Jadestone Energy (LON:JSE) has been slapped with two directives from Australia’s offshore energy regulator as worries rise about the structural integrity of the company’s Montara floating production storage and offloading (FPSO) vessel following two oil leaks.
Australian offshore safety regulator NOPSEMA said yesterday that “two incidents at the facility have resulted in the loss of structural integrity of three tanks on the FPSO.” As a result, the regulator directed Jadestone to engage an independent reviewer to undertake a gap recognition review and assure Jadestone’s remediation plans and operational readiness prior to the restart of production operations.
As Energy Voice reported previously, when Jadestone Energy completed its US$195 million acquisition of the Montara oil project from PPT Exploration & Production (PTTEP) in September 2018 it was taking a risk with an FPSO facility that had a troubled history. Given recent oil spills at the field in the Timor Sea, and subsequent shutdown of the Montara Venture FPSO, that gamble has come home to roost.
“NOPSEMA has concluded that the system of managing structural integrity of the Montara Venture FPSO hull and tanks is failing to identify and control structural integrity risks. Ongoing failure of the system to manage structural integrity risks may result in significant safety and environmental impacts,” the regulator said in its general direction notice issued Monday.
“The first incident on 17 June 2022 involved loss of containment of petroleum from cargo tank 2C with the potential for a significant oil pollution incident and associated environmental impact. Several chance mitigating factors appeared to limit the released volume,” said the regulator.
“The second incident on 3 August 2022 involved the loss of containment of crude oil which leaked from cargo tank 5C into ballast tank 4S, compromising both tanks and their fitness for purpose. The registered operator shut-in hydrocarbon production and commenced an investigation,” added NOPSEMA.
Jadestone said it will provide an update on its Montara remediation plans at its half-year 2022 results on 20 September.
On Monday, Jadestone said it is not able to provide guidance on a possible Montara production restart date. As a result, the company expects that 2022 production could average approximately 13,000 boe/d if production were restored in line with previous guidance, or closer to an average of approximately 11,000 boe/d if the restart were towards the end of 2022.
Paul Blakeley, President, and CEO said “we have shut-in production at Montara to focus exclusively on a remediation plan and have accelerated the inspection and repair activity through prioritising additional maintenance crew offshore.”
“Going forward, we will be reviewing the way we approach inspection and repair on the FPSO’s hull and tanks, with a firm intention to prevent similar occurrences of unplanned downtime in the future. We have made significant progress in restoring the FPSO to the standard which we expect while improving its reliability. We are looking forward to safely delivering the remediation plan, resuming production, and restoring confidence in Montara, further adding to the considerable value we have already delivered from the asset since acquisition,” he added.