Mobil Producing Netherlands, Inc. as Operator for the P/12 Group of Dutch Offshore block P/12 recently concluded an Operating Lease Agreement for the supply of a compression module with the Dutch engineering contractor ABB Global Engineering b.v. Because of the envisaged short term use of the equipment, leasing of the complete module proved to be a cost effective alternative to purchasing. Leasing presented a tailored and flexible approach to capital equipment financing.
The module is compressing gas coming from two small gas fields in Dutch offshore block P/12 with total reserves of some 150 Bscf. The 250 ton module was installed on the Mobil operated P/6-A gas production platform during fall of 1992. The module includes a 4 MW single stage compressor skid and is capable of compressing 100 MMscf/d of gas from a minimum suction pressure of 500 psi to pipeline pressure of 1500 psi.
The lease agreement was constructed as an Engineering, Procurement, Installation and Commissioning (EPIC) type contract and included detailed egineering, procurement and supply of all equipment, module fabrication, single lift installation, and hook-up and commissioning. One main contractor had full responsibility for getting the module built, installed and operational.
The lease has a three year base term, after which the term can be extended on a yearly basis, or the lease can be terminated by either purchasing the module for a pre-determined price, or by returning the module to the owner. The lease is the first of its kind in the North Sea area.
The financial and economic benefits of the lease concept are explained, and the roles and responsibilities of the different parties involved in the lease agreement are discussed.