The offshore oil business in many ways epitomizes all that is good and bad about the oil industry. Its technological achievements rank among some of Man's greatest feats, but its mistakes can be hugely expensive, both in terms of money and environmental consequences.


With a new millennium under way, many of those who work within the offshore sector have sat back to truly consider just how it will develop over the course of the next few years.
And it does need to be considered carefully - after all, natural oil and gas reserves are finite, so it can't last forever. Technological innovations in alternative energy sources could make oil redundant in as little as 20 years. But most feel confident that there will be a future for oil certainly well into the next century, and it is hard not to get excited imagining just what might be technically possible not just in 5 years, but in 15 or 20 years.
Most can predict the steady evolution of existing technology and techniques offshore in the near term. But who, sitting in their office back in 1980 (let alone those around in the offshore glory days of the '70s and earlier), would have imagined the advances the offshore industry has made in terms of accessing reserves in what were then unimaginable depths.
It is something of a symbolic reminder that Petrobras, the Brazilian state-owned oil company, has just set a new world water depth drilling record at more than 9,050ft (2,777m) using R&B Falcon's fourth-generation Peregrine 4 drillship on the RJS-543 prospect offshore Brazil. This expansion in the apparent ability of the industry to go ever deeper will lead, logically, to it being able to tackle virtually all ocean floors within the next two decades, if the oil is believed to be there. After all, it was only in the '70s that 1,000ft (300m) was very much the deepwater limit - now we're 900% beyond that in just 20 years.
At this percentage rate of progress, theoretically, in just another 15 years or so there will not be a single part of the world's seabed that the industry cannot reach - even the Pacific's 36,200ft (11,033m) Mariana Trench will be attainable if necessary. However, whether a 900% rate of improvement over a 20-year period is maintainable is open to substantial debate, because this would involve some incredible step changes in materials and techniques.
What we can predict in the shorter term is that the most important challenge confronting the offshore industry right now is that of reducing the costs of finding, developing and producing deepwater oil reserves. These costs are still in the range of US $8/bbl to $10/bbl. Add the costs of fiscal and regulatory measures and it is clear that many projects are not robust enough to sustain economically viable production with oil prices at levels as low as $10/bbl to $12/bbl - which many oil companies now exercise as their base figure.

Combination
And so the industry is relying once again on a combination of technology development and changes to business and contractual procedures to reduce costs of both development and operations of offshore oil and gas fields.
Some experts claim that an accelerated development of cost-reducing technology will successively make offshore production, even in ultra deepwater, up to 50% cheaper within the next 5 years.
The problem remains of course the variations in the costs of technology and services as a result of imbalances in the supply and demand situation for such technology and services. With the cyclical nature of the industry, significant cost variations seem to be unavoidable, and in their efforts to curb costs of offshore E&P, the oil companies can be expected to avoid or minimize the use of such technologies and services, most importantly adding to costs as demand increases. The cost saving potential lies within the increased efficiency of such technology and services.
Much attention remains focused offshore on the drilling and well services sector, since more than one-third of total expenditures in offshore E&P are in this area. Efficiency in drilling operations has improved significantly in recent years, and further efforts are being focused on making use of enhancements in drilling technology in order to achieve higher efficiency rates and improved reservoir drainage.
But the advent of the new generation of Deepwater and Discovery series drillships, some with dual derricks, and semisubmersible units now coming onto the market, has opened up a whole new area of potential for the industry in terms of what is achievable offshore.
Additionally industry consortiums are investigating highly advanced new concepts such as subsea mudlift drilling, also known as riserless drilling. Many see this as a key development in drilling technology that, if proved, will see specialized pumps eliminate mud from the drilling riser, permitting fewer casing strings. Instead, muds and drill cuttings are returned to the surface through a separate, flexible riser. Under this design, the weight and deckload restrictions of floating rigs would be greatly reduced, enabling drilling at even greater water depths.

Flow rates
Also, with fewer casing strings, flow rates from individual wells would likely improve, and the potential for multilateral and horizontal completions is introduced.
With this concept expected to be commercialized by 2002, targeted well savings of $5 million to $12 million per well are being predicted.
Other advances in technologies such as in the marine seismic and production sectors have brought about dramatic improvements in recent years, cutting field development costs by between 30% and 60% compared to just a decade ago. Remember that as recently as 1990, Shell did not consider its US Gulf of Mexico deepwater discoveries such as Auger, Ram-Powell, Mensa, Ursa and Mars to be commercially viable. Today they are all producing profitably.
While technology improvements on the drilling side such as extended-reach and horizontal drilling, slimhole drilling and synthetic fluids should not be overlooked, the majority of field development cost declines can be attributed to improved geophysical technology and a better understanding of the costs and challenges associated with the advent of floating production and subsea systems.

Production systems
The future of offshore production revolves around these base concepts as a natural move by the industry into deeper waters, although the debate over which may be better in the long term is still fierce. Floaters continue to be the favored option, and many can foresee a day when unmanned, dynamically positioned floating production systems will be in operation, linked to large and complex subsea networks of manifolds.
Entirely independent subsea developments are already a reality, but many oil companies cannot seem to reconcile themselves to fully trusting the technology because of the expense of repairs and maintenance, such as well workovers.
But a continued combination of various floating and subsea production concepts is very much the way forward, aided by increasingly able advances in remote support technology. The latest remotely operated vehicles are highly capable when used in conjunction with specially designed subsea systems, and have already proven themselves in the key area of diverless intervention.
Floating production systems themselves are well on the path toward a time when they will be virtually interchangeable. A growing number of multipurpose vessels is already in existence, which can be "tuned" as appropriate. Again, this will lead to the potential for units to act as drilling and production vessels as appropriate, needing only minor and modular topsides modifications in order to be able to undertake different projects.
To many extents this will have to happen, as the mobile production system market will need a more flexible fleet of partly interchangeable vessels, unless the construction time of new production systems is dramatically improved.
With other problems now being researched such as flow assurance in long-distance, deepwater pipelines, it is likely that answers will be found sooner rather than later to this problem (via the use of various chemical solutions, pipeline insulation and warming methods).
Overall, a future vision of the offshore sector in, say, 20 years is likely to be not so dramatically different as some would have us believe. As is nearly always the case with this industry, gradual evolution of current marine technology will lead to undoubtedly significant refinements but with concepts that already exist today.
A vision of unmanned submarine rigs drilling and then producing oil controlled by a skilled desk jockey onshore is unlikely - although attractive - but compared to the advances that have occurred in the past 20 years, few can fail to get excited about Offshore Industry 2020.