Lloyds List: Fairfield to invest in its Dunlin fresh fields

Martyn Wingrove
Published: Jun 21, 2007

FAIRFIELD Energy is planning to invest in the Dunlin fields to increase production and reserves once the deal with Shell and ExxonMobil is completed.

The Staines-based independent company will be getting its first taste of oilproduction when it acquires the oil majors’ interests in the Dunlin platform and satellite fields Dunlin SW, Merlin and Osprey.

Combined, these fields pump out around 8,000 barrels per day from quadrant 211 and the platform handles oil from the nearby Murchison and Thistle platforms. Crude then goes through a pipeline to Cormorant and then on to Sullom Voe in Shetland.

According to Fairfield’s chief executive Mark McAllister, his company is in advanced exclusive negotiations with Shell and ExxonMobil and has met with the Department of Trade and Industry to gain its approval.

He has also met representatives of British contractor Amec, which manages the installation for Shell at present, to discuss how Amec can become the platform’s operator and duty holder.

‘The combined Dunlin, Merlin and Osprey acquisition represents a major step in the establishment of Fairfield as a UK independent. We have been working for over a year to develop a deep understanding of these assets, assisted by Amec,’‛ said Mr McAllister. ‘The fields are still in production and we believe there is a lot of upside potential to be tapped. We have a long-term investment plan and will take the decommissioning liability off Shell and ExxonMobil.’

Once in its hands, Fairfield will be upgrading the platform and will want to drill new wells and workover existing ones. It will also want to gain third party production to reduce operating costs and expand its own offices in Aberdeen.

‘There is a platform rig on Dunlin, which we will use, and we will look for a semi-submersible rig for work on Merlin and Osprey,’‛ Mr McAllister told Lloyd’s List. ‘We will work hard to capture third party business and we are looking to invest in activities to increase production and reserves.’‛

Mr McAllister believes Shell and its partners have been busy on the platform as part of a general strategy of upgrading and maintaining all of its North Sea facilities. There are some small oil discoveries in the area west and southwest of Dunlin, including Antrim’s recent Causeway field, which should be a key target for Fairfield’s strategy to gain third party business.

Meanwhile, Fairfield is also active in the Crawford and Maureen fields, which are both decommissioned after production by major oil companies and now have the potential for redevelopment.

Maureen, once in Phillips’ hands in block 16/29, still holds a few million barrels of oil and US firm Apache has been appraising these reserves to see if they can be redeveloped.

‘On Maureen we believe there are still some reserves. It has produced around 200m barrels, but there remains potentially more,’‛ said Mr McAllister.

Fairfield operates Crawford and is interested in redeveloping the ex-BP fieldin block 9/28 with a new stand-alone facility. ‘Crawford produced only 4m barrels. We have done a lot of work and expect it will be a commercial development. We plan to drill an appraisal well on Crawford this year,’‛ said Mr McAllister.

Fairfield is negotiating with rig owners and other oil companies as it seeks a sublet to drill this well, and Mr McAllister said: ‘There’s an active sublet market at the moment.’

Fairfield is keen to redevelop both fields and could turn to contractors to lease a floating or jack-up production unit.

‘We are looking at all options as both fields are close to existing facilities and in shallow water so we could use a fixed jack-up potentially,’‛ said Mr McAllister.

Any redevelopment of Crawford will take a number of years so it is unlikely to come on-stream until 2011.

The oil in Crawford is a heavy, viscous fluid so technology like horizontal wells and electric submersible pumps may be required.

Fairfield is privately funded with six equity investors who can provide finance for acquisitions. Mr McAllister believes this is a better way to access capital than being listed in London.

Meanwhile, oil companies with heavy oil fields in their portfolio, such as Fairfield, Chevron and Nautical Petroleum, have been meeting with British Treasury officials to try and reduce tax on viscous crude oils that are costly to produce.

They are calling for a cut in taxes on oils with low API numbers (set by the American Petroleum Institute) to make these developments more economic. Heavy oil fields need more technology to produce and get lower prices than the lighter Brent oils, so they are less profitable.

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