Australian FPSO Remains Shut Down as Regulator Orders Outside Review
Jadestone Energy, an independent oil and gas production company focused on the Asia-Pacific region, reported that they still do not have a target date to resume production with the Montara Venture FPSO operating in the field located approximately 420 miles northwest of Darwin. The company was forced to suspend production a month ago after experiencing the second problem with the vessel’s operations in a month and earlier problems that led to regulatory oversight.
Australia’s National Offshore Petroleum Safety and Environmental Management Authority today issued a general direction to the company, which requires that Jadestone engage an independent reviewer to undertake a gap recognition review, and assure Jadestone’s remediation plans and operational readiness before the restart of production operations. The regulators will review the independent reviewer’s report before the restart of production through the FPSO.
On August 12, Jadestone reported that it had discovered more defects on the Montara Venture FPSO and had suspended production. It was the second time in recent weeks that problems had been identified the operator reported a leak in a tank that resulted in an oil spill around the vessel in June. In August the company said that it expected it would cost $2 to $4 million to complete repairs and that production would be suspended potentially through September 2022.
“We have shut-in production at Montara to focus exclusively on a remediation plan, and have accelerated the inspection and repair activity through prioritizing additional maintenance crew offshore,” said Paul Blakeley, President and CEO of Jadestone. “In addition, plans to increase longer-term accommodation space on the FPSO are underway. This will deliver a high level of confidence to all stakeholders in the structural integrity of the Montara FPSO, and allow for a safe and reliable restart of production. 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. “
The FPSO has experienced a series of problems since its commissioning. In January this year, production had to be reduced following an engine failure in the gas reinjection compressor. Then in June, a small leak of oil from one of its tanks was detected. Despite an interim repair and subsequent restart of production, Jadestone has been working to complete a permanent repair to the tank. During preparations for the repair is when an additional internal defect in a water ballast tank was also detected.
The regulators issued the company with a prohibition notice following the oil spill in June. While they undertook an investigation and were reportedly satisfied that Jadestone had addressed the immediate risk of any further spill, the authority said it would be monitoring the facility closely.
At this stage, the company says it is not in a position 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.