American Oil and Gas Reporter - June 2015 - 94
ticipated curtailments at higher reserve scenarios would severely reduce net present value.
A new-build FPS provided superior economics to the host option at the high end of the reserve range, but at the low end, the
project did not meet the company's economic hurdles. Delineation
drilling would eventually narrow the reserve range to determine
whether adequate reserves were present to proceed with the FPS
project, but waiting for the delineation results would erode the
project's NPV.
Private Equity Financing
Construction of the single-deck topsides began in December
2012. The FPS has a daily nameplate capacity of 80,000 barrels
of oil, 200 million cubic feet of gas and 40,000 barrels of water,
with peaking capacity of 100,000 bbl/d of oil and 240 MMcf/d of
gas. The throughput capacity meets the needs of nearly all of
LLOG's hub-class prospects, and is the largest capacity that
can be achieved with a single deck lift.
the properties of the oil, the additional distance could reduce reserves, depending on reservoir drive mechanisms.
In addition, no single host had enough capacity to handle all
three anchor fields, so an existing host option would mean multiple simultaneous projects. The subsea option would work reasonably well at the lower range of the reserve spectrum, but an-
One of the key elements in Delta House's success was the decision to use private equity financing to reduce the economic
threshold and allow early project sanctioning.
There are several examples in the Gulf where a party other than
the owner of the reserves owns the production facility and/or export pipelines, including Devils Tower, Marco Polo, Independence Hub, Tubular Bells, and Thunder Hawk. The main advantage for the producer is that it can use its capital for its core business of exploration and production, rather than paying for infrastructure.
In these transactions, the infrastructure owner provides the upfront capital and then collects monthly fixed fees, along with additional fees based on the amount of production processed through
the infrastructure.
LLOG's understanding was that all these prior transactions
involved investment-grade credit of the producer to guarantee a
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94 THE AMERICAN OIL & GAS REPORTER
American Oil and Gas Reporter - June 2015
Table of Contents for the Digital Edition of American Oil and Gas Reporter - June 2015
Contents
American Oil and Gas Reporter - June 2015 - Cover1
American Oil and Gas Reporter - June 2015 - Cover2
American Oil and Gas Reporter - June 2015 - 3
American Oil and Gas Reporter - June 2015 - Contents
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American Oil and Gas Reporter - June 2015 - Cover3
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