DONG Energy's flagship high-pressure, high-temperature Hejre field development is in a state of limbo after operator DONG Energy said it was terminating a contract for the topsides, despite being well into construction.
Contractors Technip and Daewoo Shipbuilding & Marine Engineering, under a consortium arrangement, had cut first steel on the 13,000-tonne Hejre topsides in 2013, and sailaway was due last year.
Image: The Hejre jacket before its installation in 2014.
But, in February, DONG said first oil in 2017 - already delayed from 2016, and before that 2015 - was no longer likely as a result of delays in construction. Now it and partner Bayerngas are looking for alternative solutions to develop the field after terminating the contract with the two contractors.
The field, the largest oil and gas project in the Danish sector of the North Sea, is in 70m water depth, 292km north west of Esbjerg and is estimated to contain about 170 MMboe, 5000-6000m deep, at 1010 bar and 160°C. The Hejre jacket was installed in 2014 and production wells have already been pre-drilled on the field.
"A key challenge for the project has been that the supplier consortium consisting of Technip France and Daewoo Shipbuilding & Marine Engineering (DSME) has not been able to meet its contractual commitments under the EPC (engineering, procurement and construction) contract on the Hejre platform," says DONG. "This has, among other things, resulted in significant delays in the completion of the Hejre project."
DONG said it and Bayerngas "no longer have confidence in the supplier consortium’s ability to deliver the platform and hold the consortium in material breach of its contractual obligations." As a result, they today gave notice to terminate the EPC contract with immediate effect, which means the platform will not be completed and that the Hejre project in its current form will be stopped. DONG Energy and Bayerngas are now looking for alternative ways to develop Hejre.
David B. Cook, Executive Vice President in DONG Energy, said: “DONG Energy and Bayerngas have today decided to terminate the contract for the Hejre platform due to the supplier consortium’s material breach in meeting its contractual obligations under the EPC contract for the design and construction of the Hejre platform. We’ll now take a step back to jointly evaluate the best way forward for the Hejre field.”
DSME, one of the world's largest shipbuilders, like it's fellow Korean shipbuilders, has been under strain after posting a record loss for 2015. Mid-March, according to Bloomberg, the firm was working on nine offshore projects as planned, including Songa's latest Cat-D drilling rig and Petronas' floating LNG facility, and didn't expect any further losses from them. DSME said it expected to return to a profit in 2016.
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