SUBSEA SYSTEMS

Elsewhere in intervention work offshore Spain, Marine Subsea has completed work for Repsol near the Casablanca platform to prepare for J-tube installation work scheduled for 2011. The multi-purpose intervention vesselSarah relocated an abandoned 6-in. flex pipe. The Sarah is an Ulstein SX121 DP-3 vessel capable of working down to 3,000-m (9,842-ft) water depths. It has a deck capacity of 1,470 sq m (15,823 sq ft) and features a tower, main crane, and two heavy duty workclass ROVs.

Subsea production starts to flow

The past few weeks have seen significant new subsea production start-ups come onstream. Statoil started oil flowing from the Morvin subsea field through a 20-km (12.4-mi) pipeline to the Åsgard B platform for processing. Initial production is set at 24,000 boe/d with a boost to 51,000 boe/d when the second well comes on production. When all the work is done, Morvin will consist of two subsea templates and four production wells.

In the Gulf of Mexico, Marathon began producing at Droshky in 3,000 ft (914 m) of water in Green Canyon block 244, 160 mi (257 km) southeast of New Orleans. Droshky, too, is tied back to an existing platform; Bullwinkle takes the dual 18-mi-long (29-km-long) flowlines from Droshky. Marathon says the initial development stage is expected to produce 50,000 boe/d at its peak.

Petrobras is not left out. The FPSOCidade de Santos in Uruguá field is expected to reach 25,000 b/d of oil from three wells, with a fourth scheduled for tieback before year end to bring production to 35,000 b/d. Petrobras says the development plan for Uruguá field will consist of four horizontal oil wells and five gas wells directly connected to the FPSO.

The FPSO also will be used to develop another Santos basin field, Tambaú. This field will have three horizontal wells producing non-associated gas which will be connected to a subsea production manifold and then to the FPSO. Full production capacity is expected by late 2012.

Macondo repercussions

Subsea engineering, equipment, and operations are going to be hit by fallout from BP’s Macondo oil spill in the Gulf of Mexico. While most of the rhetoric and political posturing is aimed at drilling, sooner or later subsea production systems are going to come into review somewhere within the new bureaucratic trident that is the old Minerals Management Service.

The specifics are unknown at this writing, but subsea trees, flowlines, and production risers are obvious targets for fail-safe demands and redundancy requirements similar to those that are coming for drilling. Beyond that is the question of penalties for failure.

The Obama administration’s action in this area is evidenced by the make-up of the panel investigating Macondo. Those views have led to discussion, if not law, regarding liability delimiting for starters. Even without new laws, the administration has been cited for its willingness to use bureaucratic rules which require no congressional action to impose its opinions on drilling upon the industry.

This will affect industry beyond US waters, too, and create dilemmas for operations and equipment suppliers. The subsea world will be divided into two parts based on regulations – the US and countries that follow that regulatory path, and everyone else.

Either way, the cost of subsea development will go up. Engineering, equipment, and service companies either will have two sets of hardware and procedures, or will universally adopt the most stringent rules as the baseline. The same will hold for operators, too. Under this scenario there could be two sets of operating procedures. Two different ways of doing things with two different sets of procedures is inviting trouble.

Regardless of which, the non-productive cost of defensive subsea development means the price and volume of oil in a given find will have to rise, too. Lots of reserves will be priced out of the market, i.e. the per barrel cost of recovery exceeds the per barrel sales price. In this scenario, supply will drop and the price of oil will rise.