Turning to OMV, we reported in November that the company was seeking to farm-down “before doing battle” with its West of Shetland target, Tornado, hoping to divest a large chunk before starting drilling early in the new year.
Schlumberger unit Indigopool is handling the transaction and put out a note on the prospect a couple of months ago.
While OMV has kept quiet about which rig it intends to use, the tracking service of Stewart Group notes that the Paul B. Loyd has been taken on sub-contract from BP for a period.
The Tornado well is expected to cost about $30million and OMV expects whoever farms-in to shoulder 20-40% of the well costs.
Potential recoverable reserves are 176million barrels oil equivalent (P10 volume, which means high-case estimate) and the target is “well positioned for development following exploration success”.
The 22nd Round P1190 and P1262 licences where Tornado is located are located adjacent to the Suilven oil&gas discovery – about 30km north of the Schiehallion field and about 25km south of the Cambo find.
This means that, should the exploration probe live up to expectations then, subject to appraisal, Tornado offers the potential of being a sizeable tie-in opportunity for existing infrastructure.
In other words, that basically means BP-operated Schiehallion, which is currently the subject of a redevelopment plan. There is a strong case for considering a future tie-in, as Tornado crude, assuming commerciality, is likely to be much the same as Schiehallion’s – that is, in the 25-27 degrees API range and gas-to-oil ratio (GOR) of 300-500 standard cu ft per barrel.
Besides the core field, according to Indigopool, which is handling the farm-out for OMV, there is upside potential in the nearby Spitfire lead located in block 204/14b. The mean resource estimate for that is 27million boe.
Indigopool notes: “The Tornado prospect is based on a sound geological model and is supported positively by seismic structure, stratigraphy, rock physics and electromagnetic data.
“It is considered low to medium risk and has mean volume expectation well above the economic threshold.
“Mapping has been conducted using both 3D and new long-offset 2D data. In addition, a controlled source electromagnetic survey was shot over Tornado by Norwegian company EMGS which also gives positive indications of the presence of hydrocarbons.”
Success with Tornado would mark a turning point on the Atlantic Frontier for Faroe Petroleum especially. The firm, which was initially set up to pursue opportunities in that sector only, has a 10% interest in the Tornado acreage.
Faroe has, in recent times, spread its risk by taking North Sea stakes, too, and recently enjoyed success with the apparently large Breagh discovery in the Southern Gas Basin.
A find would also reward Dana Petroleum and, in a sense, doubly so as it is a significant stakeholder in Faroe.
The co-venturers in the P1192 (Tornado) licence are OMV (50% and operator); Dana Petroleum (30%); Idemitsu (10%), and Faroe Petroleum (10%).
In May, 2007, Faroe entered into a farm-out agreement with Idemitsu whereby a proportion of the costs associated with Faroe’s 10% retained interest are carried by Idemitsu.
Also clearing to drill on the frontier as operator, DONG has secured the rig, Transocean Rather, to drill the Glenlivet prospect, in which Faroe also has a small stake (10%).
Glenlivet (block 214/30) is a large Palaeocene gas prospect in a proven play, located close to Laggan. It should be drilled in Q2 or Q3 of 2009.
It lies some 15km from the proposed Laggan gas export pipeline to Sullom Voe and is considered to be an analogue of other undeveloped gas discoveries in the vicinity.
Indeed, Faroe Petroleum says a discovery at Glenlivet could become a significant part of the planned new UK gas-gathering system for West of Shetland for which, as explained above, Laggan is the focal point – and, of course, DONG is a stakeholder in this, too.