Operating in the margins

Emma Gordon

March 1, 2017

With more than 3 billion boe up for grabs, the race is on to find ways to unlock the remaining oil and gas in around 350 unsanctioned, and largely marginal, UK Continental Shelf discoveries. Emma Gordon reports on the latest developments.

A DP production system concept for marginal fields. Image from Amplus Energy.

Developing “really simple” technical solutions that ensure the economic viability of marginal fields, and in particular small pools, is a global oil and gas business opportunity like no other.

That’s according to Mike Tholen, UK industry body Oil & Gas UK’s upstream policy director. “These are high-risk opportunities in every commercial and technical sense,” he says, speaking at the Subsea Expo event in Aberdeen in early February. “Unless we find a way to make them ultra-attractive, they will not move. Whatever the environment we’re in.”

In fact, he says unless the “all-up costs” – comprising operating, capital, decommissioning and finding spend – are reduced to around US$20/bbl, most small pools will remain economically unviable.

“The challenge to crack is to find $10-15/bbl [operating expenditure] solutions that work. Get those, and you will have business opportunity out there like no other; [one that is] scalable around the world.”

Setting the scene earlier at the same session, Carlo Procaccini, head of technology at the UK regulator, the Oil and Gas Authority (OGA), said that there were around 3.4 billion boe reserves recoverable from some 350 unsanctioned discoveries on the UK Continental Shelf (UKCS): 70% of which were small, with reserves of fewer than 10 MMboe.

Procaccini says that while much was needed to unlock these discoveries, the process had begun, adding: “The complex nature [of marginal fields] requires a collective response. It needs companies to approach it joining forces, working together with the regulator, and with the supply chain in more specific areas of technology and execution.”

Taking up this task is Chris Pearson from the recently-opened Oil & Gas Technology Centre in Aberdeen. Pearson is the Solution Center Manager, small pools, a part of the organization tasked with identifying and developing technologies to lower field development costs.

“Alongside the OGA, the National Subsea Research Initiative (NSRI), and others, we’re looking at what [technology] makes sense to develop, and in what order,” Pearson says.

He adds that adopting and adapting technologies such as production buoys and remote wells would be looked at over the next few years, with enhanced oil recovery techniques and normally unmanned installations earmarked for consideration over the longer term.

Meanwhile, ahead of the 30th offshore licensing round, the OGA will publish data on relinquished discoveries, and their potential within mapped cluster developments.

Eric Marston, the OGA’s area manager, Southern North Sea (SNS) and East Irish Sea, says the authority has helped kick-start a development of this kind in the SNS’ West Sole Catchment Area: a cluster including one relinquished discovery.

“As an organization, we have a key role in shining a light on the opportunities,” Marston says. This includes building the “big picture” of the potential of these clusters, for operators and license holders, using validated industry data, as well as the results of OGA’s own development concept valuations.

Ultimately, Marston says this gives companies a better understanding of how these ideas could be progressed, and how a collaborative approach could drive down costs through standardization and rig sharing, for example.

West Sole has 0.5 Tcf recoverable reserves, and four license holders – Centrica, Premier, Dana and Hansa. Marston says that there has been “tangible progress” here in recent months including on confidentiality agreements and infrastructure access. “This is where we’ve picked up the ball, moved things forward, handed over to industry, they’ve reciprocated, and are now taking it forward.”

Gordon Drummond, NSRI project director, said that this type of clustering and campaigning is likely to work for some discoveries, and would, “see us through 2020-2025.” But, “beyond that, the other difficulties, including tight gas, high-pressure, high-temperature and low permeability reservoirs, will have to be solved for us to have a sustainable supply chain and center of oil and gas excellence here in the UK.”

That said, Drummond adds that the quickest win will likely be delivered through improved efficiency, citing work carried out by the Oil & Gas UK Efficiency Task Force (ETF).

The ETF’s Subsea Standardization Project drew on the expertise of around 30 companies, including operators, the supply chain, and industry bodies, to identify efficiencies that could be applied to subsea developments through a simplified, fit for purpose approach.

Steve Duthie, project industry lead, and Technip UK’s industry liaison director, says that applying the theory developed through the project realized sustainable savings of around 25% in two initial prospects: Centrica’s Pegasus West and Chevron’s West Wick.

Efficiencies in the Pegasus West development, a three well gas tieback in the SNS, included introducing a co-mingling manifold to replace the well daisy chain configuration, as well as applying a standard control system design: saving on management and engineering costs.

In Chevron’s West Wick, a potential heavy oil tieback to the Captain platform in the Moray Firth, one of the efficiencies was using free hanging risers as an alternative to a caisson riser.

“This [25% cost saving] has demonstrated what can be achieved by adopting a collaborative approach, and highlights the benefits of a simplified and fit for purpose approach to the UKCS,” Duthie says. “Wider adoption... to other prospects, including small pools, will provide sustainable savings going forward.”

What is clear is that there is no silver bullet to increasing the economic viability of these small, diverse discoveries. But, a coordinated pan-industry effort with the ultimate goal of producing from these marginal discoveries – and in turn extending the life of the UKCS – has begun.

“Hopefully, what comes across is that we are all aligned,” Drummond concludes. “We are all looking to get these things over the line, and that single focus is pulling us together.”

Read more:

Small pools contain 3 billion boe

Tanked Up [OE: August 2016] 

Cutting the umbilical [OE: Dec 2015]