Explorers, developers reconsider their options west of Shetland

George Robinson
Smith Rea Energy Analysts

Recent wells drilled west of the Shetlands. (Source: Smith Rea Energy Analysts/UK Department of Trade and Industry.) [15139 bytes]

One and wait has been the usual pace offshore. Major steps into the unknown have often been followed by a pause long enough to see how well the idea worked out. This happened in the North Sea with the UMC, Shell's elaborate Cormorant subsea system in 1982, and Conoco's first TLP for Hutton in 1984, which were both in themselves trials for deeper water. The UMC turned out to be too complex, while the TLP stood the test of time and has now become the norm for large fields in deep water.

Now in the west of Shetlands we have two simultaneous frontier floaters, both with notable advances in subsea and well engineering, alongside two similar vessels for Norne and Aasgard in the Norwegian Atlantic.

The Schiehallion vessel is perhaps the greater step forward for BP, despite the lesser water depth (around 400 meters), since it will be designed as a newbuild, with 900,000 bbl of storage, an onboard repairable bogey turret bearing system and multiple, high capacity inverted swivels. It was nearly even more of an innovation, since we are told that a concrete FPSO was found equally acceptable and lost out narrowly on old-fashioned commercial factors.

It would therefore be not so surprising to see a pause before a third commitment west of Shetland. Instead we have an extended well test on BP's Clair Field, which could be followed by a decision on a phased development with one or more production units. Other known discoveries include Amerada Hess' Solan in block 205/26a and a number of gas discoveries, including Texaco's Victory (207/1). The current market does not encourage distant gas developments, but the chance of oil associated with gas discoveries and vice versa should not be entirely discounted.

What form could these developments take? It would be unwise to consider the floater as a pattern set for all time. In the first place, both 205/26a and Clair are in relatively shallow water, less than surrounds a number of northern North Sea platforms. Then again there is a desire in some quarters, particularly the adjacent island communities and the UK government, to see a pipeline infrastructure grow up. The threshold at which this would be economic may not be so far away.

Beside the environmental risk arguments, this would encourage longer-term thinking, ensure that development economics favored longer tail-end production and would also encourage smaller field tie-ins. While the FPSO can be used for pipeline export, the fixed platform has more proven attractions and adds to the long-term features of the system. Even one fixed platform for 150 meters of water would be extremely welcome to the UK-based construction industry.

Compliant platforms are usually considered as deeper water solutions, but are almost equally acceptable as pipeline nodes and terminals. Among these the TLP is now a prime contender, applicable down to 1,250m, particularly as at least one three-cornered design has re-emerged, which at once simplifies the tensioning problem and, we are told, slashes the overall cost.

Also in the greater depths, and again breaking the one-and-wait mold, is the Spar platform. Another unit has been ordered for Genesis in 800m of Gulf of Mexico waters. The Spar promises to combine the surface wells and stability of the TLP with the storage capacity of the FPSO, making it suitable for pipeline or offshore loading systems.

Other forms of deep draught floater can be considered alongside the Spar, such as the elongated semis which were designed in the 1980s, putting bulk and weight well below the wave zone and drawing on upper buoyancy for stability. Statoil's current concepts seem to include one of these, capable of surface wellheads.

Drilling disappoints

As far as drilling in the west of Shetlands is concerned, 1994 and 1995 activity exceeded previous years, but 1996 does not look so promising, despite the three rigs in the area. When SREA published its first report on the area in September 1994, the operators were suggesting 27 exploration and appraisal well starts in 1995, with five development wells. The 1995 UK DTI Brown Book figures turned out to be 23 and five (one of the latter actually started in 1994). The expectation for 1996 was lower, a total of 20 plus five, but again the E&A total no longer seems likely.

The Foinaven manifold problems may possibly interfere with the development drilling program, but greater rig time spent per well as the emphasis changes from E&A to development has more to do with horizontal and multilateral complexity. There may be a further five development wells at Foinaven, and possibly a start this year at Schiehallion, where 14 out of a total of 28 are planned by the field start-up at end-1998.

The reduction in numbers of exploration and appraisal wells is generally attributed to the high demand for semis, the shortage of suitable ones for deepwater areas, and the use of these for development. New rigs will take a long time to appear: lead time is 30 months when the decision is taken, and dayrates of over $200,000/d would be needed. Up-rating for deeper water takes time and money: Mobil's first deepwater well has to wait until 1997.

While the west of Shetlands is still considered highly prospective - though perhaps with a touch too much gas potential for the present market - it takes more than a high degree of enthusiasm to contend with shortages and higher costs. In such circumstances, waiting to see how the committed developments perform becomes more of a temptation.

On the brighter side, the 14 Atlantic Frontier companies are putting 1 million into an environmental seabed study of the area and BP suggests that with 15,500 sq km of seismic available by the end of this year, 1997 and 98 will bring a new series of exploration wells in the area - an effort that will reveal its true potential.