By William Furlow
Innovative design may challenge hub and spoke concept
Shell has developed a breakthrough design that builds on the success of its floating liquefied natural gas (FLNG) concept and experience with floating production, storage, and offloading vessel (FPSO) technology. Shell is confident the Floating Oil and Natural Gas (FONG) development solution will change the way remote fields are developed. The operator is assessing first projects in areas such as West Africa.
Similar to an FPSO, the FONG production facility would not only process oil, but LNG as well. FONG integrates conventional floating technology with advanced deepwater and gas technologies for delivery of both oil and liquefied gas to market from a single vessel. The two products would be exported in standard oil tankers and LNG carriers. This could prove to be game-changing technology for fields in remote areas where there is no existing oil and gas pipeline infrastructure, but also an insufficient domestic market to consume the products.
The key advantage that attracted Shell to develop the FONG approach is that it turns a liability into an asset. Associated gas is produced in conjunction with virtually all oil developments. This gas must be sold, burned for fuel, or re-injected. The volumes of associated gas can be relatively small and insufficient to justify dedicated new pipelines to shore. This is not such a problem for mature gas markets and production provinces such as the Gulf of Mexico with extensive, existing gas infrastructure. Easy access to infrastructure means the threshold at which oil and its associated gas can be economically recovered is lower. However, in remote markets, such as West Africa, there are few, if any, pipeline grids to transport the gas, plants to process it, or markets to buy it. This gas, far from being marketable, is a liability for operators.
The FONG concept processes LNG and crude side-by-side.
Robert Ryan, Vice President for Gas Devel-opment at Shell International E&P, explained that associated gas is a real problem for any remote development. Flaring or venting the gas is not acceptable. This often leaves operators no choice but to re-inject the gas where this is possible.
Re-injection is itself a complex and expensive operation. It requires significant topside equipment, including high-pressure compressors, drying units, etc., which take up space and add costs to the production vessel. The process also requires the drilling of costly re-injection wells. In addition to the expense, the injected gas can sometimes have a negative impact on the reservoir performance and ultimate recovery.
Most remote developments require significant amounts of recoverable oil reserves to underpin a commercial development with a central gathering and processing facility, called a hub. As oil basins mature, there will be fewer giant discoveries and more small finds that are not within tieback range to an existing hub. In fact, 85% of deepwater discoveries outside the Gulf of Mexico are smaller than "hub-class" size. Any of these fields could benefit from FONG technology through reduction of the marginal field size cutoff.
Eliminating gas liability
FONG allows associated gas to be turned from "problem to profit" by eliminating gas re-injection and replacing it with added revenues from selling LNG. Combining gas and oil production, storage and offloading systems into a single vessel also significantly reduces the unit cost.
Ryan is quick to point out that this is not a lot of gas and is far from the typical onshore LNG plant scenario where a market has to be fully secured before the gas can be developed and produced. A standard, oil-focused FONG processing some 100 MMcf/d would only load an LNG cargo every four weeks. A typical onshore LNG plant would produce sufficient LNG to load a cargo every four days.
Shell would be prepared to purchase the LNG from FONG installations as part of its global LNG supply operations. The key is the fact that the gas is no longer a liability. "This solution is expected to blossom over the next decade," Ryan said, "with the potential for several of these novel vessels operating offshore West Africa in that timeframe."
Origins of FONG
In the early 1990s, Shell identified a need for a remote offshore associated gas solution. The goal then, as now, was to develop a single-vessel solution with a broad range of application. The company closely considered the potential of floating LNG, but at that time processes were too complex and the equipment wasn't yet well suited for an offshore environment. "The technology wasn't there yet," Ryan said. Then, in 1996, serious efforts commenced on a large gas and condensate focused solution, which led to Shell's Floating Liquefied Natural Gas (FLNG) design in 1999. Many of the key issues that needed to be solved for an oil-focused FONG solution were successfully tackled in designing the FLNG. Shell is actively pursuing FLNG-based projects in Namibia and in the Timor Sea off Northern Australia. While many of the large finds made offshore West Africa have been in deepwater, there is no reason the FONG solution could not be applied in conventional depths that are otherwise remote from markets and infrastructure.
The integrated approach to safety and the environment throughout the whole of the FLNG and later FONG projects results in expected safety levels as good as the best North Sea platforms and FPSOs. The key technical challenges for FONG include both product and location issues. By introduction of LNG as an export product, the combination of oil and LNG storage in one single barge needed to be addressed, as well as integration of oil production and LNG liquefaction facilities to arrive at a deck layout that meets all safety requirements. It was concluded that safety was maximized by locating gas treatment closest to the bow-mounted risers and mooring turret, followed by liquefaction and process utilities, and finally power generation, with personnel accommodation at the stern. A switch to all-electric compressor drivers versus standard gas turbine direct drive showed significant improvement in safety, together with improved redundancy, maintainability, and layout design.
Leading the way
"We learned from our many LNG plant, shipping, and deepwater projects how best to work through all the critical problems," Ryan said. A novel process design reduced the amount of equipment needed for liquefaction by about 30% and allowed more flexible feed-gas specifications. Encouraged by the success of its non-associated gas FLNG design, Shell began working hard in 1999 on the oil-focused FONG solution, conducting a preliminary design study in 2000. Exhaustive engineering studies carried out in 2001 demonstrated both technical feasibility and high levels of safety compliance. FONG brings together in one location a much greater range of equipment, skills, and experience than conventional onshore or offshore developments. A rigorous internal challenge process has now made FONG ready for implementation. Project deployment studies commenced early this year.
"The West Africa market is a key driver because the conditions are such that the solution really stands out from an added value perspective," Ryan said. The company is evaluating applications of FONG offshore Nigeria and Angola. "We know several applications where we want to apply FONG today. Many fields in this area have already been discovered and are facing the associated gas disposal issue for development," he said. In addition to West Africa, FONG is also suited to metocean conditions offshore Brazil, the Caribbean, and the South China Sea. Ryan said FONG will be Shell's future development solution for production of oil and gas in remote offshore areas.