An accelerated approach

Area 4 is the jewel in Italian explorer Eni’s African crown. Meg Chesshyre reports on the company’s plans to get its large gas discoveries off Mozambique to market.

Map of Mozambique. From EIA.

Mozambique’s Area 4 is the world’s fifth largest natural gas discovery in the last 30 years with more than 85 Tcf estimated natural gas resources in place.

The scale means Area 4 offers world-class discoveries with large gas resources and exceptional reservoirs, said Eni senior vice president Stefano Maione, who is in charge of the Area 4 development, at a presentation at ONS 2014 in Stavanger.

But, it also presents unique challenges, technical, non-technical, environmental and social. It also offers exceptional opportunities with an advantageous location and the prospect of an accelerated development strategy, he says.

Area 4, covering 10,000sq km, is in the Rovumba Basin offshore Mozambique, about 50km off the coastline at Palma, more than 200km from the capital Maputo, and close to the Tanzanian border. Eni East Africa is the operator with a 70% interest. The other joint venture partners are: ENH (10%), Galp (10%), Kogas (10%) and CNPC (20% indirect participation through Eni East Africa).

Area 4 includes three main gas discoveries – the Mamba complex, Coral and Agulha. It lies next to the Anardarko-operated Area 1, and five of the eight discovered pools of Mamba straddle the Area 4/1 border. Eni started drilling in Area 4 in 2011, with the Saipem 10,000 drillship.

Discoveries

The first well, Mamba S-1, encountered large gas volumes. Since then there have been multiple 2D/3D seismic studies. A total of 14 exploration and appraisal wells have been drilled and six drill stem tests executed, resulting in the identification of eight reservoirs with turbidite sands. The gas is lean, without H2S, with excellent reservoir characteristics giving an extraordinary deliverability.

The Area 4 reservoirs are characterized by sand-rich deepwater fan deposits. In the Mamba complex a hydraulic continuity has been proven between wells as far apart as 22km. Moreover, the reservoir thickness found by the wells is 600m with a gas column up to 560m, Maione says.

To maximize the monetization of the 85 Tcf of discovered gas resources and to secure early first gas, Eni is working on a multiple development approach. The initial plan is to have two onshore hubs at Afungi and Quionga, plus an offshore hub. Diversified LNG technologies will be used with onshore trains and floating LNG units, with diversified products (LNG, gas-to-liquids, compact natural gas, and others). There will be parallel development of straddling and non-straddling reserves.

Initial phase

In the initial phase for Area 4 straddling reservoirs, there will be two onshore LNG trains (5 MTPA each), 16 production wells, subsea production systems, umbilicals and sea lines. Near shore sea lines will be developed in synergy and common facilities onshore will be shored with Area 1. An engineering, procurement and commissioning tender for the LNG facilities and a front end engineering and design (FEED) competition for the subsea facilities are ongoing. The final investment decision (FID) is scheduled in 2015 and start-up in 2020.

The Saipem 10,000 drillship being used in Area 4 by operator Eni. Photo from Saipem.

The development of the Coral non-straddling reserves will comprise a floating LNG (FLNG) unit (2.5 MTPA), six production wells, subsea production systems, umbilicals, risers and flowlines. A FEED competition for the FLNG and for the subsea production systems is ongoing. The FID is expected by year-end, and start-up in 2019.

The area poses considerable technical challenges. The development wells will need to be drilled in ultra-deepwater, between 1500-2500m water depth. The subsea facilities design will have to take into account the seabed morphology, which is characterized by the presence of deep canyons (See “Challenges in the deep” on page 68 for more). Approaching the coastline, the presence of the continental shelf requires the crossing of a steep escarpment, while the last 10km of the sea lines are in shallow water. Detailed design characterization has been carried over the last two years from the deep offshore to the coast in order to define the optimum design of all the subsea facilities.

Adding to the complexity is that the area has limited infrastructure. The closest city with only minor facilities like an airport and a port is Pemba, which is about 250km south of the area of operations. But, authorities in Mozambique have plans to make it a logistics center for the industrial sector in the north of the country. In parallel, Eni is planning to build a marine offloading facility in Palma to support offshore operations.

“The challenges we have to face are not only technical,” Maione says. “The lack of a specific energy legislation, the magnitude of investment and the game-changing and the greenfield nature of this project for the whole country need to be considered as well.”

Area 4 and Area 1 operators are therefore in talks with the government of Mozambique and are negotiating a dedicated legal, fiscal and contractual framework for the development of the natural gas resources. The need to respect biodiversity and social factors is also a priority. Activities are currently limited to small-scale agriculture and fishing, and islands with exclusive tourist resorts.

Maione notes that Area 4’s geographic location makes it a natural supplier to feed the fast-growing needs of the Asian gas markets. “There is a supply gap in the LNG market after 2020, when our initial phase should come on stream, and delivery prices to India and Southeast Asia are very competitive compared with other sources,” he says. In addition, the Area 4 joint venture has direct control and ownership over its upstream reserves, and is developing one of the very few large LNG projects which can count on gas supplies for the next 40 years.

Eni is adopting an accelerated approach to a phased Area 4 development in parallel with exploration activities to allow an early arrival of the gas to market. It signed a heads of agreement with Area 1 US-based operator Anadarko Petroleum in December 2012, establishing foundation principles for the coordinated development of common natural gas reservoirs offshore Mozambique. This will facilitate a development program whereby Eni and Anadarko will conduct separate yet coordinated offshore activities, spanning both Area 4 and Area 1. Furthermore, the two companies will jointly plan and construct common onshore LNG liquefaction facilities in the Cabo Delgado province of northern Mozambique.

Maione concluded that the size of the Area 4 discoveries enables parallel and accelerated development of multiple hubs, incorporating both onshore and offshore LNG facilities with low unit costs due to significant project scale and quality of the reservoirs. There are also additional monetization options/technologies opportunities including gas-to-liquids and compact natural gas to drive the economic growth of Mozambique.

Floating toward FLNG

The KD Consortium, consisting of KBR and Daewoo Shipbuilding & Marine Engineering Co., was awarded a front-end engineering design (FEED) contract by Eni East Africa for a floating liquefied natural gas (FLNG) facility for the Coral South Development Project in Mozambique.

The KD consortium will be one of three consortia competing for the engineering, procurement, construction, installation and commissioning (EPCIC) contract to build the new FLNG facility for Eni East Africa and its partners.

Only one consortium will be chosen to take the project to the EPCIC phase.  The milestones of the combined FEED-EPCIC competition are:

1)  FEED activities started in May 2014.

2)  FEED completion date is set to be end of April 2015.

3)  EPCIC offer submission is foreseen by end of May 2015.

The KD Consortium will provide the FEED for the topsides, hull and subsea for the floating LNG facility. The topsides and turret are being designed in KBR’s Leatherhead, UK, office while the hull and marine system are being engineered in DSME’s facility in Seoul, South Korea. 

The FLNG facility will be a turret-moored. double-hull floating vessel, on which gas receiving, processing, liquefaction, and offloading facilities will be mounted together with LNG and condensate storage.