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Easy oil has gone, says Shell exec Oil industry needs to focus its technical, management skills on increasingly challenging hydrocarbon sources, says Shell VP Russ Ford By Alan Bailey Petroleum News
While national oil companies that own resources in major oil provinces around the world can by themselves produce their oil from straightforward oil basins, international oil companies need to seek hydrocarbon resources in increasingly challenging situations, Russ Ford, technical vice president for Shell Exploration and Production Americas, told the Alaska Support Industry Alliance’s Meet Alaska conference on Jan. 25.
“International oil companies have to concentrate on things that others are incapable of doing when it comes to technology, project management and operational excellence,” Ford said. “… The job of supplying the world’s energy is getting a lot tougher. It takes more investment and it takes more ingenuity to address the issue of supply.”
However, Ford characterized this opening of new frontiers as a continuum from past challenges, rather than some new phenomenon. Industry has had to deal with complexity and solve difficult problems before, Ford said.
“We can continue to do that and we can do it responsibly for everyone involved,” he said.
First Cook Inlet platform For example, Shell installed the first offshore oil platform in Alaska’s Cook Inlet in 1964. At that time Shell engineers had to overcome significant obstacles such as 30-foot tides, ice, high currents and earthquakes, thus raising the bar on what could be achieved.
That bar has now reached the level of exploring in deep water and remote regions. Hydrocarbon reservoirs are becoming tighter and more difficult to develop, with new and expensive technologies needed to cause oil and gas to flow more easily from fields with thick crude or impure gas.
And deepwater developments, for example, require massive investment.
“They need more steel. They need more infrastructure. And that means new engineering designs and it means a lot more investment,” Ford said. “... Who would have thought 10 years ago that a deepwater operation could consume nearly $1 million a day in capital?”
Moving into frontier areas where there is very little supporting infrastructure also requires major investment. And that requires a regulatory environment conducive to the investment — contracts, terms and political tensions sometimes change way too rapidly for the investment horizon that the oil industry faces, Ford said.
Technology has become increasingly critical to success in meeting the world’s energy needs and Shell is able to harness its global technology experience, Ford said.
“The leverage of our global knowledge has allowed us to transfer technology across countries to develop these projects a lot more quickly,” he said.
Perdido Shell’s Gulf of Mexico Perdido project, for example, 200 miles south of Galveston and in 7,800 feet of water, will become the deepest drilling and production system in the world, Ford said.
The Perdido floating production facility, known as a spar, will consist of a cylindrical structure about 822 feet high, almost the height of the Eiffel Tower.
“The processing facilities (will) rest on top of a buoyant tank that’s moored to the seafloor with chains and wire rope whose pattern … would cover an area the size of downtown Houston,” Ford said.
Following field discovery in 2002, the Perdido design team worked out a viable development plan in time for project approval in 2006. In addition to the spar facility, the design involves wellheads on the seafloor “where the real estate is a whole lot cheaper than on the surface,” Fords said. Known as “wet tree DVA,” this design concept enables well access for drilling or other interventions via a single drilling riser. Together with other design innovations, that is enabling a relatively compact topside module that can be installed in a single sealift operation.
And the extreme water depth necessitates the use of pumps to move fluids from the field reservoir formation to the processing facilities on the spar.
“In another first we will put caissons at the seafloor with 1,500-horsepower electric motors to pump oil and gas from those points to the surface, to increase recovery by reducing backpressure on the formation,” Ford said.
Offshore Brazil Shell’s BC-10 oil field currently under construction offshore Brazil also requires several innovations to ensure project viability.
Those innovations include seafloor wellheads in 1,500 to 2,000 meters (4,500 to 6,000 feet) of water. The wellheads will connect to a converted tanker known as a floating, producing, storage and offloading vessel, or FPSO. Originally a 1.4 million-barrel very large crude carrier, the FPSO will be equipped with production facilities that include separators and a gas treatment plant.
“The FPSO concept was selected in this case because of the lack of an oil pipeline within that immediate area,” Ford said.
Umbilical lines totaling 40 kilometers in length will supply power to twin-screw multiphase pumps that will move oil from the field reservoir to the vessel. The lines will also contain hydraulic tubes, fiber optic cables and low-voltage communications lines.
“Because the FPSO will move up and down more than the spar, the steel risers that conduct the fluid to the vessel potentially have some slack built in and have to have some buoyancy modules to reduce the loading on the FPSO,” Ford said.
The producing well bores will involve horizontal completions, each about 1,000 meters (3,000 feet) long.
Sakhalin The Sakhalin II project near Sakhalin Island in the Russian Far East involves the construction of Russia’s first LNG plant and two 800-kilometer onshore pipelines. The project also involves Russia’s first offshore pipeline in sub-freezing point water and three offshore platforms in 30 to 50 meters of water. The platforms have to withstand a harsh climate and difficult ice conditions. The 2,000-ton Lunskoye-A platform, for example, sits on the seafloor and was constructed from concrete.
“(It) was one of the most complex concrete construction projects ever undertaken anywhere in the world,” Ford said. “It sits in 48 meters of water, similar to the depths of water in the Beaufort area.”
Sakhalin experiences earthquakes and, unlike the Beaufort Sea, does not have multi-year ice.
“But we’ve learned an awful lot from Sakhalin that will be useful in an eventual Beaufort development,” Ford said.
The Bully rig A joint venture between Shell and Frontier Drilling is developing an innovative drillship that the companies call the Bully Rig. The market for dynamically positioned, state-of-the-art drillships capable of operating in water depths in excess of 10,000 feet is extremely tight, Ford said. And this type of drillship typically weighs in at about 120,000 tons.
The Bully Rig design will be 25 percent smaller and 60 percent lighter than those existing designs, Ford said.
“Smaller means lighter, which also means less fuel,” Ford said. “And lower fuel means lower exhaust emissions.”
The drilling derrick and ship design will support drilling operations in 12,000 feet of water, while the ice-class hull will enable operations in Arctic conditions. The Bully Rig will also require a smaller crew than a conventional deepwater drill ship, Ford said.
Alaska So what does this mean for Alaska?
Shell’s experience with offshore oil and gas technology means that the company can develop Beaufort Sea resources in an economic and responsible way, Ford said.
“Shell is committed to Alaska. The Alaska offshore is a future heartland for Shell and opens the next major chapter for Alaska resource development. We know we need to protect and preserve the environment. We know the importance of co-existing with traditional subsistence hunting,” Ford said.
And in addition to using best technical practices from around the world, Shell will listen to local communities.
“We’re humble enough to understand there’s always more we can learn about operating responsibly in the Arctic and that we must learn from the people who have centuries of history around the Beaufort,” Ford said. “… We know Alaskans expect us to earn our right to be here every day. By sticking to our principles of honesty and integrity our hope is that our Alaska program moves beyond a leap of faith for some Alaskans and becomes a partnership that can be built on trust.
“The challenges are there, but we have the will, we have the technology, and we make the commitment to understand what’s important to Alaskans to meet those challenges.”
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