Cheviot

Cheviot Oil and Gas Project Profile

History and Discovery

• The Cheviot field, originally known as the Emerald field, was discovered in 1975. It was initially developed in the mid-1990s by Midland and Scottish Resources but was prematurely abandoned in 1996 due to inadequate project planning and execution, resulting in only 8% of the original oil in place being produced.

Licensing and Ownership

• In 2003, Alpha Petroleum Resources Ltd. was awarded the licence for the Cheviot field in the UK's 21st Licence Round. Alpha Petroleum held a 100% interest in the field until it was acquired by Waldorf Production Ltd. in 2022 through a binding sale and purchase agreement.

Geology and Reserves

• The Cheviot field is located in blocks 2/10b, 2/15a, 3/6a, and 3/11b, east of the Shetland Islands in the UK North Sea.
• The field consists of high-quality Jurassic Emerald sandstone with 21-23 API oil overlying a fractured basement.
• Estimated contingent resources include approximately 55 million barrels (MMbbls) of oil and 120 billion cubic feet (BCF) of gas.

Previous Development Attempts

• The initial development by Midland and Scottish Resources achieved peak oil rates of 22,000 barrels per day (bpd) but was halted early due to water breakthrough issues resulting from sub-optimal well positioning.

Current Development Plans

• Under Alpha Petroleum, a revised Field Development Plan (FDP) was developed and gained technical acceptance from the UK's Oil and Gas Authority (OGA) in December 2015. This plan involved the development of oil from the Cheviot and satellite Peel fields, followed by the development of the Cheviot gas caps and the Padon satellite field. The plan included redeploying the Varg FPSO from the southern Norwegian North Sea and partnering with GE Oil & Gas for subsea infrastructure and financing.
• However, since Waldorf Production took over, the project has faced challenges due to low recovery rates, increased capital and operating costs, and the need to contribute to net zero targets. As a result, the oil development is currently on hold, and Waldorf is focusing on assessing the potential to develop the gas cap and nearby discoveries such as Padon through a subsea tieback to existing infrastructure.

Current Status

• Waldorf Production is conducting assess stage studies to evaluate the potential for developing the field either as an oil development with a future gas cap blowdown or as a gas development. The company has recycled the field to the assess stage to complete these studies and prepare for a potential FDP submission.

Infrastructure and Partnerships

• Previous plans under Alpha Petroleum included an agreement with Teekay to redeploy the Varg FPSO to Cheviot and a partnership with GE Oil & Gas for subsea infrastructure, project management, and procurement activities. GE Energy Financial Services was also involved in raising debt financing and considering a significant capital investment.
• Current infrastructure plans under Waldorf are under evaluation, with a focus on subsea tiebacks to existing infrastructure in the area.

Operational Considerations

• The project faces significant challenges, including low recovery rates, high capital and operating costs, and the need to align with net zero targets. These factors have made the economics of the project challenging, leading to a reevaluation of the development strategy.