|
|||||
New Zealand Engineering 1998 June A Fresh Look at Floating Production for Marginal FieldsAlistair Nieuwenhuyse, New Zealand trained engineer, is based in Aberdeen and working in the North Sea. Alistair has specialised in the installation of floating production systems, flexible pipelines, umbilicals and the recovery of used subsea equipment.
Science and technology have changed the scene since the days of "wildcat" wells and now a significant amount of the risk has been eliminated in some well studied areas. New Zealand is generally classified as "under explored", yet there are known reserves of oil in economic quantities that are not being exploited. In an international industry where returns may be better in Vietnam or Thailand, New Zealand's reserves may stay unrecovered while the country continues to import 50,000 barrels of oil per day to meet present demand. Why leave it to the big guns when for quite reasonable money modest New Zealand companies could be developing marginal fields. What is against New Zealand investment is the high cost of new imported equipment and the low value of the dollar. The answer is to use our advantage _ an inexpensive, highly skilled and motivated workforce to refurbish the capital plant required. This plant is being sold for scrap here in the UK. Even better is that UK oil companies will soon be paying contractors to take the gear off their hands. Interested? What will we need for this venture? 1. Reserves of oil 2. Drilling capacity 3. Investors willing to fund restoration and removal/reinstallation works 4. Experienced people with good management skills 5. A means of transport for oil produced 6. Market. Let's look one by one at what might seem at first glance a daunting prospect. Reserves of oil The reserves are there and flow rates from test wells are public knowledge. The exploration licence holders have put their money in (some of them) and drilled on likely prospects identified by extensive seismic survey. In some cases this has been purely speculative; a big company looking for a big find to support a major multi-well facility for oil export. Note the emphasis on oil. The gas market in New Zealand is limited and the cost of distribution is high. Gas we have a lot of but it is not immediately commercially viable.Some exploration companies have relinquished their interest while others are sitting on information, but in the majority of cases the Government is a partner and should have access to the information. Companies that have made finds will be very interested in home grown exploitation because it simply won't happen otherwise. A small find of say 10 million barrels will support a £40,000/day floating production system producing as little as 15,000 barrels/day and still return adequate margins. Total production costs including drilling, plant, oil export and vessel operation of £6/barrel are possible in the UK and it is likely this can be reduced. Drilling capacity Drilling capacity is tight for semi-submersible rigs, however, there are drill ships laid up in Singapore that could be fitted out for work in moderate water depths. New Zealand weather is not kind for drilling and the hire of a drilling semi may be one of the unavoidable costs. There are exploration wells that, with workover, could be made into production wells. This work may be within the capabilities of vessels more readily available. A converted tanker with a moonpool and derrick makes a fine early production and storage vessel. At least 20 second-hand rig derricks will be available by the year 2000. Modern horizontal drilling, slimhole techniques, multilaterals and even multi-path wells are capable of turning exploration wells into producers, and can cut out months of drilling time. Three months drilling per completed well is not uncommon for a new well, however, a workover of three weeks to convert an exploration well into a producer may make weather risks associated with monohull drillers more acceptable. Investors How much needs to go up front before returns can be used to pay for incremental development? Say an early production vessel is used, a drill ship modelled off the early Glomar or Petro Jarl vessels, producing from a single well. The upfront costs will be mobilisation, workover and well completion, process plant, flare, tree, risers and moorings. The day rate or opportunity cost involved in taking the vessel out of action for refit and drilling time may amount to six months vessel hire before first oil. Subsea costs can be mitigated by use of a refurbished second-hand tree, control system, riser and umbilical. These items are available now. Moorings need not use new chain or anchors (piles). Where are the eight chains from the Brent Spar?Alternatively, dynamic positioning for floating production is now a reality, for example, Greenseas' "Crystal Sea" and Reading & Bates' "Seillean" SWOPS (single well oil producing system) vessels. The tree and riser can be installed from the production drill ship. Diverless tie-ins are no longer rocket science. Floaters don't have to be permanently moored. Disconnectable risers (and mooring buoys) mean that wells can be produced on an intermittent basis, avoiding the worst of the weather, or even using the production vessel for transport of the product. The bottom line depends on the ingenuity of the management team but it is not inconceivable to start production with as little as £10 million upfront. If we consider in the first instance a simplistic revenue model neglecting diminishing flow rates and net present value. If the oil were sold at say £10/barrel (less £5/barrel Opex) and 100 days/year @ 6000 barrels/day = £3 m/year profit. Detailed analysis is required to consider costs and returns over the life of the field, however, significant profit can be made from intermittent production. £5/barrel (including debt servicing) operating cost may be high especially if vessel day rate can be reduced. If production is then increased to say 30, 000 barrels/day with the addition of new wells then you are in the hay. Now if you drill and produce at same time from the one vessel, add gas lift and water injection as funds permit, the next thing you know, you are in the big league. Then you can look at second-hand structures such as the Phillips Maureen relocatable gravity base jacket _ but that is another story!
A word of warning from capitalist country _ unless you want a future like that portrayed in "Blade Runner" (social conditions not androids) you had better have a closer look at "market forces". The rot goes deep here but it may not yet be terminal in New Zealand. Support the little operations and there will be fewer big ones that dictate to you and spoil your freedom of choice. Transportation Transportation of product for local consumption could be by shuttle tanker to Marsden Point refinery or by a combined production, storage, transport vessel, or even pipeline ashore and then export by tanker.Transfer internationally needs to be in larger parcels, however, one 3-400,000 barrel tanker could service the single well producer for the Australian market. But production for local consumption would be aim of the exercise (especially if in partnership with and supported by the New Zealand Government). Market There is little doubt that without oil the New Zealand economy would stop. The cost of oil for industry and transport is one of the major forces in international politics and finance. With self sufficiency New Zealand will no longer be at the mercy of overseas banks, and the interest and foreign exchange saved can be pumped into the New Zealand economy instead of European, American and Asian banks. Gas markets may come or methods of transforming gas to a more useful and transportable fuel. In the meantime gas produced can be re-injected and stored in the oil producing formation for future use.Oil should and can be valued more highly and the revenue used to develop more environmentally sound transport and industrial systems and eventually alternatives to oil itself. This is a challenge to the Richardsons, Frasers, Smiths, Fitzroys, Sims and Kidsons out there! Come on you men of Vision and Ingenuity, don't retire just yet, don't leave us with the corporate accountants (and foreign debt). What is the downside? Let's get to it! |
|||||
 |
|
|
|
Experienced
People