Platform demanning drive controls costs in era of lower gas prices
Low gas prices in the UK have not deterred some oil companies from pursuing major revamp/expansion programs in the southern North Sea. Two of the most active currently are Shell Expro, a force in this sector since the mid-'60s, and Arco, enlarging its powerbase through management of the Eagles pipeline system.
Shell's thinking currently is to maintain gas production from its southern field clusters at least to 2030. But that wasn't the case in 1990.
Speaking at a conference in Great Yarmouth this summer, John Carter, Shell's general manager for the Southern Fields said: "We had declining production and no economic prospects. Proceeds were seen to take a dive and unit costs of production were heading more sharply in the opposite direction."
Aging facilities needed to be replaced or refurbished in line with post-Cullen safety requirements. But there was also a general lack of focus in the Southern Fields unit: too much dwelling on past successes, and too many dry holes in exploration drilling. At that stage, new projects looked unthinkable, Carter said, because costs were simply too high.
So Shell initiated a turnaround plan with a new operating philosophy involving extensive demanning of southern sector installations. Bacton in Norfolk, formerly just a processing terminal for the gas, would become the control center for these unmanned facilities, with a nodal manned platform retained in each of the core areas of Leman, Sean/Inde and Sole Pit.
By the end of this year, five satellite platforms will have been de-manned on both Inde and Leman, as gas processing is switched to central compression complexes currently undergoing refurbishment. A further Leman satellite, BT, is due to be demanned next year and the old BK compression platform will be removed.
Results of this action are that Shell's southern fields operating costs have taken a tumble, according to Carter, particularly at Leman, where economic production can now continue into the next century. Costs have been cut further by outsourcing non-core business such as maintenance, drilling and onshore facilities management.
Sole Pit cluster
Achieving the turnaround has allowed Shell to justify investments in other fields which are bringing new gas to the market. The Sole Pit three-field complex is being expanded, and next year production will start from a fourth area known as Silver Pit.
Sole Pit is located 80 km off the Lincolnshire coast in 20-25 meters of water. Gas was discovered here in 1969, but was not produced until 1990 when the Barque and Clipper Field installations came onstream. The nodal manned platform (PT) is in the Clipper complex, where a compression platform (PM) was added in 1993. Gas is piped through a 24-in diameter line to Bacton.
A year ago, Shell also started up Galleon via the first of a planned series of lookalike, normally unmanned wellhead platforms (all to date built by Heerema). Gas is exported through a 12 km line to the PM platform. Next year development could begin of Galleon's second phase, with a second wellhead platform, PG, installed in the field's north-east section. This could be in operation early in 1998.
Long before phase II of Galleon happens, the extension to the main Barque reservoir is being brought into production currently through the new Grootint-built, 2,000 tonne PL wellhead platform. Like the Barque PB platform, this is an unmanned satellite tied back to the Clipper complex.
Barque South is yet another discovery (around 2.5 bcf) which is being recompleted to PB. Three long-reach wells will also be drilled from this and the Clipper platforms to tap 140 bcf at the extremes of the two reservoirs.
Complicating matters further is Shell's first slimhole well in Sole Pit, recently suspended, which looks to have uncovered the company's biggest gas find in the southern sector for over a decade. No follow-up appraisal wells have been announced, but current thinking suggests another platform. One problem with the location could be busy shipping movements in the Sole Pit area: a platform installed there last year then had to be moved to avoid transport routes.
New gas province
Inde will be the first of Shell's core southern sector areas to deplete, probably in the next decade, but Shell has replacements lined up in the Silver Pit area 150 km off the Yorkshire coast. Pace of development there will depend on how gas prices shape up, but one field has definitely been committed.
Schooner, due onstream late next year, is Shell's first Carboniferous development; its first to use third party pipeline transportation (Conoco's Caister Murdoch system); and also its first southern sector field with supplies not committed to British Gas. The buyers are Shell/Esso's gas marketing company, Quadrant, and UK electricity utility Eastern.
Installation of the Heerema-built unmanned wellhead platform will be completed next summer, in 71 meters water depth. The facility is being tied back to the Murdoch platform through a 28 km line for onward export to Theddlethorpe. Reserves are estimated at 550 bcf.
East of Schooner is Ketch, another Carboniferous discovery containing around 500 bcf. But at this stage Shell is in no hurry to develop the field before 2000, with a 1993 survey over the Ketch area still being evaluated. "We would like to see production from Schooner first," says Carter, "then build lessons learnt into Ketch to see how the reservoir performs."
Currently Shell is spending 350 million a year in the southern North Sea, and its turnaround program will continue. By 2000, staff numbers offshore will have halved against current levels, and combined gas production will be double the rate in 1990.
1995 has been a roller coaster for Arco British in terms of transactions, new production and new field developments. The short-term result is that by the end of next year, Arco should be producing close to 10% of the UK's gas.
Most of the significant action relates to the Carboniferous play in Quadrants 43 and 44. Here Arco has been building its third southern sector stronghold, in addition to the Thames complex, tied to various fields in Quadrants 49 and 50, and the large Pickerill Field farther north off the Lincolnshire coast.
Blocks 43/24 and 44/18 contain the Trent and Tyne reservoirs, discovered in 1991 and 1992. Development was finally approved this May, following two deals earlier in the year. First, Arco raised its percentage in both fields to 80% through buying the interests of St James' Oil & Gas (a Clyde/OMV venture).
Then in February, the Trent and Tyne group and the owners of the Esmond Transportation System agreed to maintain and expand the 167 km pipeline as an evacuation route for Carboniferous gas. ETS was originally built to take supplies from BHP's Esmond, Forbes and Gordon Fields, but all three have recently ceased production.
The system was renamed Eagles (East Anglia Gas and Liquids Evacuation System), with Arco appointed operator and Trent and Tyne booked as the first new tenant fields. Both are due onstream in October 1996. Gas from the two fields will be processed at the Trent platform for onward delivery to Eagles via a new 1 km spur line, and from there routed to the Bacton terminal in Norfolk.
Arco is also responsible for marketing spare capacity in Eagles. Discussions were held with Shell over the Schooner Field, but Shell eventually went with Conoco's Caister-Murdoch pipeline. However, Shell says it will review export routes for its future Carboniferous fields on a case-by-case basis.
Other candidates for export through Eagles include gas from the Blythe prospect (according to UK analysts Wood Mackenzie), discovered in 1987 in block 48/23, south of Ranger's Anglia Field. Arco recently raised its controlling interest in this block to 80%. Arco has also just farmed into block 43/22, operated by Talisman Energy: two Carboniferous discoveries have been made here this decade, which would again be within reach of Eagles.
Trent and Tyne, with combined reserves estimated at 440 bcf, are being developed jointly under a 275 million development. SLP is building an unmanned platform for each of the two reservoirs, which lie 60 km apart: Allseas will connect them by laying a 20-in. diameter pipeline. Trent's will be the bigger platform (weight 2,700 tons), partly to handle processing of Tyne's gas as well as its own, but also to cater for possible tie-ins of any new discoveries nearby.
Both platforms will be controlled remotely from Arco's operations center in Great Yarmouth. According to production manager David Knox, the aim is to have them manned only for periods of planned maintenance, which would mean five days every two weeks on Trent and just two days every fortnight on Tyne. There would be no overnight stays.
The Yarmouth control room is manned round the clock with two people working 12-hour shifts. It already controls operations on Pickerill and, since this summer, the Thames complex. Thames comprises two bridge-linked platforms with tie-backs from Arco's Welland, Orwell, and Gawain Fields.
Modifications were performed on the platforms under a project known as TOPS (Thames optimization). These allow the complex to be operated remotely in minimum attendance mode - the first such operation for a North Sea installation with compression. Bringing in Trent and Tyne as well will mean expanding the number of dedicated VDUs at the Yarmouth center from five currently to nine.
Gawain is the latest field under surveillance: this is a 20 million subsea development operated by Arco on behalf of a joint venture with Mobil subsidiary Superior Oil. The field, located 55 miles east of Bacton, began producing in September: output will rise to a peak of 112 mcf/d, with an expected lifespan of ten years.
The development copies Orwell in using a three-well subsea template: this is tied back to Thames nine miles to the southwest via a 12 km export pipeline and control umbilical. Unlike Orwell, Gawain does not require a dedicated processing module at the Thames complex. Gawain's gas has been sold to Kinetica and Mobil Gas Marketing.
An unusual aspect of this development are the "designer wells", as Knox describes them. Measured depths of up to 22,000 ft have been attained. The thin nature of the reservoir requires production to be from horizontal wells: targeted tolerances have been generally to within 10 ft. Mobil managed the drilling operations, which were performed by jackup Glomar Labrador.
Arco British's other main share swap this year involved ceding various stakes in BP-operated UK blocks and oilfields in exchange for BP's 11% of Welland. This field has been in production since 1990 through an unmanned platform on the northwest structure, and through three subsea completions on the smaller southern structure tied to the platform. Gas is piped back to the Thames complex: most is committed to British Gas.
Reserves are estimated at 275 bcf, but there is another, 150 bcf prospect 10 km to the south called Wissey. This has lain dormant since its discovery in 1967, when it tested 56 mcf/d from neolitic limestones. Until recently, Wissey was considered uncommercial, but utility Eastern Natural Gas, which farmed into Welland last year, is said to be interested in an incremental development.
Welland/Thames infrastructure is also being used to handle supplies from Tristan, a third party well drilled by Mobil. According to Knox, "There is a bit of spare capacity on the Thames pipeline system, but we feel we can upgrade it to take more".
A 3D survey has been shot over Arco blocks in this area which yielded improved, quality data due to incorporation of amplitude mapping. Following interpretation, new prospectivity has been identified and two drilling locations in the Thames area have been already approved.
Drilling was due to start last month: one well will be drilled in block 50/26a with the other in Thames block 49/28. Arco is also keen to drill near Orwell, a 50-50-venture with Texaco, which holds the UK record for a subsea tieback (35 km to Thames).
Pickerill, in production since 1992, is three times the size most of the newer fields, but according to Knox it is "a complex reservoir". A further 17 years production is possible through the field's two unmanned platforms: gas travels to Theddlethorpe for onshore compression. A discovery was made just to the north of Pickerill last year in tight rocks: any development would probably involve fracturing.
Arco is tackling the spectre of continued low gas prices by working much more closely with other oil companies and contractors to reduce costs. EMC/Brown & Root handled Gawain on an EPIC basis; SLP is incentivized as an alliance partner to get Trent and Tyne out on a very tight schedule.
Others are picking up on Arco's innovations in the southern sector. "Some of the things we're doing may assist Shell with the Shearwater development in the Central North Sea," says Knox.
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