Chestnut Oil Field, United Kingdom

Chestnut is located in block 22/2a in the Central North Sea, about 290km east of Aberdeen in about 120m of water. Aberdeen-based Venture Production Plc is the operator, with a 69.9% interest, with Bow Valley Petroleum holding 15.1% and Atlantic Petroleum the other 15%.

Venture acquired a 5% stake in the field in 2001 and increased that holding to just less than 70% after its previous owners – a consortium including Amerada Hess, Premier Oil Exploration, Roc Oil UK, Fina Petroleum Development and AGIP UK – deemed it unviable as a standalone development.

Originally discovered in 1986, it is one of the smallest and oldest undeveloped standalone oilfield developments in the North Sea, and the project illustrates an emerging trend in oil exploration. Venture, which specialises in exploiting such stranded, untapped reserves, has drilled a new, vertical water injection well and is re-using the horizontal production well drilled by the original consortium.

Chestnut has estimated net recoverable reserves of 6.8m barrels of oil equivalent, and production – which began in late September 2008 – is put at an initial average net rate of 6,000-10,000 boepd.

Venture has declined to release details of the project’s capital expenditure, although it has said that, as of October 2008, it is set to recoup the investment on a cash basis by about the end of the year.

Approval for the development of Chestnut was obtained from the UK Government’s Department of Trade and Industry in late 2005. The original consortium had drilled and tested the production well (22/2a-11X) in 2001 at rates of 10,000-15,000 barrels of oil per day.

The extended well test lasted for about four months and about a million barrels of oil were produced before it was shut in. Then, in mid-2006, the water injector well (22/2a-12) was drilled and showed pressure communication with the production well.

The two wells have been tied back to an FPSO, the Sevan Hummingbird, the second such Sevan Marine 300 unit to be built and the first cylindrical FPSO to be deployed in the North Sea. It is under a five-year contract to Venture worth about $365m, making it is much cheaper to deploy than conventional rigs and so allowing the commercial development of small fields, such as Chestnut.

The Hummingbird’s hull was built at the Yantai Raffles Shipyard in China, after which it was moved to the Keppel Verolme Shipyard in Rotterdam, where the outfitting and assembly of the processing plant took place.

The hull is fitted with the necessary machinery, power generators, transformers, electric boards, fire control systems, ballast pumps and cargo pumps. The main components on deck are living quarters with control rooms, a workshop, life vessels, helipad, cranes, on and offloading system for oil, and anchor winches.

The geo-stationary FPSO has an oil storage capacity of 300,000 bbls – about a month’s worth of production can carry up to three risers and umbilicals, and has an oil processing capacity of 30,000 bopd and a water injection capacity of 20,000 bowpd.

The oil is brought up from the reservoir through three risers from the wellhead. Sea water is injected to maintain pressure, while produced water from the well is treated, then discharged.

The oil is stored in tanks in the hull and then transported by a shuttle tanker, initially to Rotterdam but eventually elsewhere in Europe.

The Hummingbird will stay on location for the life of the Chestnut field, forecast to be between two-and-a-half and five years. A second Chestnut production well was spudded in early September 2008.

This well will be completed and tied-in during early 2009 and is expected to increase the recoverable reserves and production rates, and so extend the field’s life.

Investment in this second production well was sanctioned in May 2008 and on current plans it will be drilled and brought onstream by mid-2009.

Aberdeen-based Wood Group is providing the operations management on the project, in a contract valued at about £8m a year.