29/04/2021 - 14:30

Kato plans $500m oil project

29/04/2021 - 14:30

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Cottesloe company Kato Energy is progressing plans to develop multiple ‘stranded’ oil fields off the WA coast after gaining key regulatory approvals this month.

Kato plans $500m oil project
Kato will use a modular 'honeybee' production system.

Cottesloe company Kato Energy is progressing plans to develop multiple ‘stranded’ oil fields off the WA coast after gaining key regulatory approvals this month.

Kato is an unlisted company led by chief executive Joseph Graham and backed by Perth investor Craig Burton.

Mr Graham returned from Houston four years ago to work on the project, which is targeting a series of small oil fields off the north west coast that are too small for standalone developments.

Instead Kato plans to use a relocatable ‘honeybee’ production system that will move from field to field.

Its first project is expected to be the concurrent development of the Amulet and Talisman fields, located about 130 kilometres north of Dampier.

That will be followed by the Corowa field, 60 km from Onslow, with Kato evaluating further potential developments.

Kato passed a major milestone this month when the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) approved its first two projects.

This made Kato the first company to obtain approvals for oil field developments since NOPSEMA introduced Offshore Project Proposals several years ago.

Mr Graham said Kato would shortly commence front-end engineering and design work, with first production targeted for Q3 2023.

He estimated that total spending on the project, encompassing upfront capital expenditure and operating expenditure, would be about $500 million.

Mr Graham noted that Perth-based consultancy Xodus Group was a big help in obtaining the NOPSEMA approvals.

“It is a great outcome, culminating from an extremely thorough process and provides the surety Kato needs to progress the projects into FEED,” he said.

The NOPSEMA approvals followed a detailed review of Kato’s environmental and safety plans.

“NOPSEMA is reasonably satisfied that the project will be managed such that the health, diversity and productivity of the environment in maintained by the proponent for future generations,” the regulator concluded.

A notable aspect of Kato’s strategy is its greenhouse gas management plan.

This includes a requirement that crude oil must be delivered to countries that have ratified the Paris Agreement on climate change.

Mr Graham said Kato evaluated several alternatives for developing the fields.

It has opted for the relocatable ‘honeybee’ production system, which comprises a jack-up mobile offshore production unit (MOPU) and a short subsea flowline linking to a floating storage and offloading (FSO) facility moored nearby.

The MOPU will include equipment to undertake well workovers and the plugging and abandonment of wells prior to departure.

A separate rig will be contracted to drill the planned production wells.

Mr Graham said similar systems had been used in other jurisdictions, including the North Sea, but he was not aware of any companies using this system in Australian waters.

Advantages of the honeybee system include the self-installing jack-up platform, with no requirement for mobilising a crane barge, which would introduce additional risk and cost.

All infrastructure will be removed before demobilising from the field, and most elements will be re-used on the next project, allowing for ease of decommissioning and minimising number of mobilisations required.

The environmental impact is minimised by having no fixed platform and no offshore piling or trenching, further minimising environmental impact.

The fields targeted by Kato all have a long history.

The Corowa field was appraised by Santos, with three wells drilled between 2001 and 2002.

It has a proven contingent resource of 7 MMstb and an expected production life of between two years and 4.5 years.

It was one of several fields formerly owned by Hydra Energy (WA), which had been pursuing similar development plans prior to falling into administration in 2016.

The Amulet field was appraised by Tap Oil, with three wells drilled in 2006.

It has a proven contingent resource of 6.9 MMstb and once again expected production of up to 4.5 years.

Up to three production wells will be drilled to a vertical depth of 1,900 metres.

The Talisman field is situated about 5km from Amulet and was initially drilled in 1984 by Marathon Petroleum.

A total of six wells were drilled, with production from two wells until the field was shut-in in 1992.

The MOPU will be situated equidistant from the Amulet and Talisman fields, with extended-reach deviated wells linking the MOPU and the reservoirs.

Tamarind Resources is a minority shareholder in Kato after acquiring an interest in the Amulet title in 2019.

Xodus described the Amulet and Corowa developments as ‘the right projects at the right time’ when looking at Australia’s overall energy transition journey.

It said the development concept was short-term, responsive to changes in markets and policies and had a small physical footprint and absolute volume of emissions.

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