BP Plc (NYSE: BP) has chosen OneSubsea, part of oilfield services powerhouse Schlumberger (NYSE: SLB), and U.K.-based Subsea 7 to provide engineering, procurement, construction and installation work for its $9 billion Mad Dog Phase 2 development in the U.S. Gulf of Mexico (GoM).
As part of a contract valued between $300 million and $500 million, Subsea 7 will be responsible for the engineering, procurement, construction and installation of the development’s subsea umbilicals, risers, flowlines and associated subsea architecture.
OneSubsea’s engineering, procurement and construction contract is for the development’s subsea production system. Included in its scope are subsea manifolds, trees, the control system, single and multiphase meters, water analysis sensors, intervention tooling and test equipment for producer and water injection wells, Schlumberger said March 21.
The duo already work together as part of the Subsea Integration Alliance, jointly designing and developing integrated subsea solutions.
The award was seen by analysts as a positive, particularly for OneSubsea.
“We continue to have a positive view on the industry’s acceptance of the OneSubsea value proposition,” RBC Capital Markets said in a note. The analysts estimated the value of the award between $250 million and $500 million. “We continue to expect SLB to outperform the broader service group in the challenging oil environment.”
Craig Broussard, Subsea 7’s vice president for the GoM, called the contracts a significant award for Subsea 7 and a significant endorsement of the alliance’s offering and approach.
“It combines Subsea 7’s capability with our Subsea Integration Alliance value offering to reduce risk and provide lower cost solutions for BP,” Broussard said in a news release. “This project serves as a step-change of how we work in the region and in Subsea 7’s ability to deliver superior value to the industry.”
Oil production from Mad Dog Phase 2 is scheduled to begin in late 2021. Development plans include a new floating production platform, which will be moored about six miles southwest of the existing Mad Dog Platform.
The new platform will have the capacity to produce 140,000 barrels per day (Mbbl/d) of gross crude oil, compared with the existing platform’s production capacity of up to 80 Mbbl/d of gross oil, from 14 wells. The Mad Dog Field is currently producing from a truss spar, which is also designed to process 1.6 million cubic meters per day (60 million cubic feet per day) of gas, with dual barrier production risers and dry trees.
Subsea 7 also plans to use its Swagelining polymer lining technology. The company acquired the technology, which guards carbon steel pipes from corrosion, when it bought U.K.-based Swagelining Ltd. in 2016.
Mike Garding, president of Schlumberger’s OneSubsea, said, “Our equipment reliability is a key factor in mitigating project risk, and this project will benefit from the supplier-led approach of using standardized equipment designs and specifications.”
Both believe their collaborative efforts will help lower costs for the project, which has already seen costs fall by more than half.
The development’s initial design, which has been described by BP as “too complex and costly,” prompted the company and its partners to start searching for ways to lower costs in 2013. Efforts made by BP and contractors for the project resulted in a 60% drop in costs, attributable to a simpler and standardized platform design.
The awards are among several given in March for the project.
Samsung Heavy Industries selected Wood Group to provide detailed engineering and procurement services for the topsides for the project’s floating production unit. The $80 million contract followed the December 2016 completion of interim agreement period early work valued at $4.5 million, Wood Group said in a news release.
BP also tapped Wood Group’s specialist technical solutions (STS) business for a $4.89 million contract for subsea engineering and project management services. The company’s work scope includes gas lift system interface design, geospatial information system support, subsea controls engineering and geotechnical engineering support.
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