"So why is an allowance needed? This is because uHPHT is very different to conventional field developments in terms of the risk and capital investment, and also the pre-commitments required in order to drill within the windows of opportunity due to the nature of these projects. The allowance should be enough to get the project across the line in terms of commercial viability for all the partners. It provides incentives, compared to the fixed allowances the industry has been used to, making it easier to call on capital and to determine future proofing of these concepts as we go forward."
From the UK government's perspective, he added, there would be a further benefit from the newly-installed offshore infrastructure. "Looking at future opportunities, the additional pipelines will drive less focus on a sole-field development and more on an area-wide cluster development. This is a significant change."
Pedersen then posed the question, why does a cluster development matter? The answer, he said, is that "clusters do matter because they enable maximized recovery from the area so that we end up focusing on the license terms and the individual development. It could mean rolling up the entire license commitments for an area and driving the respective partners to collaborate for much earlier alignment in terms of exploration prospects and ownership of the emerging hubs."
During planning for the Culzean development, Maersk examined the potential for a hub for the area able to accommodate other wellhead platforms and production add-ons from other projects at later stages. "However, if the hub/cluster model is to be replicated elsewhere in the basin," Pedersen said, "operator behavior will have to change…we need to devise far easier alignment in the area and strive for early agreement on how to develop work plans for wider [field] clusters.
|Jackdaw area. Map courtesy BG Group.|
Much of BG's UK offshore production of 110,000 boed/ comes from the central North Sea, where the company operates the Armada, Everest, and Lomond hubs, and is a partner in Buzzard and the HP/HT Jade development, operated by ConocoPhillips.
The company's main undeveloped resource is the Jackdaw gas-condensate field, containing reserves estimated currently in the range 125 to 250 MMboe. The region around Jackdaw holds total discovered resources of around 2 Bbboe, according to Andy Samuel, BG's managing director for Europe E&P, another speaker at the uHPHT conference.
BG drilled the Jackdaw discovery well in 2005 followed later by three appraisal wells: most of the company's activity to date has focused on the northern part of the field. It was an extensive and costly appraisal program, Samuel explained, "owing to the very substantial pressures and temperatures". Pressure at the base of the Jackdaw reservoir is 17,250 psi (1,189 bar), possibly the highest for any UK offshore discovery to date, and the temperature around the base is 385°C (725°F).
"To date we've penetrated three of the fault blocks: it's a very permeable, high-quality Jurassic reservoir, and we can take some learning from [Total's] experiences at Elgin/Franklin, which is a similar type of reservoir. Unfortunately, Jackdaw has quite a lean gas condensate, so we won't have the economic benefit of the substantial oil that is produced from Elgin/Franklin."
In 2012 BG conducted a successful drillstem test on Jackdaw using equipment specially qualified for the harsh conditions, following collaboration with the UK supply chain. "It is critical to get an understanding of the reservoir fluids and the challenges they may pose down the line," Samuel said. "Exploration and appraisal is expensive – anything that would allow us to drill these wells cheaper, and safer, would help hugely."
Jackdaw spans three licenses; BG and five other partners in the licenses are working to put in place a pre-unit agreement ahead of a development. "We're currently going through a concept select phase: the base concept is similar to Culzean, with three platforms. But there are challenges unique to uHPHT. From the safety viewpoint, we want the maximum pressure brake to occur at the wellhead platform, and we will do this through a high integrity pressure protection system." The numerous ball valves on the platform providing protection by reducing the pressure will weigh over 10 t each, he said, using this as an instance of the high development costs that lie ahead. "The capex is high, the drilling costs are high, and you may have to factor in infill well drilling down the line. Plus, there is a degree of risk."
Nevertheless, BG sees Jackdaw and the new allowance as a good test case for the uHPHT corridor as a whole, Samuel said. "We will provide data openly, and we need to creatively explore broader solutions to kick-start developments such as this and unlock these resources." One way is through collaboration: "As part of the base case development for Jackdaw, our team approached all operators of acreage within a 25-km (15.5-mi) radius of our proposed project to explore possibilities for a joint development or a subsequent tie-in [to the new facilities]. There are a lot of stranded discoveries nearby, mainly operated by Maersk and Gaz de France E&P UK, with exciting exploration potential."
Jackdaw's future proofing scenario takes into account tie-ins, with some deck space on the platforms to add further modules. "But to maximize value we are exploring whether to go for a joint development from day 1."
To the south-east of Jackdaw BG operates the Invincible prospect. "We expect to find the same Joanne Triassic sandstone reservoir that is so productive in the J Area. To the north and south there is high-quality Jurassic rich clay. There is a range of resources with all these structures but the mid-case potential appears to be 60MMboe. However, right now these prospects are not economic to drill, even though there are enough to potentially make a difference. Our challenge is to find a way to make them economic, get them to be part of a base development and accelerate exploration. In this area we think that putting in new infrastructure is the way forward – this area could supply up to 10% of the UK's gas, and these fields tend to have a long life."