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O TC 2286 0

O TC 2286 0 S ubsea P r ocessi n g: A Ho l istic Ap

S ubsea P rocessin g: A Ho listic Ap proach t o Margi nal Field Develo pments

N. Abili, O.Udo fot, F.Kara, / Cranfield U niversity UK

Cop yright 2012, Offshore

Technology Confer ence

This paper was prepared for presentation at t he Offshore Technol ogy Conference held in Houston, Texas, U SA, 30 April–3 May 2012.

This paper was selected for presentation by

revi ewed by the Offshore

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an OTC program co mmittee following rev iew of information co ntained in an abstra ct submitted by the a uthor(s). Contents o f the paper have not been

Technology Confer ence and are subjec t to correction by the author(s). The mate rial does not necess arily reflect any posit ion of the Offshore T echnology Conferen ce, its

this paper without th e written consent of the Offshore Techn ology Conference is

prohibited. Permiss ion to

Techn ology Conference is prohibited. Permiss ion to Ab stract Description Th e application of Full
Techn ology Conference is prohibited. Permiss ion to Ab stract Description Th e application of Full

Ab stract

Description

Th e application of Full Subs ea Processing

att ractive option

of the fields ha ve remained

ec onomics occa sioned by err oneous estim ates in basic input parame ters. But the right method of applicatio n for develop ing

ma rginal fields

de velopment of these fields.

an

for breaking the techno-e conomic barr iers which ha ve long hind ered the deve lopment of th ese fields. So me

and

(FSP) to de velop remotel y located ma rginal fields i n Offshore W

est Africa is

marginal and unproduced

to

ens ure that

both

over the year s, arguably, d ue to incorre ct estimates i n recoveries

National a nd Internatio nal Operatin g Companies

partake in

must be so ught

the

Th is paper explo res the use of full subsea pro cessing techn ology to devel op marginal fi elds economic ally.

Application

These challen ges

are

nu mber of such fields exist i n Nigeria wi th no concret e plans in pla ce yet to dev elop them d ue to the chal lenges involv ed.

Su bsea processi ng which ha s recently ga ined broader de veloping such fields.

of

Th e economic d evelopment

processing f acilities. A g ood

of marginal fi elds in Offsh ore West Afr ica poses hug e technology challenges.

with long step -out distance from existing

acceptance i n the industr y offers a vi

further com plicated as th e field is loca ted offshore

ble and attra ctive method

Results, Obs ervations, Co nclusions

conducted a nd their vari ous

rea diness levels determined.

ad vantages stem ming from t he applicatio n of FSP. In creased recov ery and redu ced OPEX h ave been est ablished as v ital

associated w ith

(FSU) ident ified. A holi stic

ap proach which considers de veloping a gr oup of fields together rath er than a sing le field at a t ime is adopte d to develop the re mote offshore marginal fiel ds in offshore West Africa.

Ex tensive quali fication of th e different te chnologies a vailable for c arrying out

has also been done to reve al the enorm ous

FSP has been

A systematic analysis of a n existing m arginal field

inc entives for d eveloping m arginal fields

re mote fields a re developed

and the best

economically . Various me thods of ove rcoming the long distance

method whi ch incorpora tes a floating

storage unit

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Significance of Subject Matter

The cumulative effects of FSP are significant increases in the quantity of oil & gas recovered, and a largely reduced OPEX which are the most critical elements for developing marginal fields economically. The proper equipments for carrying out these processes are incorporated in a Full Subsea Processing Station (FSPS). Application of this new subsea processing techniques/technologies is a major facilitator to achieve the goal of marginal field developments.

List of Acronyms

CAPEX: Capital Expenditure

CPF: Central Processing Facility

CM: Combinational Method

DPR: Department of Petroleum Resources

FSP: Full Subsea Processing

FSPS: Full Subsea Processing Station

FSU: Floating Storage Unit

GCE: Gas Compression Equipment

GOR: Gas Oil Ratio

IMR: Inspection Maintenance & Repair

IPRR: Install-Produce-Retrieve-Re-install

OPEX: Operating Expenditure

RVP: Reid Vapour Pressure

RSWIP: Raw Seawater Injection Pump

SM: Simultaneous Method

SPP: Single Phase Pump

SSBI: subsea separation, boosting and injection

STOIIP: Stock Tank Oil Initially In Place

TRL: Technology Readiness Level

VASPS: Vertical Annular Separation and Pumping System

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1. Introduction

Subsea processing technology is maturing and is making its way into the toolbox of the oil industries for development of oil and gas fields with huge prospects for developing remotely challenging fields 17 . In the current climate, exploration and production has moved into unlocking reserves in less attractive and difficult environments, requiring innovations and qualified technologies. These marginal fields located offshore or onshore in some cases, requires one form of processing or another before they can be commercially productive.

Today, Operators are interested in the development of oil and gas reserves lying in ultra deep waters, and the tie-back of remote marginal fields to existing production facilities. Subsea processing is recognized to be an efficient way for oil and gas production enhancement, especially for fields having challenging reservoir characteristics or lying in very deepwater. These marginal fields must be developed with cost efficient solutions and innovative technologies to allow the economic recovery of the reserves, as conventional solutions may not be viable 5 . The subsea separation of associated gas and subsea boosting of liquid through pumping is one of the most interesting solution in deep and ultra deepwater, allowing longer tie-back distances.

Literature has been published on marginal field developments, the challenging gaps and the applications of subsea processing technology 3, 5, 6, 7, 10, 16 . An evaluation of the technology opportunities available to develop these marginal fields is examined with potential options demonstrated.

1.1 Key Definitions

1) Marginal Fields – Several definitions exist for marginal fields, but the commonly accepted ones are:

a. A field that may not produce enough net income to make it worth developing at a given time; should technical or economic conditions change, such a field may become commercial 3 .

b. A field with estimated average production capacity not expected to exceed 10,000 bbl per day 11 .

c. The Nigerian Department of Petroleum Resources classifies fields with the following characteristics as marginal 9, 11 .

Low Stock Tank Oil Initially In Place (STOIIP), therefore low reserves - high gas and low oil reserves

Cannot be developed using conventional methods

Abandoned due to economic reasons

Considering the above, it can be seen that to develop a marginal field profitably, innovative technology and solutions must be applied. This means that the economic benefits that can be derived from developing the field and producing these reserves, limits the amount of capital and operational investments that could be made even if the technology for doing it is available.

2) Subsea Processing – 3 well accepted definitions for subsea processing are stated below.

a. McClimans & Fantoft 13 defines subsea processing as any active handling and treatment of produced fluids at or below the

seabed.

b. Davies et al 16 describes it as involving one or more combinations of fluid conditioning and pressure boosting of well stream

fluids and water (from a reservoir or from the water column) at the seabed.

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OTC 22 860

such as pum ps,

se parators, pow er distributi on systems, a nd compress ors installed o n the seafloo r. For oil sys tems, this eq uipment prov ides

oil polishing , and raw se awater inject ion for reser voir

pr essure suppor t. For gas sys tems, process ing includes subsea gas co mpression an d subsea gas dew point co ntrol/dehydra tion

K

Janardhanan

& Mac Mc Kee 11 also c onsiders Sub sea processi ng generally

separation,

sales-quality

to encomp ass systems

pre ssure boostin g, processin g, bulk water

for flow assuran ce and sales q uality.

or conditioni ng” given to l ive hydrocar bon

to

de liver processe d gas to tops de, and a sys tem to achiev e this is show n below in F igure 1, with subsea proce ssing system gas

flu ids from the reservoir to

3) Full Subsea Processing – Means the complete “ac tive handlin g, treatment

enable it arri ve at topside /receiving fac ility for expo rt/refining/us e. One of the

objectives is

co mpressor mod ule 11 .

e. One of the objectives is co m pressor mo d ule 1 1 . Figur

Figur

e 1 - Subsea P rocess System s showing gas

Compression M odules (Source: R Fantoft, OT C 17399)

out through the well into t he Full Subse a Processing Station wher e sand and oth er solids are f irst

into oil and water. Produ ced

wa ter and sand are disposed

to the Single Pha se Pump (SPP ) for boosting . Chemical co nditioning an d active heati ng can be ap plied subsea i f required bef ore

to provide a rtificial lift ( gas lift). If a lso

of these econ omic benefit s is

the

re moved follow ed by separat ion of the flu id into gas an d liquid. The liquid is furt her separated

gas is comp ressed in th e Gas Comp ression Equip ment (GCE), while the oil g oes

Fl uids from the reservoir flow

subsea. The

processed

fluids are pu mped to the

receiving fa cility. Gas

may be used

req uired, water can be treate d and injecte d into the re servoir to m aintain pressu re. A detail

dis cussed in the “remotely lo cated margina l field” sectio n. Figure 2 be low captures the concept o f Full Subsea Processing.

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5

R eceiving Fa cility
R eceiving Fa cility

Export Ready Flui d

T emperatur e/Chemica l Conditio ning
T emperatur e/Chemica l Conditio ning

Boosted

Fluid

C ompressio n
C ompressio n
Boostin g
Boostin g

Oil

l Conditio ning Boosted Fluid C ompressio n Boostin g Oil Liqu id Ga s Gas

Liqu id

Ga s

Gas Sand H andling Separato r Oil
Gas
Sand
H andling
Separato r
Oil
Raw Oil Sea water Sepa rator Water
Raw
Oil
Sea water
Sepa rator
Water

Produ ced water

Oil Raw Oil Sea water Sepa rator Water Produ c ed water Injection Pump Reservoi r
Injection Pump
Injection
Pump

Reservoi r Fluid

R eservoir
R eservoir

Figure 2

- Fundamental building blocks for full Subsea Processing

4)

Floating St orage Unit ( FSU) – Is a floating vess el with appro priate faciliti es for receiv ing and stora ge of proces sed

hy drocarbon fl uids. For the req uired.

purpose of

this report, it

includes floa ters with ver y minimum p rocessing fac ilities as may

be

5)

Technology Readiness

Level (TRL)

– Is an asse ssment metho d which sho ws the exten t to which a n equipment

or

sy stem

is read y for use gi ven specified

qualification

factors/requi rements. The API RP 17N – Recomme nded Practice for

Su bsea Product ion System -

un proven, to 7 f or proven tec hnology as s hown in App endix D 4 . T o attain a T RL of 7 (i.e . to be class ified as pro ven

for

Reliability

and Technica l Risk Mana gement defin es 8 differen t TRLs begi nning with 0

tec hnology), a s ystem must fu lfil the follow ing conditio ns 4 :

Manu factured prod uction unit inc orporated wi th the operati ng system

System

Syste m shows low r isk of failure s in early life

operated wit h acceptable r eliability in re al field envir onment for a t ime period gr eater than 3 y ears

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2. Remotely Located Marginal Field

An examination of full subsea processing to develop marginal field that is located in a remote location offshore is considered, at 100Km away from the nearest fixed or floating production platform. Because the field is a marginal one, the amount of initial investment (CAPEX) is seriously limited by the economic benefits derivable. Secondly, its remote location reduces the possibility of obtaining assistance from nearby platforms in terms of water injection, power supply, etc. Few options are available for developing such a field. If full subsea processing is applied, then one of the options below will be chosen after due processing subsea:

a. Transport the produced hydrocarbons to the nearest fixed, floating, or shore facility 100Km away, for onward delivery to a refinery

b. Use an FSU (Floating Storage Unit) with appropriate receiving facilities at RVP of 10 – 12 psi, positioned in the field.

2.1 Subsea Processing Requirements

Having decided to use full subsea processing, the next level is to determine what types of subsea processing would be required for the field. This is necessary as some well fluids require just one or two of the processing while others require all. It is also important to determine early in the project planning the exact time when subsea processing becomes necessary. This is because not all fields will require major processing at the very beginning of production 18 . For instance, if from initial field studies, water break through is not expected until after the third year of production, it may not be necessary to install water separation equipment from the start. Also, if the natural flow pressure is sufficient until the fourth year, then boosting equipment may not be installed until the third year of production. For the benefit of this paper we shall examine subsea boosting

application.

2.1.1 Boosting

Boosting is one means of “artificial lift” applied to lift produced fluids to the surface. Its effect reduces the back pressure on the reservoir thereby increasing production rate given the same draw down. Subsea booster pumps could be single phase or multiphase pumps and may be positioned downhole or on the seabed 20 . This technology is the most mature subsea processing technology. They may operate alone or complement other artificial lift methods. Use of subsea boosting offers the following benefits:

a. Increase flowline inlet pressure to enable long distance tie-back to existing or new production facility, or transport to shore.

b. Provide lift to wells with low natural production caused by low GOR, high water cut, or very deep water.

c. Accelerate production with reduced production time.

Most subsea boosting applications use multiphase pumps. Subsea multiphase pumps are based on 2 general types – the hydrodynamic and positive displacement types.

Electrical Submersible Pump (ESP) technology is an attractive solution for providing necessary boosting to deliver increased production volumes to topside facilities. The first use of subsea electrical submersible pump was made by Petrobras in 1994 following the success of a prototype testing in subsea well RJS-221. Through the PROCAP 3000

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Program, ESPs have been operated at over 1000m producing up to3774 bbl per day with 40% free gas. A typical pump can handle more than 3145 bbl per day of fluid 20 .

The pump assembly is made up of hundreds of centrifugal sections having small diameter with each one mounted serially. The pump is coupled to a motor which has a seal assembly and is filled with a fluid greater with density than water. Most ESP motors run on 60Hz frequency and have capacities between 100 to 500HP 20 . Electrical power is supplied to it by electrical cables attached to the tubing supporting the pump assembly. The major disadvantage of using ESPs is their reliability as they were considered to have short life spans many years back. Also, since they are installed downhole, the cost of intervention in case of failure will be high. However, they can operate for years at high flow rate and in harsh environments 20 .

This technology is proven and is widely used in the oil and gas industry. It has a TRL of 7 4 . However boosting may not be necessary if the option of using an FSU is chosen, except if it is envisaged that the fluids may not flow naturally to the FSU at some point during production. But if the option of transporting the fluid over a step out distance of 100Km is chosen, boosting becomes very important and must be given due attention. This option may become attractive when some experience gained is used in applying it to the marginal field scenario.

Another attraction is the Single phase pump. In this pumping when applied, more energy is used for compressing gas than for pumping liquid. Baker and Entress concluded that the separation of well fluids into gaseous and liquid phases and application of single phase pumping “is thermodynamically the most efficient way of transferring well stream fluids from remote locations” 1 . This is because in multiphase pumping, most of the energy is applied to compressing the gas while only a little fraction of the pumping energy is applied to the liquid. But in actual fact, it is the liquid that requires more energy for its transportation over long distance than the gas since the gas is of much lower density. Single phase pumping is more efficient because the boosting energy is directly applied to the stream where it is needed.

2.2 Overcoming 100Km Step Out Distance

The technology for liquid boosting is mature. With this technology, liquid boosting can be applied to covers a step out distance of up to 100Km. Table 1 shows the longest step out distances achieved for various real life commercial applications of boosting. It is clear from the table that the ETAP - MACHAR Field with a step out distance of 35.2Km is the longest. It uses a water driven turbine powered by injection water from topside of a central processing facility (CPF) 18 .

Field

Depth (m)

Distance (km)

Year

King

1700

29

2007

ETAP - Machar

84.5

35.2

1999

Otter

185

21

2002

Tyrihans

270

31

2009

Table 1 - Long step out subsea boosting applications

This means that the power for the drive is provided by surface pumps located in the CPF. Thus providing injection water to drive a turbine from 100Km away can be applied on this long stepout development. Furthermore, a study carried out by Baker et al claims that the VASP can pump liquid to cover up to 100Km distance 1 , although this has not been

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OTC 22 860

pr actically teste d and proven for such 100 km applicati on. A typical application a vailable is th e Tytihans fi eld subsea pu mp

Seawater I njection Pu mp

wi th power sup ply as a mean s to drive thi s pump over t he step out d istance. The

Tyrihans Raw

(R SWIP) whi ch was test ed and has

been succe ssfully install ed is the wo rld’s most p owerful subs ea pump and

is

ins talled for a

step out of o ver 31Km fr om the host

platform 8 . It

is a single p hase electric ally driven p ump that can

be

lev eraged on to cover 100km step out dista nce.

To

cover a step

out distance

of 100Km,

2 options are

available. T he first optio n is to provi de several b oosting stati ons

alo ng the step

out route. Fo r example, 4 boosting stat ions along th e 100Km pipe line using 3

pumps with t he same capa city

of the Tyrihans

RSWIP (assum ing depth, vo lume, pipeline

size, etc are t he same). The se stations w ill be positio ned 31Km ap art,

i.e , at 0Km, 31 Km, 62Km a nd 93Km (a s maller pump to cover onl y 7Km) alon g the pipelin e to boost the

en sure transport ation of the f luid to its des tination. This is depicted i n Figure 3.

fluid. This

will

100Km

OKm

3

1Km

62Km

93Km

R eceiving F acility
R eceiving
F acility
B1 B 2 B3 B4
B1
B
2
B3
B4

Fluids

Km 62K m 93Km R eceiving F acility B1 B 2 B3 B4 Fluids F igure

F igure 3 - Boo

ster stations al ong step out ro ute

Th e second opti on is to manu facture and us e one pump

To

with adequate capacity to c over the dep th and the 1 00Km distan ce.

find out the

capacity of pump requir ed for this, w e use the gen eral rule of t humb for esti mating requir ed pump dut y.

2.2.1 Pump Duty Requir ed for 100K m

Ru le of thumb:

Pu mp Duty = ( Water depth X grad) + ( distance X F rictional

los s)

Ty pical multiph ase gradient

50 psi/mile.

for oil after

water separ ation is 0.3p si/ft, and typ ical multiph ase pipeline

frictional los s is

As suming a dep th of 300m = 984.252ft an d a distance = 100Km = 62. 13712mile

Pu mp duty = (9 84.252 x 0.3 ) + (62.1371 2 x 50) = 34 02.1316psi = 234.569bar =

23 .457Mpa.

Th is is only a ro ugh idea of w hat is required . It assumes t hat the pump suction and fl uid boarding pressures are equal. In thi s, it

dis regards the n atural flow p ressure of th e fluid which is normally

flo w pressure w ould have be en reduced co nsiderably by

present. How ever it is a g ood assumpti on as the nat ural

any separato r located ups tream of the p ump.

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9

It is important to note that the required pump duty will increase as the depth increases. Also, more work/energy is required to lift liquid over a vertical distance than to push it over an equal horizontal distance. The pump duty required to overcome the distance alone is the component.

From the above pump calculation, Distance x Frictional loss is:

62.13712 x 50 = 3106.856 = 214.2102bar = 21.421Mpa.

Studies carried out on single phase pumps indicate that if the oil has low viscosity is less than 1 Cp, then up to 27.579Mpa (4000psi) can be achieved and even exceeded with expected improvements in subsea pumping technology 8 .

2.2.2 Effect of Long Distance Step out Boosting

The major reason for using ESPs in the Otter Field was for artificial lift to enable the produced fluid get to the receiving facilities at Eider which is located in 157mwd. To do this, the fluid have to be transported from 185mwd over 23km (including 2km well length) while climbing 28m to get to 157mwd, ascend the 157m to the sea surface and a further 22.5m to reach platform facilities. The power for this is provided by the ESPs which offered more benefits over other artificial lift methods like gas lift and hydraulic submersible pumps that were considered for the development 20, 21, 22

2.2.3 Gas Compression

After separation, gas will be transported to the receiving station to be used for electricity generation and other services. Separate pipelines and risers will be required for this. If the gas is available in commercial quantity, then the receiving facility must be prepared to receive it and compression/pumping over 100km may be considered. If gas is not available in commercial quantity, the excess gas can be injected into a reservoir to avoid flaring 13 .

2.2.4 Re- Injection

Produced water and solids are products of the separation process for injection back into a reservoir. Though they can be disposed onto the seabed (seabed dumping) no technology is known to have been developed for this. For injection into a reservoir, first a well must exist or be drilled for this purpose. Second, a pump must be available to inject the water and solids into the reservoir that will not be plugged up immediately by the disposed solids. If separated gas is to be injected also, then it is either compressed subsea and pumped, or it can be recombined with the water and a multiphase pump used to inject the water/gas mixture. After separating the fluid into its constituent phases, the Tordis separator recombines the oil and the gas for pumping by the multiphase pump 15, 20 . This separator can be re-configured to combine the separated water and gas (instead of oil and gas) before disposal by a multiphase pump into the reservoir.

2.2.5 Floating Storage Unit (FSU)

The use of a floating storage unit (FSU) offers many advantages over the option of running 100km pipeline. First the pump capacity, energy power required to boost the fluids is much reduced as the FSU will typically be positioned 0.5 to 3Km away from the subsea facilities 22 . The pumps required to cover this is very readily available. Secondly, it brings the control system, power supply, storage and other facilities closer to the development and eliminates the need to run a

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OTC 22 860

10 0km pipelin e 10 . Another i mportant ben efit of using

FSU is that it is a floater an d can be relo cated easily f rom one posit ion

to

another with

a

RVP of 10 –

12 psi. Apar t from making

enormous sa vings during decommissio ning, it can be

used to deve lop

oth

er fields whe re necessary.

 

3. Remote Ma rginal Field s, Offshore West Afric a Case Stud y

An application o f the available subsea proce ssing technolo gy in develop ing remotely l ocated offshor e marginal fie lds particularl y in

Ni

geria is demon strated. The m ap in appendi x B and C sho ws the Marg inal Fields in Nigeria’s Ni ger Delta 2 . Th e Departmen t of

Pe

troleum Reso urces estimat ed that each field can pro duce about 5 000 bbl/d an d 5 to 50 mi llion barrels

over 20 years

of

pr

oduction 15 . 5

of the fields h old about 30 0 million bar rels giving an

average of 6 0 million ba rrels of oil pe r field, while 20

oth

er fields each

hold 15 to 2 0 million barr els 11 .

 

3.1

Field Grou ping

 

To

develop the se fields eco nomically u sing full sub sea processin g, a broad a pproach will be adopted. A

number of s uch

fie

lds, say 6 fiel ds, located re latively close together wil l be consider ed collectivel y for develop ment. So the first approac h is

to

identify and

map out fields

located in th e same gener al vicinity an d then group

them into clu sters. These f ields are loca ted

far

away from

a

production

platform or o ff-take point but not neces sarily far aw ay from othe r marginal fie lds. After thi s is

do

ne, then an FS U can be use d for the deve lopment.

 

3.1.1 Instal l-Produce-Re

trieve-Refur

bish (IPRR)

A

concept strat egy which is crucial to pro ducing a gro up of margin al fields econ omically is

proposed. Th e equipment for

de

veloping the

fields is ma nufactured,

moved to site

and installed . After Instal lation and al l other operat ional procedu res

ap

plied, the fiel d is produced

until it is a bandoned. T hen the equ ipments are retrieved fro m the seabe d, refurbished

as

ne

cessary, mov ed onto to a nother field

as the case

might be and

installed ag ain. The cyc le continues

until all fie lds

id

entified in th e group are p roduced. Th e IPRR proce ss is depicted

in the Figure

4 below.

in th e group are p roduced. Th e IPRR proce ss is depicted in the

Figur

e 4 - Concept of IPRR

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11

3.1.2 Design

The design of the systems to be used for this concept plays a crucial part in the success of the overall development. All subsea equipment for this service will be designed to operate for a long time (25 - 35years). This will enable it to be used to produce up to 5 fields each with an average life of 5 years. Table 2 shows the various subsea processing installations and their design life 16 . The table shows that subsea systems have been designed to operate for more than 25 years.

Systems

Depth (m)

Design Life (yrs)

Troll Pilot Subsea

349

25

Tordis SSBI

210

26

Tyrihans RSWI

270

25

Gulffaks Gas Compression

135

20

Asgard Gas Compression

260

30

Table 2 - Design lifetime for subsea processing stations

Also, the systems must be designed with very high reliability to reduce Intervention Maintenance and Repair (IMR) which will impact on the OPEX. Intervention will be planned for every 3 years. So for a field life of 5 years, only one intervention is expected. The systems will be designed for repeated installation and retrieval. All steps must be taken to ensure easy installation and retrieval. Again modularization for the different subsea processing systems – separation, boosting, compression etc should be done for easy maintenance.

3.1.3 Retrieval

This is the process of “uninstalling” or removing the installed subsea equipment from the seabed after all recoverable reserves have been produced. An appropriate vessel with the necessary equipment is required for this purpose. The retrieval operation must be properly planned and carefully carried out to ensure that there is no damage to systems. The retrieved equipment may then be transported by the same vessel or a different vessel for refurbishing.

3.1.4 Refurbishing

The first step in refurbishing is to clean the retrieved equipment. Then a thorough inspection is carried out to detect any defects, damage or malfunction of any component/part/equipment/system. If necessary, the defects are rectified and/or parts replaced with spares before reconditioning and retesting to original standards in order to ascertain integrity and reliability of the system. Refurbishing can be done:

a. On a vessel equipped for the purpose (with clean room facilities, pressure test facilities and gas test facilties, etc, coupled with other specialist kits – this will save time) or,

b. In a refurbishing centre located on the coast close to the area of operations. Established factories abound in the Niger

Delta and one with the desired facilities can be identified and used. This method of refurbishing will take more time as the equipment have to be transported to the centre, refurbished and transported back. If the systems are properly designed and manufactured for this purpose, then it will be expected that for the first 2 or 3 fields, very little or no refurbishing will be required. However, it is necessary to clean and inspect the equipment so as to detect any damage caused by the retrieval

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OTC 22860

process. Several factors affect the quality of refurbishing that can be carried out such as period of operations, condition of operations, extent of damage, availability of spares for replacement where required, etc. Notwithstanding this, refurbished equipment can be 80% to 99% as good as new.

4. Cost Analysis

4.1 Assumptions

In analysing the cost involved in developing these fields, the following assumptions have been made:

> All the fields require full subsea processing

> All the fields lie at a depth of 180m of seawater or less

> They have similar characteristics

> Each field has 20million bbls of oil

> 45% of the reserves held are recoverable using FSP

> Each field will be produced in 5 years

> None of the systems to be re-used was damaged beyond refurbishing throughout the period

> Gas is not available in commercial quantity and is therefore recombined with produced water and re-injected subsea into the reservoir

> The FSU has a capacity of 65,000bbls and is fitted with minimum processing facilities for reception and conditioning to handle at least 20,000bbl/d.

4.2 Data

Most of the data used in this section were obtained from

a.

A real life proposal made for development of the Otter field using an FPSO in 1998 10 .

b.

An economic analysis of marginal field development in Nigeria - 2006 19 .

4.3

CAPEX

The cost of Tordis SSBI was $100 million 9 . Therefore it is assumed that the cost of the FSPS = $100million.

Cost of a new FSU = $140 million 9 . The cost of acquiring a FPSO - converted tanker is $120 million 19 . However, the above cost for the FSU has been arrived at after considering that only minimal processing facilities are required on the vessel and the vessel will be a new build one (not old converted tanker) as it is expected to function for at least 30 years. To develop the first field, the following initial CAPEX as shown in Table 3 applies.

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13

No

Description

Cost ($)

1

Management & Engineering

1,194,000

2

Drilling & downhole completion

55,328,000

3

Subsea production & Well Systems

10,181,000

4

Seabed structures & piping system

3,793,000

5

Flowlines & tie-in spools

7,923,000

6

Riser & other accessories

8,181,000

7

Control system

5,022,000

 

TOTAL

91,622,000

Table 3 - Initial CAPEX

CAPEX for initial development of the first field is thus $91,622,000 9 . Since this figures above were obtained in 1998, a price adjustment has to be made from 2011 - 1999 = 12yrs.

Assuming an annual price increase of 5%, the adjusted price for 2011 will be obtained by compounding $91,622,000 at 5% for 12 years. This is done in EXCEL as shown in Appendix A. The value for 2010 = $206,350,298 which approximates to $206,000,000

Total CAPEX = FSU + FSPS + Initial CAPEX

= $140,000,000 + $100,000,000 + $206,000,000 = $446,000,000 = $446 million

This is for the first field.

NOTE: For the benefits of this paper based on cost assumptions, taxes have been excluded.

4.4 OPEX

Fixed operating cost: $8 million per annum, total for 5yrs = $40million and Variable operating cost: $3/bbl (variable cost according to Kue = 8$/bbl) 19 . But since nearly all the processing will be done subsea by FSPS, the cost is reduced to 3$/bbl). These costs were made with respect to 2006, hence subject to high price adjustment.

Variable cost for 11million barrels = $33 million

Total OPEX = $40 million + $33 million = $73 million Total Expenditure = Total CAPEX + Total OPEX

= $446miillion + $73 million

= $519million (for the first field)

14

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4.4.1 Income for First Field

Total reserves: 23 million bbl

Recoverable: 45% = 11million bbl

Price of oil: $70 per bbl

Total income: $770million

From this, it is clear that proceeds from the first field alone will pay for all CAPEX and even make a good profit before tax

and interest, etc. From the second year, the profits increase as the cost for major CAPEX items like an FSU and FSPS are

eliminated. Producing 11million bbl in 5 years will give an annual average production of 2.2 million bbl per annum =

6027.4bbl/d.

The Break Even Price (BEP) is the price of oil at which:

Total Expenditure = Total Income

Total Expenditure = BEP x Recoverable reserves

BEP = Total Expenditure Recoverable reserves

= 519 000 000

11 000 000

= $47.1818 which approximates to $47 before taxes and interest charges.

If the price of oil goes below this price, then no profit will be made for the first field before tax and interest.

5. Field Development Options

5.1 FSPS and Pipeline

The first option is to locate an FSPS (full subsea processing station) in a position central to the group of fields, with a

central long distance pipeline to nearest receiving facility. This option is fraught with many challenges which will

significantly increase CAPEX and OPEX. It will only be attractive if:

a. The fields are together and hold a considerably large amount of reserves

b. The cluster of fields are relatively close together

Figure 5 is a sketch of the development with the various fields requiring only short lengths of pipesline to terminate at the

central FSPS. The CAPEX associated with laying the main pipeline may make this option less attractive.

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15

M arginal Fie lds

F2 F 1 F 3 Receiv ing Facil ity F4 FSPS RX Pip eline FX
F2
F
1
F
3
Receiv ing
Facil ity
F4
FSPS
RX
Pip eline
FX
F5
F7
F6

5.2 FSU and I PRR

Figure 5 - F

SPS and Long d istance pipelin e

Us ing an FSU a nd applying t he IPRR conc ept is the best way to devel op the field.

This can be d one in 2 ways .

a. If the group s of fields ar e relatively cl ose together like the abov e case, then t he FSU is po sitioned abo ve the FSPS co nnected to it v ia risers.

b. The FSPS a nd the FSU c an be positio ned in one fi eld and after the productio n is complete d, they are m oved to anot her

fie ld.

and

5.3 Install-Pro

duce-Retrie ve-Re-install

Af ter productio n, the fields w ill each be d ecommission ed; it is assum ed that the s ubsea produc tion equipme nt including the FS PS will be r etrieved duri ng this phas e. Thus the d ecommission ing cost cove rs IPRR retri eval. Decom missioning co sts $5 million. Ref urbishing tak es place on a n appropriat e vessel (or i n the closest shore based fa ctory).

16

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No

Description

Cost ($)

1

Management & Engineering

1,194,000

2

Drilling & downhole completion

55,328,000

3

Subsea production & Well Systems

Testing

185,000

Offshore installation

309000

4*

Decommissioning*

5000000

5

Seabed structures & piping system

Integration & testing

239000

Offshore installation

1004000

6

Flowlines & tie-in spools

Spool pieces testing

75900

Offshore installation

4698000

7

Riser & other accessories

Offshore installation

2982000

8

Control system

FAT testing

231000

Offshore installation

Included with item 6 above

9**

Refurbishing**

1750000

TOTAL

73000000

Table 4 - Installation of subsea systems in IPRR

For re-installation in a new field, only items 1 and 2 in Table 4 above remain unchanged. This is because detailed engineering, procurement, fabrication, assembly and transporting are substantially reduced as a result of applying IPRR. The other items only require installation and testing as shown in the table 9 .

The cost of refurbishing is expected to be much less for the first 3 fields. Thereafter, more serious refurbishing may be required with considerable cost.

The figure stipulated is however assumed as an average for use in all the fields. The total figure for decommissioning of a produced field and re-installation (D&R) for a new field is, D&R = $154 million + $5 million = $159 million

This is used as an average for the 4 occasions when re-installation is carried out. The entire field development programme with the profits is shown below in Table 5.

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17

Year

0 - 5

6 10

11 15

16 20

21 - 25

Field

F1

F2

F3

F4

F5

CAPEX

446

159

199

248

310

OPEX

73

91

114

143

178

Decommission

5

6

8

10

12

Total Expenditure

524

256

321

401

500

Income @ $70

770

770

770

770

770

Profit

246

514

449

369

270

NPV of profit@ 10% *r

153

198

108

55

25

*r = discount rate

Table 5 - Field production timeline showing profit before tax in $million

OPEX and Decommissioning costs have both been adjusted for a 5% increase per annum.

The NPV is calculated using the formula:

NPV =

A

(1+r) t

where A = future value = profit, r = discount rate = 10%, and

t = time in years = 5, 10, 15, 20, 25

For Field F1,

NPV = 246 (1+0.1) 5

= 153;

For F2, NPV= 514 (1+0.1) 10

= 198

For F3, NPV = 449 (1+0.1) 15

= 108;

For F4, NPV = 369 (1+0.1) 20

= 55

And F5,

NPV = 270 (1+0.1) 25

= 25

From Table 5, total profit for entire period (25 years) = 246 +514+449+369+270 = $1848M

Thus average profit per annum = $1848 = $74M

25

5.4 Simultaneous Production Method

To produce each field separately and simultaneously, the following will apply:

a. 5 FSUs will be required and

b. 5 FSPSs are also needed

18

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It must be noted that the figures in Table 5 represent 5 year periods for each field (not for a single year). Hence,

Total CAPEX for the 5 fields in the 5 years of operation = 446 x 5 = $2230 million

This is the amount that must be invested initially. Total Expenditure = 524 x 5 = $2620 million

Total Profit for the 5 year period for 5 fields = 246 x 5 = $1230 million. Average profit per annum = 1230

million.

5

5.5 Combination Method

= $246

The best method for Small Operating companies to use in developing such fields is one that combines both IPRR and Simultaneous Method (SM). In this method, 2 FSUs are acquired instead of 5. The first FSU is used to produce 3 of the 5 fields, while the second FSU is used to produce the remaining 2 fields. Both of them begin at the same time. After each field is produced, IPRR is applied to develop the next one. For this method,

Total time of production = 15yrs

Total CAPEX = 2 x CAPEX of F1 = 446 + 446 = $892

Total profit = (2 x profit of F1) + (2 x profit of F2) + (profit of F3) = $1969M Average Annual Profit = 1969/15 =

$131M

6. Analysis on Field Development Options

While the development system incorporating the IPRR which takes a much longer time of 25 years for all 5 fields to be produced, the Simultaneous Method takes only 5 years to produce all fields. Also, while the IPRR yields an average annual profit of $74 million per annum, the Simultaneous Method (SM) yields an average annual profit of $246 million which is more than 3 times that of the IPRR, and will have 5 FSUs, 5 FSPSs, and other equipment which can be re-used in other developments or sold/rented out as assets.

However, the profit yielding years of the Simultaneous Method end after only 5 years. On the other hand, the profit yielding years of the IPRR lasts for 25 years. Furthermore, the total profit of the Simultaneous Method in the whole development period is $1230 million while that of the IPRR is $1848M, which is 1.5 times that of the Simultaneous Method. Additionally, while the Simultaneous Method requires an initial capital investment of $2230 million, the IPRR requires only $446 million which is only 20% of that of the Simultaneous Method. The Table 6 below captures the differences between both methods and there respective internal rate of return before tax over the total years.

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19

Descriptions

SM

Combinational

IPRR

Total Time (yrs)

5

15

25

Average Annual Profit ($M)

246

131

74

Total Profit ($M)

1230

1969

1848

Initial CAPAX ($M)

2230

892

446

Internal Rate of Return (%)

55

220

414

Table 6 Simultaneous Method, Combinational and IPRR Comparison

From

fields in 15 years, which gives an average annual profit of 131$M and a total profit of $1969M, a 220% of internal rate of return before tax/interest. It requires an initial CAPEX of $892M which would be easier

to obtain depending on the investment capacity of the operating companies. The Combinational Method is therefore recommended as the best.

Table

6,

it

can

be

seen

that

the

Combinational

Method

produces

the

5

Taking a further look again on Table 6, the initial CAPEX required to kick off the field development described for the SM method is $2230m while that for the IPRR method is only $446M. It would be easier for an interested small operating company to raise the lower sum (IPRR). However, this method will take 25 years to complete the development which is too long a time for a small operating company. The Combinational Method would however be most commercial concept adopted by these companies for marginal field developments.

7. Conclusion

The application of Full Subsea Processing to develop remotely located marginal fields is an attractive option in breaking the techno-economic barriers which have long hindered the development of these fields. Technical analysis of the effects of applying full subsea processing to develop and produce an existing marginal field using current technologies revealed enormous benefits could be derived.

To develop a group of remotely located marginal fields in Nigeria using FSPS, various methods have been considered for overcoming very long step out distances. An FSPS used with FSU is the most attractive method for developing these fields. A holistic approach which considers the development of a number of fields collectively rather than just one field, exploring the field development options examined, have been considered the best approach.

The industry will benefit significantly from the use of full subsea processing technology, as this will enable marginal fields to be developed economically for sustaining the techno-economic growth of the offshore industry.

Acknowledgments

The authors wish to express profound gratitude to all the resources accredited to this paper, particularly Kue and Rodu, on the “Economic Analysis of Innovative Approaches to Marginal Field Development”, Otter Field Development (TOTAL) and the Publisher of “Africa oil and gas report, Toyin Akinosho.

20

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Special thanks go to Cranfield University for the support on this meritorious work carried out within its facilities in making this paper a success.

References

1.

AC Baker & JH Entress, (1991), “VASPS Subsea Separation and Pumping System Applied to Marginal Developments”, SPE paper 23049, Offshore Europe, 3 – 6 September 1991, Aberdeen, UK.

2.

Akinosho Toyin, (2011), “Africa oil and gas report” volume 11, number 9, Dec 2010 - Jan 2011, www.africaoilgasreport.com .

3.

Anthony 0. Uwaga, (2008), “Developing Marginal Fields in the Niger Delta: Recovery & Economics Can Be Better than Currently Estimated”, SPE paper 119722, international conference and exhibition, August 2008, Abuja, Nigeria.

4.

API RP 17N, (2007), “Recommended Practice for Subsea Production Systems - Reliability & Technical Risk Management”, an API standard.

5.

Di Silvestro Roberto, Stephanie Abrand, (2011), “A Novel Gas/liquid Separator to Enhance Production of Deepwater Marginal Fields”, OTC paper 21394, May 2011, Houston TX, USA.

6.

Erik Baggerud, Vidar Sten-Halvorsen, and Rune Fantoft, (2007), “Technical Status and Development Needs for Subsea Gas Compression”, FMC Technologies, OTC paper 18952, May 2007, Houston TX, USA.

7.

Fantoft, R. and Nijhuis, R., (2005), “Subsea Gas Compression – Challenges and Solutions”, OTC paper 17399, 2005.

8.

Grynning A, et al (2009), “Tyrihans Raw Seawater Injection - Increased oil recovery through subsea processing”, OTC paper 20078, May 2009, Houston TX, USA.

9.

J Perridy, (2011), “Project and Contract Management”, Lecture note 14, Cranfield University MSc module on offshore & ocean technology, 2011.

10.

K Janardhanan, Mac McKee (2011), “Subsea processing advances to meet industry needs”, Offshore Magazines, INTECSEA, accessed 05/05/2011 on http://www.offshore-mag.com/offshore/en-us/index/article

toolstemplate.articles.offshore.volume-71.issue-3.subsea.subsea-processing-advances-to-meetindustry-needs.html.

11.

LO Akinpelu & OA Omole; (2009) “Economics of Nigerian Marginal Oil Fields - Identifying High Impact Variables”, SPE 128343 SPE International Technical Conference and Exhibition, Abuja Aug 2009.

12.

OT Mcclimans & R Fantoft, (2006), “Status and New Developments in Subsea Processing”. OTC 17984 May 2006 Texas.

13.

R Fantoft, (2005),”Subsea gas compression – challenges and solutions”, OTC 17399 May 2005 Taxes, USA.

14.

Oluropo Rufus Ayodele, et al, (2003), “Economics of Nigerian Marginal Oil Fields” SPE paper 81998, SPE Hydrocarbon Economic and Evaluation Symposium, 5 – 8 April 2003, Dallas, Texas.

15.

S Davies et al, (2010), “Experience to Date & Future Opportunities for Subsea Processing In Statoil”, OTC 20619 May 2010 Texas.

16.

Van Khoi Vu, Rune Fantoft, Chris Shaw and Henning Gruehagen, (2009), “Comparison of Subsea Separation Systems”, FMC Technologies, OTC paper 20080, May 2009, Houston TX, USA.

17.

Westwood, J. (ed.) et al, (2006)”The Subsea Processing Gamechanger Report 2006-2015”, Douglas-Westwood Limited, Canterbury 2006.

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21

Case History from the UK North Sea”SPE paper 37954,SPE Hydrocarbon Economics and Evaluation Symposium,

16 – 18 March 1997, Dallas, Texas.

19.

YN Kue & OD Orodu, (2006), “Economic Analysis of Innovative Approaches to Marginal Field Development”, SPE 106001

30 TH Annual SPE International Technical Conference and Exhibition, July 2006 Abuja, Nigeria.

20.

MP Ribeiro et al, (2005), “Field applications of subsea electrical submersible pumps in Brazil”, OTC paper 17415,

May 2005, Houston Texas.

21.

B.H.N Smulders et al, (1987), “The Eider Production Platform Concept: A Platform in Deep Water with Small

Reserves”, OTC 5547, Houston Texas.

22.

M Horn et al, (2004), “Otter: A 21km Subsea Tieback with Dual Electric Submersible Pumps”, SPE 87902.

Appendices

Appendix A - Price Adjustment for OPEX and Decommissioning at 5% p.a

OPEX Adjustment @ 5%p.a

Time

5

10

15

20

25

(yrs)

OPEX

73

91.25

114.0625

142.5781

178.2227

$M

Decommissioning Adjustment @ 5%p.a

Time

5

10

15

20

25

(yrs)

OPEX

5

6.25

7.8125

9.765625

12.20703

$M

22

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Appendix B – Nigerian Marginal Fields: Status Update (Source: Africa Oil and Gas Report)

22 OTC 22860 Appendix B – Nigerian Marginal Fields: Status Update (Source: Africa Oil and Gas

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23

Appendix D – Nigerian Independents Upstream Activity Map (Source: Africa Oil and Gas Report)

OTC 22860 23 Appendix D – Nigerian Independents Upstream Activity Map (Source: Africa Oil and Gas

24

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Appendix D - Definition of Technology Readiness Levels (Source: API RP 17N, 2007)

   

Development Stage

 

TRL

Completed

 

Definition of Development Stage

   

Unproven Concept

 

Concept

0

(Basic R&D, paper concept)

Basic scientific/engineering principles observed and reported; paper concept; no analysis or testing completed; no design history

     

a) Technology concept and/or application formulated

1

Proven Concept

(Proof of concept as a paper study or R&D experiments)

b) Concept and functionality proven by analysis or reference to features

common with/to existing technology

c)

No design history; essentially a paper study not involving physical

Proof of

models but may include R&D experimentation

Concept

 

Validated Concept

 

2

(Experimental proof of concept using physical model tests)

Concept design or novel features of design is validated by a physical model, a system mock up or dummy and functionally tested in a

laboratory environment; no design history; no environmental tests; materials testing and reliability testing is performed on key parts or components in a testing laboratory prior to prototype construction

     

a)

Item prototype is built and put through (generic) functional and

Prototype Tested

 

3

(System function,

performance and

reliability tested)

performance tests; relability test are performed including: reliability growth tests, acceralated life tests and robust design development test

program in relevant laboratory testing environments; tests are carried out without integration into a broader system

b)

The extent to which application requirements are met are assessed

and potential benefits and risk are demonstrated

   

Meets all requirments of TRL 3; design and built as production unit (or

Prototype

Environment Tested

4

(Pre-production system environment tested)

full scale prototype) and put through ist qualification program in simulated environment (e.g. hyperbaric chamber to simulate pressure) or

actual intented envirnment (e.g. subsea environment) but not installed or operating; realiability testing limited to demonstrating that prototype fuction and performance criteria can be met in the intended operating condition and external environment

 

System Tested

(Production System

Meets all the requirements of TRL4; designed and built as production

5

unit (or full scale prototype) and integrated into intended operating system with full interface and fuctional test but outside the intended field environment

interface tested)

     

Meets all the requirements of TRL 5; production unit (or full scale prototype) built and integrated into the intented operating system; full

Field Qualified

6

System Installed

(Production system installed and tested)

interface and fuction test program performed in the intended (or closely simulated) environment and operated for less than 3 years; at TRL 6 new technology equipment might require additional support for the first 12 to 18 months

 

Field Proven

Production unit integrated into intended operating system; installed and

7

(Production system

opreating for more than three years with acceptable reliability, demonstrating low risk of early life failures in the field

field proven)