Focus on the Subsea
Over the past 6 months, I’ve talked about several emerging geographic and technology frontiers in the oil and gas industry. One of the most exciting and prolific emerging technology frontiers is also geographic in a way—the seafloor of deepwater basins around the world. Since the first installation of a subsea production tree in the Gulf of Mexico in 1961, the surge in the deployment of subsea wells has resulted in significant economic and environmental improvements in deepwater development.
High oil prices, technological developments, and the need to counterbalance declining production in mature shallow-water basins have been driving the move of offshore oil and gas operations into deep and ultradeep (>10,000 ft) waters. Growth in this sector has been momentous over the past few decades. Subsea installations will grow from roughly 2,000 in 2001 to an estimated 8,500 by 2018. Growth in capital expenditure (Capex), driven primarily by Asia, Africa, and the North Sea is estimated to grow by 120% between now and 2018.
Increasingly, operators are cost-effectively targeting reservoirs over a much wider area, tying back subsea wells both to fixed platforms in shallow waters and to floating infrastructure in deeper waters. In fact, capital-intensive ultradeepwater developments are expected to capture 48% of Capex and 23% of tree installations in 2014–2017, in contrast to 37% of Capex and 15% of installations in 2008–2013.
Latin America and west Africa account for more than half of subsea Capex expected to be spent between 2013 and 2017. As an operator, Petrobras dominates the subsea sector and is expected to account for 24% of global subsea Capex in the next 5 years to further key projects, such as Papa Terra, Lula, and Franco.
The highest investment levels and number of installations of subsea trees in Africa are expected to occur by 2017, driven by large developments, such as the Kaombo and Cabaca fields in Angola, and the Bonga Southwest and Nsiko projects in Nigeria. Simultaneously, emerging countries such as Ghana, Congo-Brazzaville, and Equatorial Guinea are expected to increase their presence in the subsea sector.
As mature regions, Europe and North America still present significant opportunities for the subsea sector. Norway and the United Kingdom are characterized by high drilling activity on producing fields and the completion of subsea tiebacks on smaller, remote accumulations mostly in shallow waters.
In the United States, the shift from shallow-water developments, where production is in decline, toward large oil and gas discoveries farther offshore is well under way. The deepwater Gulf of Mexico is expected to host many new floating platform developments, combined with the tieback of subsea satellite fields later on in the forecast period.
Asia, Australasia, and the Middle East present emerging opportunities for the subsea market. These three regions will together increase their market share from 8% in the past 5 years to 15% in the next 5 years. Operations in Asia are increasingly moving E&P into deeper waters in a bid to boost and sometimes reverse declining oil and gas production. As a result, Malaysia, Indonesia, India, and China are becoming major subsea industry hot spots.
New large gas discoveries in the past 5 years in the eastern Mediterranean are also driving subsea investments in the Middle East region. The startup of the deepwater Tamar field in April 2013 offshore Israel is expected to be only the start of increased subsea activity in the Levant basin.
The technologies available for materials and the design, manufacturing, and installation of subsea developments have increased rapidly over the past decade. This gives today’s subsea trees and completions a huge advantage over earlier traditional, fixed production platforms, particularly in remote locations or in waters too deep or too rough.
The subsea industry has spent significant research and development money developing a portfolio of products, systems, and services to meet the needs of the market. Foundation products such as Christmas trees are becoming increasingly reliable. Manifolds and controls with pressure ratings up to 15,000 psi working pressure are available, with movement toward 20,000 psi pressure ratings for the future. Equipment is increasingly available for 3000 m water depths and 4000 m is already being targeted.
The need for more data has led to the development of subsea multiphase meters and wet gas meters; combined with reliable subsea and in-well gauges and instruments (pressure, temperature, corrosion, sand, etc.), they are now a must-have for decision making and production assurance. Advances in subsea sampling and the ability to collect a representative sample subsea for onshore laboratory analysis also provide valuable data. Real-time condition monitoring of the entire subsea asset allows for early detection and correction of issues and proactive planning for needed maintenance or equipment replacement.
The most significant technology shift, however, and what will ultimately provide the most value to our industry, has been the integration of the hardware with the knowledge of the subsurface. Optimizing reservoir performance, for example, using the development and application of subsea boosting supported by single- and multiphase pumps and wet gas compressors. Subsea separation, when fully combined with boosting across an entire subsea development, results in a subsea factory where wells are produced, fluids are separated, and production is boosted to the topside facilities. Produced and separated water is either disposed subsea or injected. Boosting and subsea separation are key enablers for enhanced production from subsea produced reservoirs when supported by life-of-well reservoir and flow assurance analysis.
Installation of Christmas trees, once rig dependent, is now routinely handled by more cost-effective and efficient monohull vessels. Following installation of an entire subsea system, most of the services can be provided by monohull vessels. Increasingly, wireline intervention in subsea wells to diagnose and cure issues impacting production is conducted from lower-cost vessels rather than rigs.
Standardization is a growing theme and is believed to lead to further increases in reliability and delivery cycle time for complete systems. Pre-engineered and configurable elements of the system with common materials, welding, and quality requirements are all enablers and are actively being addressed.
The power and the value of integration across several product lines, within a single company, could not be more evident than in subsea systems. Over time, contracting methods for subsea systems have changed from a best-in-class approach—with operators buying Christmas trees, manifolds and controls from different suppliers and providing the integration and interface management internally—to a more likely scenario in which entire systems are being procured from a single supplier.
The subsea environment poses a set of technological challenges unlike anything seen on the surface. With the recent advances in project management, process, and system design, and with the integration of subsea technologies, operations, and reservoir knowledge, known fields can now be developed economically and safely.
For example, of more than a dozen large Arctic water fields discovered in the 1970s and 1980s, only a handful have been developed, due mainly because of high costs and daunting technical and logistical challenges. With the recent revolution in subsea technologies combined with the rapid industry growth in experience, we can address most of the existing issues around development and production of these fields.
However, as with other specialties within our industry, the availability of specifically qualified personnel is a huge challenge. There are a variety of industry-sponsored training programs that focus on training experienced engineers in the specifics of subsea technologies and operations. Certificates in individual subsea topics offer opportunity for advancement and help to satisfy regulators. Growth of certificate programs will continue. However, there are very few universities worldwide offering a proper curriculum that combines the necessary skills to graduate subsea engineers. This is no surprise when you think about the laboratory facilities required and the expanse of subjects involved. Not considering the subsurface, you have requirements in corrosion, hydraulics, robotics, flow assurance, geomatics, etc., in addition to the traditional engineering disciplines.
Today, there are only a handful of universities around the world offering complete subsea curricula, including the University of Newcastle in the UK, the Norwegian University of Science and Technology in Norway, the Delft University of Technology in the Netherlands, and the National University of Singapore. In the US, only the University of Houston offers a graduate program in subsea and as of yet, no undergraduate programs exist. The most promising efforts for a complete undergraduate curriculum are in the works at Texas A&M University, with a bachelor of science program being kicked off this fall.
How SPE Can Help
The production from deepwater fields will continue to grow as the successful exploration activities of recent years lead to a new development cycle. Central to the deepwater cycle will be the drive toward increased recovery through more sophisticated subsea developments involving closer integration between reservoir, wells, and complete subsea processing plant.
Not surprisingly, operators and service companies working in this emerging frontier require a whole range of new or modified technologies to succeed. This is where SPE can be most valuable to the industry. With our mission to disseminate technical knowledge, we can build on our efforts in the domain. SPE already has a number of ways to share knowledge about the subsea industry. Most notably is the Society’s involvement in the Offshore Technology Conference (OTC). OTC has expanded in the past few years to reach larger geographic areas and new frontiers with OTC Asia, OTC Brasil, and the Arctic Technology Conference. As I write this, the OTC in Houston is hosting a record 108,300 delegates, demonstrating the significance of this domain in our industry.
SPE has also focused efforts on its own events such as the Global Integrated Workshop Series: The Challenge of Well Integrity in a Subsea Environment in Norway this month as well as a workshop on Subsea Well Abandonment in Houston this fall. There is always more we can do.
Each month, I post my JPT column topic on the SPE LinkedIn group for comment and discussion. I invite you all to join in this discussion and look forward to hearing your viewpoints.
Source for Market Data. Personal communication with staff at OneSubsea. 2014.
Focus on the Subsea
Jeff Spath, 2014 SPE President
01 June 2014
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