thrusters and a “stagger” test, which assesses the pressure of all cargo and ballast tanks to ensure their integrity. Expectation is that this will be completed swiftly in the hope that the vessel can be on station in March.

The next critical challenge will be waiting for a period of North Sea weather settled enough to accomplish the tow-out and hook-up to the buoy around which the ship will pivot for the next 20 or so years.

Alvheim, located on NCS blocks 25/4 and 24/6, was due onstream Q1 2007, but start-up was progressively pushed back quarter by quarter because of delays inflicted by the offshore industry’s currently overheated supply chain and personnel markets.

The year’s worth of hold-ups means that the cost of the project has risen materially, though Marathon has so far not said by how much the original capital budget of about $1.2billion has been busted.

Project director Roger Wilson appeared unruffled by the delays at an update briefing in Haugesund just days before the production ship headed for Amoyfjord.

While acknowledging the lateness of the project, he said the delays had also been used to advantage, including taking the level of pre-commissioning on the vessel to a very high level indeed.

In theory, it means that the time from hooking-up to the production buoy and final commissioning activities with hydrocarbons in the system should be very short.

“Hauling the buoy in is a very short operation. The actual buoy pull-in is less than an hour, though it’s probably going to take us about 24 hours,” said Wilson.

“It will be a question of: can the tugs hold the vessel steady for several hours? If so, then we can push the button. It’s all about having the right weather window.

“We’re lifting the buoy about 10m into the vessel. The critical bit is there will be loads of up to 700 tonnes on the haul-in winch.”

Once heaved into place, the complex task is coupling up all the riser pipework via sophisticated linkages to the on-board process system, which will be capable of handling a plated 134,000 barrels of oil per day.

However, like most production units, once the Alvheim vessel has settled down and the field complex is producing smoothly, it would be no surprise if the process plant is later upgraded to handle higher throughput.

Expanding on exploiting the delays, Wilson said the company had been able to push on with development drilling, though the weather had taken its toll to some extent. Five of the Alvheim core area wells had been drilled and completed, plus two similarly completed on satellite Vilje.

“There is now a very high well capacity sitting, waiting for the vessel,” said Wilson.

“They’re ready to flow; we’ve already cleaned up some of the wells with a rig. Then it’s first oil.

“But if the weather had been a bit kinder to us over these last months we would have had six Alvheim wells ready; we’re very close to completing that.”

Wilson said he expected first commercial oil “before the end of the first quarter”.

“Then we’ll have a six-month ramp-up. With the available wells, we have the capacity to be producing up to 120,000 barrels per day before the year-end.”

As for the year’s delay, he defended Marathon’s progress by saying: “Yes, we’re behind what we said we’d like to do, but I still think it’s a pretty impressive timetable we’ve met.

“It’s been fast-track, OK, not quite as fast as we would have liked, but sometimes when you set an aggressive goal you don’t always meet it. The outcome is still positive.”