Making strides: 2016

Audrey Leon

December 1, 2016

2016 has been a year of challenges for the oil and gas industry. Audrey Leon surveys some of the year’s notable starts.

Shell’s Stones project came online in September 2016, using the Gulf of Mexico’s second ever FPSO, Turritella. Photo from Shell.

This year hasn’t been one to envy. When OE surveyed 2016’s most read stories online, the most common theme that emerged was bad news: layoffs, accidents, and cancelled projects and contracts.

However, there were some positive strides made this year. Allseas’ US$2.7 billion mega-vessel Pioneering Spirit passed its trials and completed its first commercial job, lifting Repsol Norge’s 13,500-tonne Yme mobile offshore production unit, 100km offshore Norway, this August.

And, of course, in spite of the low oil price environment, several notable projects came onstream this year. It is not certain what kind of year 2017 will be, but we hope to report on more project start-ups in the coming months.

Notable starts

Laggan-Tormore comes onstream

February 2016 Total achieved first gas from the Laggan-Tormore gas and condensate subsea-to-shore development in February (OE: May 2016).

Originally due onstream at the end of 2014, the Laggan-Tormore development suffered delays and cost increases.

The development, in 120-600m water depth, will produce 90,000 boe/d. It is a four-well subsea tieback via two, 143km-long 18in export pipelines to the new onshore, 500 Mcf/d Shetland Gas Plant.

It is also due to provide the export infrastructure for two further subsea fields, Glenlivet and Edradour.

The Laggan field was discovered in 1986, Tormore followed in 2007. Development approval was obtained in early 2010. Following treatment at the gas plant, the gas is exported to the mainland via the Shetland Island Regional Gas Export System and the condensates are exported via the Sullom Voe Terminal.

Goliat achieves first oil

 The Goliat FPSO achieved first production in March 2016. Photo from Eni.

March 2016 Production started from Norway’s first Arctic oil field at the Goliat floating production facility in the Barents Sea in March 2016.

Discovered in 2000, Goliat is both the first producing oilfield in the Barents Sea and the northernmost offshore producing field. Holding some 180 MMbo, it is expected to produce 100,000 bo/d once all 22 of its subsea wells are onstream. Currently, 17 wells have been completed.

The 360-420m water depth project is based on a powered-from-shore, via subsea cable, cylindrical floating production facility, sitting 85km northwest of Hammerfest, offshore northern Norway. The 107m diameter, 64,000-tonne, 1 MMbo storage capacity Sevan 1000-design floating production and storage, offloading (FPSO) vessel, moored using 14 anchor lines, was built by Hyundai Heavy Industries in South Korea. It was designed to be manned by about 40 staff and to be operated out of Hammerfest.

Goliat was originally scheduled for start-up in Q4 2013, but, like Laggan-Tormore, suffered setbacks. Now that the field is in production, it hasn’t all been smooth sailing. Production was briefly halted on 26 August due to gas being detected in an unwanted area. Gas was being vented as part of a maintenance operation. This led to an automatic power shutdown to eliminate ignition sources. Production eventually resumed on 27 September.

ExxonMobil in Julia start-up 

April 2016 ExxonMobil started oil production at its US$4 billion Julia oil field in the Gulf of Mexico in April 2016.

The US supermajor’s initial development phase for Julia uses subsea tiebacks to the Chevron-operated Jack/St. Malo production facility located 15mi away, which reduces the need for additional infrastructure and enhancing capital efficiency. The company is also utilizing subsea pumps that have one of the deepest applications and highest design pressures in the industry to date.

Julia is approximately 265mi southwest of New Orleans in the ultra-deepwater Walker Ridge area in more than 7000ft water depth.

The field development plan was approved in May 2013. The Julia field, discovered in 2007, is thought to contain approximately 6 billion bbl of resource in place. Exxon said the initial development phase will be designed to produce 34,000 bo/d.

Noble online at Gunflint 

July 2016 Noble Energy brought its deepwater Gunflint field in the Gulf of Mexico online in late July 2016. The Gunflint oil development, in Mississippi Canyon Block 948, is a subsea tieback to the Gulfstar One facility owned by Williams Partners and Marubeni.

The two-well field is expected to reach a minimum gross production of 20,000 boe/d. Noble Energy operates the Gunflint field with 31.14% stake. Partners include Ecopetrol America (31.50%), Samson Offshore Mapleleaf (19.13%), and Marathon Oil Corp. (18.23%).

TEN delivers first oil

August 2016 Tullow Oil achieved first oil from the Tweneboa, Enyenra, Ntomme (TEN) fields offshore Ghana with MODEC’s Prof. John Evans Atta Mills FPSO vessel back in August.

TEN is expected to ramp-up oil production gradually towards the FPSO capacity of 80,000 b/d through the remainder of the year. The TEN average in 2016 is anticipated to be 23,000 b/d gross, and 11,000 b/d net for Tullow.

The Prof. John Evans Atta Mills is moored some 60km offshore Western Ghana in about 1500m water depth. In addition to the capability of processing 80,000 b/d, the FPSO is also able to process 180 MMcf/d of natural gas, and has the storage capacity of approximately 1.7 MMbbl of crude oil.

Shell brings Stones online 

September 2016 Supermajor Shell started production from its Stones development in the deepwater Gulf of Mexico in September 2016. The field’s FPSO, Turritella, is the deepest floating production unit in the world, operating in 9500ft of water. It is Shell’s 13th project to use an FPSO unit, and the Gulf of Mexico’s second FPSO behind the BW Pioneer, which operates at Petrobras’ Cascade/Chinhook development.

Shell says it expects production to ramp up to 50,000 boe/d by the end of 2017.

Notable mergers

2016 has also seen some notable players opt to merge businesses and combine synergies.

In the beginning of the year, Shell closed its US$70 billion merger with BG Group, making Shell the world’s second biggest non-state oil company, surpassing Chevron. ExxonMobil remains the largest.

In April, service companies Schlumberger and Cameron completed their $14.8 billion merger, less than a year after the deal was proposed. Both companies had held stake in the OneSubsea joint venture. By contrast, Schlumberger and Cameron’s merger was smooth sailing compared to the attempted Halliburton and Baker Hughes combination, which eventually fell apart in May this year. Baker Hughes received a $3.5 billion payout for the terminated agreement.

But, Baker Hughes wouldn’t stay single for long. In late October, the service firm and GE Oil & Gas announced that the two would combine under the Baker Hughes brand. GE Oil & Gas CEO Lorenzo Simonelli will lead the new company, which will have a combined revenue of $32 billion. The deal was unanimously approved by the boards of directors of both companies, and closing is expected in mid-2017.

Somewhat unexpectedly, in May, engineering firms Technip and FMC Technologies announced they would combine under the brand TechnipFMC, creating a $13 billion business. Like with Schlumberger and Cameron (which shared the OneSubsea joint venture), Technip and FMC shared the Forsys Subsea joint venture, created in 2015. In a statement, the firms said the move will “create a global leader that will drive change by redefining the production and transformation of oil and gas.”

Together, in 2015, Technip and FMC generated combined revenue of about $20 billion. As of March 31, 2016, the two companies together had consolidated backlog of approximately $20 billion.

Thierry Pilenko, Technip chairman and CEO, will serve as executive chairman of TechnipFMC. Doug Pferdehirt, president and COO of FMC Technologies, will serve as the CEO of the new company.