Alpha Petroleum, which is backed by upstream oil and gas investment firm Petroleum Equity, has announced an agreement with GE Oil & Gas to partner on the advancement of the subsea infrastructure for the Cheviot oil field, one of the largest undeveloped fields in the UK North Sea with 55 mmbbls of oil and 20 mmboe of future gas production. Alpha Petroleum has named GE Oil & Gas as the exclusive supplier of early engineering, project management, and procurement activities for the project.
Todayís announcement, which follows an innovative and collaborative commercial approach between Alpha Petroleum and GE, will lead to the supply by GE Oil & Gas of subsea trees, a full control system, three manifolds, flexible jumpers, flowlines, risers and umbilicals. GE Oil & Gas will also provide subsea construction and installation services, and support commissioning.
In addition to the provision of services and technologies, GE Energy Financial Services is helping to raise the needed debt financing for the project and is in discussion with Alpha Petroleum with the intention, subject to due diligence, of making a significant capital investment at the time of final investment decision (FID), which is expected in the fourth quarter of 2017. FID is the point at which the project is awarded UK Government approval, allowing agreed construction contracts to be executed.
GE Energy Financial Services is GEís energy investing business with deep domain experience in oil and gas infrastructure investing.
For more than 12 months, Alpha Petroleum, Petroleum Equity and GE have collaborated closely, co-creating from project inception the scope of delivery and equipment specifications required to meet Alpha Petroleumís performance objectives.
Andy Crouch, Alpha Petroleumís Chief Executive said:
'By taking this unconventional, collaborative approach, we have been able to really draw on GEís expertise, enabling us to minimise costs and timescales. This partnership marks another key milestone in Cheviotís development and we are excited to see the project move forward to the next stage.'
'Through this full life-of-field partnership, Alpha Petroleum is defining the performance characteristics they require and empowering GE Oil & Gas to design the necessary solutions. While the benefits are clear, this represents another very positive example of how the traditional, transactional relationship between industry players is evolving into a partnership approach,' said GE Oil & Gas Europe CEO, Michele Stangarone.
The Cheviot field is 100 per cent owned by Alpha Petroleum and its core development will consist of 18 firm and 5 contingent wells. Alpha Petroleum recently announced an exclusivity agreement with Teekay Offshore Partners on the project for use of its Varg Floating Production Storage Offloading unit as well as FEED capabilities to the project. First oil is expected in 2019 at an expected rate of at least 30,000 barrels per day.
Arun Subbiah, founding partner at Petroleum Equity, commented:
'It is extremely satisfying to see Alpha Petroleum making such great strides towards realising the potential of the Cheviot field. We have been working hand-in-hand with Alpha on the project since we first invested back in 2014 and are all delighted to have attracted a partner of GEís calibre. We see this partnership as a significant endorsement of our investment thesis and look forward to working together to bring the development to fruition.'