Alpha Petroleum’s plans for developing its flagship UK North Sea field appear to have suffered a blow after its floating production vessel deal with Teekay was terminated.
The companies inked an agreement in October 2018 for Teekay’s Petrojarl Varg vessel to operate on Alpha’s 100%-owned Cheviot field, located east of Shetland.
Alpha, backed by private-equity firm Petroleum Equity, has described Cheviot as one of the largest undeveloped fields in the basin.
The Surrey-headquartered firm said it expected to sanction the project by the end of 2018, with first oil slated for the second quarter of 2021.
But a final investment decision has not been announced and on Friday night Teekay revealed the deal was off, claiming Alpha had been unable to satisfy key conditions.
Teekay said Alpha was supposed to stump up initial funding to cover the cost of upgrades needed for Petrojarl Varg to work on Cheviot.
The contractor said Petrojarl Varg was available again and that it would immediately pursue other opportunities for the floating production, storage and offloading vessel.
Despite the collapse of the deal, Teekay wished Alpha every success with the project and didn’t rule out getting involved again, under different terms.
Chris Brett, president of Teekay Offshore Production, said: “We have been very impressed with the creativity, competence and determination of the Alpha Petroleum team to develop the Cheviot field which remains, in our opinion, a well-developed opportunity and we wish the Alpha team all the best in their continued efforts to bring the field into production.
“From a Teekay Offshore perspective, we look forward to advancing the next project for the Petrojarl Varg, which could still include the Cheviot development under a revised financing model.
“The Varg FPSO has had a long history of reliable production on the Norwegian Continental Shelf and provides a flexible production solution for a wide range of future developments in the North Sea and beyond.”
It’s unclear whether Alpha has alternative arrangements in place.
The company has been contacted for comment.