Platform upgrade encounters further delays and cost overruns

THE BassGas joint venture has suffered its second setback in three months at the Yolla Mid-Life Enhancement (MLE) project offshore Victoria, resulting in a $30 million cost blow-out.
Phase one of the MLE project involved upgrading the unmanned Yolla platform to a manned platform and installing export compression and condensate pumping modules.
Following an unsuccessful attempt to install a compression module, project operator Origin Energy (42.5 per cent) reported that it would return Yolla to its usual free-flow operation mode, with production expected to resume in the September quarter.
“Weather conditions in the Bass Strait are unlikely to provide an appropriate opportunity to complete the compressor lift and installation prior to completion of all other phase one works,”
Origin chief executive of upstream Paul Zealand said in a statement.
“The majority of phase one construction works for the Yolla MLE project, including the installation of accommodation facilities, strengthening of the helipad and new control and safety systems, are nearing completion.” Returning the Yolla platform to free-flow production at this point in the project will increase the total cost for phase one from $460 million to $490 million.
The recent setback followed an earlier cost blow-out in April, when the total estimate for phase one of the MLE project was raised from $360 million to $460 million due to the need for a time extension on the project.
Mr Zealand said that the MLE project was an important development in extending the production life of the Yolla field and in maximising the recovery of the field’s reserves to ensure that the BassGas JV could continue to meet growing demand for gas in southeastern Australia.
BassGas JV partner AWE Limited holds a 46.25 per cent interest in the project. In a statement, AWE managing director Bruce Clement described the second cost increase as “disappointing”.
“The additional capital costs and project delays reported by the operator are extremely disappointing and AWE is looking at opportunities for reducing the impact of these cost overruns,” he said.
Mr Clement said that in light of the history of the project, the schedule delay and budget increases, AWE continued to be “very disappointed” with Origin’s project delivery performance.
“However, despite these issues, which have impacted AWE in the short term, we remain confident in the future value and potential of the asset,” Mr Clement said.
According to AWE, further technical studies of the planned compression module lift concluded that it was more favourable “in overall terms” to delay the lift until later in the year, coinciding with better offshore weather conditions.
Toyota Tsusho Gas E&P Trefoil holds the remaining 11.25 per cent interest in the BassGas JV.

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