Intelligence brief: GoM producer files for Chapter 11; Well management, P&A experts join forces
Decommissioning news you need to know.
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GoM producer Energy XXI files for Chapter 11
Gulf of Mexico-focused oil producer Energy XXI has filed for Chapter 11 bankruptcy protection after reaching a deal with noteholders on financial restructuring.
Energy XXI said it believes it has sufficient liquidity, including about $180 million of cash on hand and funds generated from ongoing operations, to continue its operations and support the business in the ordinary course during the restructuring process.
The company has said it will allocate 35% of its estimated $130 million to $150 million in capital expenditure in 2016 to plugging and abandonment (P&A) activities.
In June 2015 it reached an agreement with the Bureau of Ocean Energy management to provide $150 million on additional supplemental bonding, bringing its total supplemental bonding to $319 million at an annual premium expense of $4.8 million. It said it maintains $226 million in letters of credit to third parties on additional assets in the Gulf of Mexico.
Energy XXI’s portfolio consists of mostly shallow-water assets off the coast of Louisiana, as well as some onshore assets in southern Louisiana.
Exceed, Weatherford combine well-management, P&A expertise
Exceed and Weatherford have formed a strategic alliance and promised to offer a joint end-to-end solution for well decommissioning.
The announcement comes on the heels of Exceed’s recent contract with Fairfield Energy to support a P&A campaign covering 45 platform and 16 subsea wells in the North Sea. The Fairfield decommissioning will begin in the coming months, with the operational phase of the subsea-wells work due to start in 2017.
Exceed said it brings a proven track record in well management to the partnership with Weatherford, while Weatherford brings its extensive global P&A experience.
The expertise brought from both companies means commercial models can be flexible and tailored to meet client requirements, Exceed said. It added that collaboration also opens up potential to create a project-wide engineering, procurement and construction approach through the appointment of further partners.
Global agreements have been established with a number of internationally recognized service providers to expand the service portfolio as and when required, it said.
Scottish university to study subsea-structure removal methods
Dundee University’s School of Science and Engineering will carry out a series of small-scale model tests of uplift operations in a controlled environment on behalf of Xodus Group, which is examining ways to improve removal of subsea structures.
These tests will investigate a range of variables including the effect of on-bottom time and skirt configuration on the required recovery loads for subsea structures.
Dr Andrew Brennan, senior lecturer in civil engineering at Dundee University, said that by performing a series of small-scale model tests, the team can better understand how each of these variables controls the process and thereby improve the efficiency of structure removals in the future.
Andy Small, principal geotechnical engineer at Xodus, said decommissioning of subsea structures presents significant challenges for engineers. He predicted that the research would provide understanding of the recovery process and associated risks and will likely result in significant cost savings and operational efficiency for future decommissioning projects.