Challenges and opportunities: Deepwater Intervention

Audrey Leon

August 1, 2015

In advance of 2015 Deepwater Intervention Forum held in Galveston, Texas, OE’s Managing Editor Audrey Leon discusses the intervention market in the wake of the downturn, and speaks with several forum board members ahead of the show on 11-13 August.

OE: Despite the current downturn in oil prices, forecasts for the subsea intervention market over the next five years are very positive. What is your take on the current market?

Colin Johnston.

Colin Johnston, director, SeaNation: The classic assumption is that intervention will increase during periods of downturn since operators shift focus to existing production. In reality, however, while well service prices reduce to make intervention more attractive, as service companies chase work, the same happens with intervention supply companies. Primarily as competitors in the market place increase due to rig availability growing as a result of lack of exploration and production opportunities. All participants in the subsea well intervention supply segment suffer in an overall market downturn such as we are seeing.

With that said, however, the subsea market is a high-cost project environment and can only be entered into with long-term project planning, cost and management, remaining relatively robust in light of commodity price challenges. In addition, the projected growth of the subsea market provides significant cause for optimism, this growth includes efforts within the subsea industry to improve field recovery, with corresponding technology development to achieve this being a boon to the well intervention business. Finally, and most importantly, the overall age of subsea well assets is increasing and this compounds the growth expected in both well numbers and the need for intervention.

Consequently, the current market suffers a similar downturn to that which others see in the deepwater market but the combination of aging asset and increasing subsea technology development will make for a fairly quick recovery and also long-term healthy growth rate within the subsea well intervention market.

Alex Lawler, LLOG.

Alex Lawler, drilling & completions engineer, LLOG Exploration: Both the near- and long-term forecasts for the subsea intervention market are promising. In the near term, the focus will be on building a successful work history and demonstrating the capability to execute projects in harsh environments. Longer term, the industry will focus on increasing vessel and equipment inventory to maintain pace with increasing demand, while continuing to increase the applications of intervention equipment.

Robert Keith, Principle Consultant, R.J. Keith & Associates: The intervention market has opportunities to demonstrate its value to operators, especially in this ‘depressed’ climate, by maintaining, and possibly increasing production on applicable wells.

Rob Hill, Technical Sales Business Development Manager, Aker Solutions: Operators are focused on ways to increase the return on investment of their existing wells in the current market conditions. For example, some operators in the Norwegian Continental Shelf have proven that a scheduled intervention program can pay huge dividends. They have already invested large sums in infrastructure so it makes sense to use intervention programs to increase the recovery rates on those existing fields. New plays are deeper and farther from the shore so they are far more expensive to develop, and the price of oil that would justify the expense of developing those fields is not there right now.

OE: What new innovations will the industry will see in the subsea intervention market in next few years?

Robert Keith.

Colin: People expect major shifts when it comes to innovations. However, the best innovations are generally improvements over existing methods in relatively small increments. The current market place will see increased emphasis on the efficiency side rather than any major technology developments.

Developments relating to eliminating personnel from the working area in relation to riser and well service equipment will be an important step as will improvements to equipment handling, minimizing crane operations, increasing dual activity emphasis and speeding up the capability for service change out. Overall, the efficiency with which dedicated systems (vessels and services) conduct their business is the priority to put increasing distance between their operations and drilling rigs and is the key area for development in my opinion.

With regards to a longer timeframe step change in the industry, however, I would keep an eye on open water coiled tubing and associated subsea injector head. If this challenge can be cracked then full well servicing can take place without a riser, this truly would change the subsea well intervention operations market.

Rob Hill, Aker Solutions

Alex: A milestone for the subsea intervention industry will be to successfully deploy an open-water coiled tubing intervention system while maintaining pressure control at a subsea tree. This capability will open an array of new applications for subsea intervention systems.

Robert: Some of the new innovations I hope to see will be better remotely operated vehicle intervention tooling, and improved and smaller control systems.

Rob: Innovation is driven by the needs of the customer and increased oil recovery and cost reduction is what they need right now. Aker Solutions is focused on finding the correct solution to fit the customers need. Lighter well intervention systems for brown field applications will be an area that companies begin to focus on. One example may be using existing technology in new ways to allow an intervention system to be deployed from a vessel of opportunity rather than having to use a mobile offshore drilling unit (MODU) or purpose built intervention vessel.

We may begin to see lighter systems that can be deployed from vessels of opportunity, but still have the ability to take flow back. Some in the industry may say that deeper and higher pressure systems will be the next new innovations, but with the price of oil where it is currently and where it is projected to be over the next few years, customers will choose to spend their money on increasing recovery from existing wells.

OE: What’s the greatest challenge facing the intervention industry?

An emergency disconnect and lower riser package. Photo from OneSubsea.

Colin: The key challenge currently is delivering on efficiency of operations. Vessel providers requested operators to step up with long-term contracts to enable service company commitment and justification for what was required, this has been done in recent years. The next challenge though is demonstrating the daylight in costs between using well intervention vessels versus the alternatives. This shifts the focus back to the service providers to improve operating efficiency either directly by improving mobizilation/demobilization and operation duration or indirectly through increased collaboration and multi-skilling across marine, operations and well service supply.

Finally, the next shift needed in meeting this challenge is the move away from day rate centric comparisons to overall project costs. The combination of efficiency improvements may not make any improvement in dayrate costs for intervention vessels, but it will improve the overall efficiency of a well intervention project. Until this is allowed for in cost comparisons, there will always be the issue of drilling rig/intervention vessel day rate comparisons and this needs to change. 

Alex: Though subsea intervention systems have clearly demonstrated the ability to execute early-phase plug and abandonment operations, there is an opportunity to improve methods to isolate backside annuli. Tooling and expertise are presently available to access and isolate the A and B annuli, but subsea systems have greater difficulty than traditional MODU’s when perforating through multiple strings to access the C annulus and beyond. Prototype systems are presently in development to address this issue. Once proven from a technical and regulatory compliance perspective, these systems will give subsea intervention systems a notable advantage versus MODU’s when evaluating plugging and abandonment campaigns.

Robert: The greatest challenge facing the subsea intervention industry is a lack of confidence from operators that may feel that interventions are too: expensive; dangerous; and/or ineffective. It is up to the intervention contractors, in league with positive operators to demonstrate that subsea interventions can produce value, in a safe and efficient way.

Rob: If you look at the Asia Pacific market, the greatest challenge is the size and weight of the equipment. Infrastructure and facilities in the region are aging which makes utilizing intervention equipment a challenge. Also, drilling operations in the region have not declined to a point that would make drilling rigs available at a price to allow for intervention via traditional landing string. The region needs lighter well intervention systems that can be deployed from a vessel of opportunity. There are some systems available but the majority of equipment suppliers are focusing on interventions systems that are run from a MODU or purpose-built vessel.

Helix Energy Solution’s Q5000 at its fabrication yard in Singapore, waiting to be towed to the US Gulf of Mexico where it is due to arrive in early August. 

Photo by Neil M. Johnston, who is working on the Terasea Osprey, which is towing the Q5000.

OE: Can cost efficiency and safety be complimentary on intervention jobs?

Colin: The converse of this statement is also equally important in that an unsafe operation will by definition never be efficient. The emphasis on efficiency is a key one for the subsea well intervention market since this is where the overall project cost can be positively impacted. The benefit of such emphasis, i.e. increased automation for handling, removal of personnel from work areas, will translate into improved safety since people are literally being removed from harm’s way. The emphasis on multi-skilling should have as its target to reduce the numbers of personnel offshore, again a direct correlation to improved safety if less people are exposed to the more dangerous aspects of operations, namely being offshore in the first place. The key to cost efficiency and safety being complimentary, however, is a shift to overall project cost, to allow demonstration of operating efficiencies, and away from dayrate cost comparisons.

Alex: Efficiency and safety are never mutually exclusive in the oil and gas industry. Both aspects of operations are key drivers for a company’s ability to operate. Careful pre-job planning and crew awareness of potential hazards have shown, time and time again, to improve both efficiency and safety.

Robert: Cost efficiency and safety are complimentary, and virtually co-dependent as you almost never have one without the other, and any contractor that thinks otherwise will – or already has – gone out of business. Safe operations ultimately are more cost effective that those that incur incidents and accidents; hard lessons learned at a very high cost.

Rob: Safety is always the top priority in this industry, and this is also the case for Aker Solutions. Safe operations are in and of themselves more efficient because there is less time lost for injury or repair. With fewer lost time injuries and repairs the job will be more efficient. This holds true for intervention jobs – If we do not take care of our employees, customers, environment and equipment then future operations become much more expensive.

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