WOODSIDE has decided to go ahead with development of its Enfield oil field, about 40 kilometres north west of Western Australia’s North West Cape.
The development will cost Woodside about $1.48 billion and involves the development of a floating production, storage and offtake vessel that will be owned and operated by the oil and gas player.
Enfield has reserves of more than 125 million barrels of oil.
Woodside would not release how much of a return they expected to reap from the oil field.
Based on a back of the envelope calculation using an oil price of about $US35 a barrel the return should be in the order of $US4.4 billion.
However, Woodside is expecting operational expenses of between $50 million and $80 million a year – it has not fully quantified those yet.
Market experts expect the announcement to bring further good cheer to Woodside investors.
Euroz oil and gas analyst Ollie Foster said Woodside looked "to be the favourite big cap oil stock in the market at the moment".
Hartleys’ Ian Parker said the oil and gas major had been "very strong" over the past month.
"Particularly over the last couple of days," he said.
"You would have to think the market likes this announcement."
Besides Enfield, Woodside also has the Laminaria Corellina oil field 550 kilometres west of Darwin and the Legendre field off the North West Shelf.
It is also in the process of proving up its Mauritania find off Madagascar and two permits near Enfield called Laverda and Vincent.
There is talk of Laverda having a tieback into the Enfield production area but there are thought to be geotechnical difficulties preventing Vincent receiving the same treatment.
There is also the problem with Vincent straddling permit 155 that is owned by a consortium of BHP Billiton, Apache and Japanese player Impex.
Mr Foster said Enfield had been one of the major growth projects for Woodside and had been scheduled for a 2005 start.
He said besides Enfield, Woodside’s other major projects included LNG Train 5 and the Otway Gas development in conjunction with Origin Energy, which is scheduled to start in 2006.
Mauritania has also been pencilled in for a 2006 start.
The Enfield development will include five production wells and six water injection wells for reservoir pressure support with flowlines to a disconnectable FPSO that will be moored in about 400 metres of water.
Surplus gas not required for fuel will be returned to the reservoir via two gas injection wells.
The Perth-based Fluor Amec joint venture will conduct the topsides engineering and procurement services.
The Technip Subsea 7 Enfield Joint Venture will do the offshore installation work and supply subsea flowlines and dynamic risers.
Samsung Heavy Industries in Korea has been contracted to build the 150,000 tonne Suezmax-type tanker that will act as the FPSO.
It is understood the hull build will cost about $US100 million and the 8,000 ton topside work will cost about $US80 million to $US90 million.
