Offshore Platform 'Siri' for Repair Despite Cost Increase

Press Release April 22, 2012

Dong Energy implements permanent repair to North Sea Platform 'Siri' despite increased costs

Dong Energy is implementing a permanent repair solution necessary to restore the integrity of the Danish North Sea platform Siri.

The background for the repair work is that DONG Energy during a routine inspection in August 2009 discovered cracks in the nose of the subsea oil tank of the Siri platform. No pollution happened but the production was shut down for five months as a safety measure and re-started January 2010 after a temporary solution had been installed.

Following the progress of the project, the repair cost estimate has been increased from the initial expected DKK 2 billion to DKK 3.5 billion of which DKK 0.6 billion was incurred in 2011. For the remaining part (DKK 2.9 billion), the distribution between 2012 and 2013 is dependent on the progress of the project which is still uncertain. Currently, the expectation is that two-thirds will be incurred in 2012 and the one-third in 2013.

Flemming Horn Nielsen, Vice President and responsible for DONG Energy’s Danish oil and gas activities, underlines that the chosen repair solution and continued operation of the Danish North Sea platform Siri is still a solid business case despite increased cost of the repair work:

“The Siri area still holds valuable reserves and offers further upside opportunities for new reserves in the wider area. The repair project has been necessary to maintain a high safety and environmental standard for the Siri platform, which will function as a host for a number of fields in the area for many years to come”, Flemming Horn Nielsen said.

The cost has changed mainly due to the fact that the required repair solution is not an “off-the-shelf” repair job, but a complex work involving new techniques in offshore settings. During the project progress changes to the detailed design and engineering has had a large impact on the fabrication and installation.

Production from the Siri field and the processing of oil from the Siri area (today from the fields Nini, Nini East, Stine and Cecilie) is expected to continue at normal levels during the repair. However due to increased safety measures more outage time in 2012 and 2013 could be expected.