Subsea completions to get big boost from deepwater developments

Africa will lead the trend toward more subsea well completions. Other active areas include the Gulf of Mexico, Brazil and the North Sea

Paul Hillegeist, Quest Offshore Resources, Inc., Houston

five-year forecast of subsea activity reveals significant growth, as new subsea completions are expected to total 1,257 by 2005, based on a medium-range forecast. If a more aggressive case is assumed, the forecast rises to 1,500 completions. These data are part of a recent report from Quest Offshore Resources’ Quest Subsea-Data-Base.

While the subsea sector has experienced remarkable growth over the last 30 years (Fig. 1), Quest projects an 87% growth rate in subsea activity over the next five plus years. This will entail an average of 210 subsea completions per year, compared with an average of 122 completions per year from 1995 to 1999.

Fig. 1. From 1970 to present, the number of worldwide subsea completions has undergone exponential growth. Average water depth of these completions has also increased significantly.

Growth Is In Deepwater

Perhaps most significant are the water depth gains pioneered with subsea technology. Average water depths for subsea installations have increased exponentially during the last decade, from an average of 410 ft in 1989 to more than 1,170 ft in 1999. This growth into deeper water is expected to continue and should reach an average of 1,740 ft during the next five years. Clearly, the heightened deepwater and ultra-deepwater exploration and development activity globally is driving continued growth in the subsea sector in conjunction with the plethora of deepwater discoveries.

Trend Is To Horizontal Trees

An analysis of completions by classification suggests that the widespread use of horizontal trees (HT) points to a significant growth trend. As illustrated in Table 1, only 4% of completions from 1990 to 1994 were horizontal; most were conventional trees (CT). Between 1995 and 1999, the number of HTs grew dramatically, reaching a 13% share-of-market. Moreover, in the deepwater sector (more than 1,000 ft), HTs comprised an impressive 18.8% of market during 1995 – 99.

For 2000, Quest Subsea-Data-Base has identified 27 trees, or 54% of the identified deepwater (>1,000 ft) market, earmarked for HTs. Widespread use of HTs has included Chevron Angola’s Kuito in Africa (supplied by ABB), ExxonMobil’s Diana in the Gulf of Mexico (manufactured by FMC) and Shell’s Malampaya in the Philippines (fabricated by Cameron).

Regional Forecasts

From a regional perspective, the most dramatic growth will occur in Africa, where 331 subsea completions are expected over the next five years, Fig. 2. This represents a monumental, 250% increase over historical activity (124 total completions) in the region between 1962 and 1999. These 331 planned, probable and possible tree orders represent 28 currently identified projects.

Fig. 2. The most dramatic growth region for subsea completions is Africa, where 331 completions are forecast over the next five years.

Angola is by far the most active, with 13 deepwater projects forecast to require more than 200 trees. Nigeria is second, with more than 60 trees expected, including Shell’s Bonga and Texaco’s Agbami developments and numerous others that are projected to materialize.

The mature regions of the Gulf of Mexico and Brazil are predicted to experience continued healthy activity, albeit at a slower growth rate than in the past. Sixty-five projects have been identified in the Gulf of Mexico and Northeast Canada, comprising 183 trees. Brazil should see continued high activity, with 240 completions identified, for an average of 40 trees per year. The North Sea, particularly Norway, will continue to play an important role for subsea suppliers with a balanced number of projects in the United Kingdom.

Fig. 3. Of the 1,257 subsea completions expected during the next five years, 46% will be in waters greater than 1,640 ft.

Following are region-by-region details of activities that figured into the subsea completions forecast:

Africa is a most important region for exponential growth in the ultra-deepwater and subsea sector. Angola has the most deepwater activity, while some recent, significant deepwater discoveries have been made offshore Nigeria.

In January, Chevron commenced first production from Block 14, Kuito Phase 1A, which is Angola’s first deepwater and zero-flare field. The project was achieved under budget and just 2 years after discovery. Consortium leader Single Buoy Moorings (SBM) and partners Coflexip Stena Offshore (CSO) and ABB Offshore Systems were responsible for turnkey fabrication and installation of Kuito facilities.

CSO’s portion of Kuito Phase 1A included the design, engineering, supply and installation of 12 mi of flexible flowlines and risers and 9 mi of umbilicals. The reel ship CSO Installer and chartered vessel Smit Pioneer were used for the work. CSO also installed a range of subsea equipment, including a 12-slot production manifold. SBM and ABB Offshore Systems supplied the FPSO and subsea equipment, respectively.

ABB’s work included engineering and fabrication of 12 horizontal production trees, one gas injection tree and production manifold. Wells were drilled and completed by Transocean Sedco Forex’s Sedco 708. Two additional phases will include the Kuito Phase 1B (comprising 8 water injection trees for installation in mid-2000) and Kuito 1C (10 or 12 production trees planned further in the future).

Activity in Angola Block 17 is well established, with Elf’s 40-well plus Girassol subsea development, which is scheduled for installation in 2001. Mer Profounde Girassol is the prime contractor for the multi-billion-dollar project in 4,430 ft of water.

Elsewhere, the subsea well count for Elf’s Block 17 Dalia project is on the rise. Elf is proposing 40 wells – 20 producers and 20 injection. However, these are just the template wells. Another group of satellite wells will bring the total up to 59, as approved during a partner meeting in late December. Bid tenders are slated for June 2000, with contract awards anticipated by the end of the year.

Nearby on Block 15, Brown & Root won ExxonMobil’s Kizombo contract. The $25-million, front end engineering design (FEED) contract is based on an FPSO and floating wellhead platform with dry trees centered around development of the Hungo and Chocalho fields. Water depth is 3,937 ft. Kizombo’s second phase (development of Kissanje, Dikanza, Marimba and Xikomba) will likely include a second wellhead platform (spar, TLP) and subsea satellites or a stand-alone subsea alternative tied back to the FPSO.

With a string of recent discoveries, deepwater activity offshore Nigeria has increased. Texaco recently hiked reserve estimates at its deepwater Agbami prospect. The Agbami-2 appraisal well, drilled by the Glomar Explorer drillship on OPL 216 in 4,800-ft waters, confirmed the structure as a giant with potential recoverable reserves in excess of one billion bbl of oil equivalent. Tests suggest that the Agbami discovery will likely rank among the largest single finds to date in deepwater West Africa. The operator envisions a spar or TLP development in conjunction with an FPSO and subsea scheme with up to 20 completions. The project is expected onstream in 2003.

Also offshore Nigeria, contractors are vying for a piece of Shell’s multi-billion-dollar Bonga project. Shell will soon cull bidders to a short-list of companies able to meet the technological challenges of the project and whose abilities to effectively work in Nigeria have been proven. Daewoo or Samsung are contenders for fabrication of the FPSO hull. Heerema has pre-qualified for the pipeline and flowline package and will propose its J-lay system aboard SSCV’s Balder, Thialf or Hermod. Other competitors for the pipeline and flowline package are CSO, Stolt Offshore / ETPM, J. Ray McDermott, Brown & Root / Allseas and Saibos.

Other West African bright spots include Equatorial Guinea, where subsea activity heated up with Triton Energy’s 1999 discovery on Block G. Dallas-based Triton reportedly awarded contracts associated with the fast-track development of its Ceiba field on Block G in 2,347 ft of water. Triton has moved up its ambitious development schedule and is targeting first oil production by year-end 2000.

Bergesen of Norway will supply the Ceiba FPSO Berge Charlotte under a lease scenario. The unit’s specifications provide for two million bbl of storage and initial processing capacity of 60,000 bopd. Triton anticipates initial phase-one production of 52,000 bopd. The vessel can be expanded cost effectively through the addition of incremental processing capacity to accommodate up to 240,000 bopd.

Stolt Comex Seaway was awarded subsea installation work, including flowlines to the FPSO, with the Seaway Falcon, MSV Norlift, Seaway Eagle or Seaway Osprey. Houston-based Cameron will supply its spool trees for the field’s four subsea wells. The Ceiba-1 discovery and Ceiba-2 appraisal wells are scheduled to be completed in 2000 and will be two of the four planned producing wells. Drilling and completion of the remaining two appraisal / production wells will follow later in the year. Triton envisions that the Ceiba development in Block G (2,347-ft water) will grow to a total of 30 subsea wells in the future.

Offshore Egypt, British Gas tapped Bechtel and Intec Engineering to spearhead its deepwater Scarab / Saffron development. Separate management contracts were awarded to Bechtel and Intec for development of the West Delta Deep concession in 1,740 ft of water. Bechtel, which beat out Kvaerner, Aker and Halliburton, will manage the onshore work. Intec is responsible for the offshore work, including contractor selection.

A full-blown, subsea scheme, comprising eight plus subsea completions producing to a subsea manifold in the field, is the preferred development solution. Plans for an FPSO have been scrapped. A 52-mi, 30-in. or 36-in. pipeline will be laid to shore. British Gas issued tenders in February for the 52-mi umbilical linking the field to shore. Offshore installation is scheduled for 2002 – 2003. Field is estimated to contain 4 Tcf of recoverable gas reserves, Egypt’s largest gas field to date.

Fig. 4. Of the 210 subsea development projects represented in this forecast, the more mature areas of the North Sea and Gulf of Mexico will account for more than 70% of the projects.

North America. U.S. Gulf of Mexico operators are increasingly stepping out into deeper water and are looking to build infrastructure in frontier areas in the form of multiple floating platforms (mini-TLPs or spars) with subsea clusters tied back. Some 183 completions are forecast for North America during the next five to six years. Floaters are gaining momentum in the ultra-deep waters.

BP Amoco has prioritized its near-term deepwater venue and has given a green light to the anticipated Holstein (GC 644), Mad Dog (GC 825) and the one-billion-bbl Crazy Horse (MC 778) developments. These Gulf of Mexico waters are ultra-deep, ranging from 4,265 to 6,730 ft.

Gulf Island Fabrication recently announced the creation of Deep Ocean Services, a new wholly-owned subsidiary based in Houston to market and develop deepwater floating production platforms, including its proprietary MinDoc floater as well as mini-TLPs and spars. The company also will provide project financing, bareboat charter leasing options and fabrication services for these concepts.

Many deepwater projects earmarked for potential floating concepts are gaining momentum, including Kerr-McGee’s Boomvang (EBR 643/688 unit), Elf’s Matterhorn (MC 243) and Vastar’s Horn Mountain (MC 127), to name a few. Many of these projects are designed for 3,000-ton to 4,000-ton plus topsides, with fabrication tenders slated for mid-2000.

Aker Engineering, Alliance Engineering and Atlantia Engineering reportedly are conducting separate FEED studies for floating platform concepts (spar or mini-TLP) to develop Vastar’s 125-million-bbl Horn Mountain prospect in Mississippi Canyon Blocks 126 and 127. Water depth is 5,417 ft.

Elsewhere, Elf awarded its Aconcagua FEED contract to Intec Engineering. The Aconcagua prospect in Mississippi Canyon Block 305 is in 7,100 ft of water.

In January, Kerr-McGee boosted reserve estimates at its Nansen prospect, revealing enhanced field economics for the greater Boomvang and Nansen developments. After a second successful appraisal well – East Breaks 602 3 – Nansen reserves were raised from 350 – 450 Bcf to 500 – 600 Bcf of gas equivalent. Development scenarios for the entire East Breaks area are being evaluated with preliminary plans for one spar at the 100-million-boe Boomvang and North Boomvang discoveries, and another spar at Nansen. Both spars will be prime hosts for future subsea satellite tie-backs. Development plans are expected to be completed during first-quarter 2000, with initial production expected to begin in 2002.

Chevron issued contract awards for its $250-million, deepwater Typhoon development at Green Canyon Block 237 in 2,398 ft of water. Atlantia Engineering will supply a Sea Star mini-TLP, Cameron will supply four subsea wellheads and trees, ABB will supply four subsea controls, DUCO will supply umbilicals and J. Ray McDermott will fabricate the Sea Star hull and topsides, as well as perform derrick lay barge installation operations. The project is expected onstream in 2002.

For another hot project, subsea contractors have prepared full turnkey bid packages for El Paso Production Services’ Prince subsea development in 1,500-ft waters of Ewing Bank Block 958. (The project had formerly been known as Sunday Silence.) A four-well, stand-alone subsea development is in the works, with offshore installation scheduled for winter 2000. The project is targeted for a mid-2001 onstream date. Pipelay reel vessels CSO Apache (Coflexip Stena Offshore), Chickasaw (Global), Seaway Falcon or MSV Norlift (Stolt Offshore) should be leading contenders for this project.

South America. Petrobras continues to establish records offshore Brazil, with an average of 35 to 40 subsea completions installed per year. And with the opening to outsiders, activity is expected to ramp-up even more, driven by the likes of ExxonMobil, Shell, Texaco and Unocal.

Halliburton recently secured the largest offshore EPIC project ever awarded to a single contractor. The company is moving forward with Petrobras’ $2.5-billion integrated Barracuda (2,576-ft waters) and Caratinga (3,396-ft waters) projects in Brazil’s Campos basin. Both Halliburton Energy Services (HES) and Brown & Root Energy Services (BRES) business units will perform full engineering, procurement, installation and construction services. Work includes construction of 51 wells, fabrication and installation of flowlines and risers, construction and installation of two FPSOs and the commissioning, start-up and operation support for both fields. Each FPSO will have 2 million bbl of storage capacity and production capacity of 150,000 bopd. At least 40% of the FPSO work (based on value) must be performed in Brazil.

Asia Pacific. In this sector, 120 subsea completions are forecast, with additional projects anticipated. Once the market for LNG is solidified, Australia’s North West Shelf will be a beehive of subsea activity.

Unocal has been active offshore Indonesia in the Makassar Strait production sharing contract area. Late last year, Pertamina granted Unocal (operator, 50%) and Mobil (50%) approval to begin development activities in the deepwater Kutei basin off East Kalimantan – Indonesia’s first deepwater development. The West Seno and Merah Besar projects mark a major milestone for Unocal, which is the most active explorer in Indonesia. The company holds about 2.5 million gross acres in the deepwater Kutei basin alone – the equivalent of about 500 Gulf of Mexico blocks.

The two-phase development scheme encompasses two mini-TLPs with tender-assisted drilling at West Seno in 3,200 ft of water. Produced fluids will be processed on a single FPU nearby the first TLP. Oil and gas production will be transported to shore from the FPU via two separate (14-in. or 18-in.), 37-mi pipelines to the Santan terminal.

Prime contenders for laying the project’s large-diameter export pipelines will be limited to Global’s DLB Hercules, Allseas’ Solitaire, Saipem’s SSCV S 7000, SAIBOS’ Newbuild FDS, Coflexip Stena Offshore’s CSO Deep Blue and Stolt Offshore / ETPM’s Polaris. Phase one is expected to have 24 development wells completed from the first (dry-wellhead) TLP, with first production in 2002. Phase two, which should follow in about 18 months, will include a second TLP at Merah Besar and 21 development wells. These major facilities will form the backbone for additional deepwater development opportunities via tied-back subsea satellite clusters.

Western Europe. There are 383 subsea completions forecast for the North Sea, constituting a multitude of smaller two- to six-well subsea satellite developments. Subsea is touted as the wave of the future in the North Sea as a cost-effective alternative to vastly expensive fixed platforms.

Offshore Norway, Norsk Hydro is proceeding with the $300-million development of its Tune gas field via a multi-well subsea development tied back to the Oseberg D platform. The project is expected onstream in 2002. Norsk Hydro has awarded DSND a $30-million EPIC contract for pipelay and subsea installation works.

In the UK sector, Talisman Energy and partners British Gas and Paladin Resources are moving ahead with the C$400-million development of the 75-million-bbl 13/24b Blake field. Blake, in 380 ft of water, will have up to eight subsea completions tied back to Ross field, which utilizes the Bleo Holm FPSO.

The first of eight wells was to have commenced drilling this month. Installation of subsea facilities is planned for early 2001. Hydrocarbons produced from Blake will be transported via flowlines to a subsea production manifold for onward transportation to Bleo Holm via 10- and 12-in. flowlines. Surplus gas will be exported via the existing Ross tie-in to the 34-in. Frigg UK pipeline to the St. Fergus gas terminal.

BHP Petroleum and partners BP Amoco, Total-Fina / Elf and Veba Oil & Gas are proceeding with the Keith subsea satellite. The oil field is in Block 9/8a, about 200 mi northeast of Aberdeen. Suspended appraisal well 9/8a-14 will be tied back about 4 mi to BP Amoco’s Bruce Western Area Development system. Production is slated for fourth-quarter 2000.

BHP confirms contract awards to Rockwater, which has landed the Keith 4-mi flowline bundle, including an 8-in. production line, 3-in. gas lift line and control and injection fluid lines.

Development plans also call for additional wells. Kvaerner Oilfield Products reportedly has the contract for subsea hardware. This includes a single, 5-in. bore horizontal tree and control system. The tree is designed to accommodate a subsea multiphase flowmeter and two ROV-deployable chokes.

The author

Paul Hillegeist is president and co-founder of Quest Offshore Resources, Inc. He has been involved in business development and market analysis activities in the offshore oil and gas industry for more than 10 years. Before joining Quest in 1999, Mr. Hillegeist held strategic positions with Global Industries, Ltd., and Offshore Data Services. He holds a bachelor’s degree in economics from the University of Texas at Austin.

Back to Top