A pilot program in Norway has taken a fresh approach to the logistics of a refurbishment project delivering revamped subsea christmas trees to Statoil for its giant Troll oil and gas field. So far the program is proving that the refurbishment of equipment is a way to both save money and make money as well.

Dubbed Pit Stop, the refurbishment initiative has been undertaken in light of the recognized need offshore Norway for increased standardization and faster, more cost-effective delivery of the required subsea equipment. The results so far are impressive, reducing the average delivery period for a subsea tree from around a year to just 17 weeks.

The Pit Stop program was highlighted at the recent Underwater Technology Conference in Bergen, Norway, where Kristoffer Bakke, lead engineer for XMT projects at Aker Solutions, gave an update on the refurbishment initiative.

Oil production at 1.5 Bbbl so far

The background to the program lies in the ongoing plans at a multitude of different levels by Troll operator Statoil to maximize and extend the life of this world-class North Sea gas and oil field—a giant that in May this year achieved total oil production of 1.5 Bbbl so far despite reservoir pressure decreasing. The operator has been busy “inserting” new technologies such as more advanced well completion and flow control systems, topsides gas compressors, and subsea production systems to help enhance and extend recovery rates.

One subsea aspect recognized early on was the importance of refurbishing and, where necessary, upgrading the field’s 115 subsea trees as part of the initiative to increase oil recovery, according to Bakke. It also was recognized that this tree cost was low compared to the cost of operation if a tree failed.

Christmas tree upgrades

A key decision also was that the Norwegian state-owned operator was willing to invest to reduce risk and invest in particular in the purchasing of long lead items as a separate project. As a result there will be an estimated 60 to 70 christmas trees to be upgraded between 2014 and 2019 on Troll.

Bakke went on to point out the large cost and risk factors for the project in terms of new technical requirements and the way they are implemented. Implementation cost of extra requirements is a major cost driver, with the cost essentially being the same whether a company buys one component or 1,000, meaning an “extreme cost impact if low volume.”

Statoil had originally wanted to refurbish up to 14 trees per year, but Aker Solutions only originally had the capacity to do seven per year (actually translating into only three or four per year). However, thanks to the Pit Stop initiative, Aker has already produced seven so far in 2014, a performance rate that is good business for both sides.

Recovery rate of 52%

On Troll the aim is to raise oil recovery from 42% to 52%, including the use of four rigs drilling 10 to 15 horizontal production wells per year up to around the year 2020 on top of the 122 wells already there. Over the last five years Statoil and its partners have invested more than $7.5 billion on the field, which came onstream in 1995.

If all goes to plan, this will mean eventually achieving a forecast produced total of about 2.1 Bbbl by around the year 2030. Not bad for what remains the North Sea’s largest gas discovery ever made and where—during the 1980s—it was deemed too expensive to even produce the giant field’s thin oil layers.

Subsea trees and capex growth

Global subsea tree installations and subsea capex are both anticipated to double over the next five years, according to the latest report by analyst Infield Systems.
The company foresees positive prospects for growth in the sector, with the subsea market predicted to expand at a compound annual growth rate of 6.72% over the 2014-2018 period. The principle driver for the growth is the continued increasing trend toward deepwater oil and gas development, according to Infield, brought about by continued high oil prices, key technological improvements and the need to replace production from maturing shallow-water basins.

As a result, the report added, subsea developments have steadily increased over the past decade as companies look to cost-effectively target reservoirs over a much wider area.

Latin America and Africa will maintain their subsea market dominance, together accounting for more than half of total global forecast capex between 2014 and 2018.

The primary drivers remain the massive presalt discoveries offshore Brazil in the Santos and Campos basins. These ultradeepwater fields are mostly operated by Petrobras, with the state oil company remaining the top global subsea investor over the next five years with a 25% share of the global capex figure.

Asia, Australasia

The Asian and Australasian regions represent emerging opportunities for the subsea sector, Infield added. They will increase their combined market share from 8% in the last five years to 14% over the next five years.

Infield has now released the latest edition (its 10th) of its “Global Perspectives Subsea Market Report to 2018.”

The growth figures also were backed up by a separate report from another analyst, Douglas-Westwood. It is forecasting global subsea hardware capex will total $117 billion between 2014 and 2018. This represents growth of more than 80% compared with the preceding five-year period.

In 2013, subsea tree installations were lower than expected with delays in crucial projects off Brazil and West Africa, it added. However, it is predicting an increase through to 2018, with the major manufacturers all reporting strong backlogs.