FONG: Floating Oil and Natural Gas Converging proven technologies to innovatively deliver new economic development opportunities

F.Faber, Shell International Exploration and Production B.V., The Netherlands, J.R.Dominey, L.R.Resweber, P.S.Jones, Shell International Exploration and Production Inc., USA. Abstract
Shell has developed a breakthrough offshore development solution, called Floating Oil and Natural Gas (FONG) which integrates Floating Production, Storage and Offloading (FPSO) technology with advanced deepwater and gas technologies for delivery of both oil and Liquified Natural Gas (LNG) products to market. FONG consists of a floating production unit with a fully rotating external turret, complete with on-board processing facilities, utilities, storage and offloading for oil and LNG. A typical FONG configuration enables development of a single field or several smaller oil accumulations, clustered as shown in Figure 1. Through an innovative gas processing system, FONG is able to accommodate a wide range of Gas/Oil Ratios (GOR) which could dramatically expand the development scope of oil fields with appreciable amounts of associated gas. In this way, an associated gas problem can be transformed into gas profits with up to 30% improvement in Net Present Value (NPV) across a broad spectrum of oil field sizes. As a consequence, the economic oil reserves threshold is lowered, allowing smaller fields to be developed economically. Implementing a FONG development offers benefits to a range of stakeholders. Environmental impact is minimized by eliminating the need to continuously flare gas, and without re-injection in a producing field, long-term reservoir management can be enhanced. FONG can provide the stimulus for the creation of new in-country support opportunities. Exhaustive engineering studies conducted throughout 2000/2001 demonstrated both technical feasibility and high levels of safety compliance. FONG is ready for implementation and project deployment studies commenced early 2002. Shell is positioned to leverage its proven track record in both global LNG operations and major deepwater developments to deliver FONG. This paper highlights the business drivers that support the FONG case for action and describes the technology innovations applied to deliver a safe, reliable and economically viable stand-alone offshore field development solution for delivery of both oil and gas revenue streams. Figure 1 Typical FONG Cluster

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Development

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Case for Action FONG unlocks Oil & Gas Industry Growth Opportunities
The worlds oil and gas industry is facing significant challenges in the offshore hydrocarbon basins. In the last 5 years, several hub class fields (> 500 million barrels) were discovered in deep water in West Africa (Bonga, Akpo, Girassol, Dahlia, etc.). These fields can be developed with known standalone solutions, however, this often relies on gas re-injection for disposal of associated gas. A large number of discoveries are smaller than hub class (see Figure 2) and many are uneconomic to develop using present development technology. This is particularly the case with deepwater discoveries (>400 m water depth) due to the much higher development costs than in shallower waters. Most of the fields are located in areas with only small local gas markets, with long distances to export markets in Europe, United States and Asia. These stranded oil fields represent a significant volume of resources including the associated gas, and provide the oil and gas industry with major growth opportunities for the next decade.

14 12 10 8 6 4 2 7 0 0-50 51-100 101-200 201-500 501-1000 1001-2000+ Fong Technology potential: hub or clusters for 50-500 MMBO fields 26 11 Existing hub technology developable, but FONG increases profit 6

Total Discovery Volumes, Billion boe

Number of Fields 13 15

Field size, Million boe Figure 2 Field Size Distribution of Deepwater Discoveries outside GoM (>400m w.d.)

Also, new discoveries in mature basins are generally smaller, and a development solution is required for both oil and gas resources to make these economic.

Converting the Associated Gas Problem into Gas Profits

Oil field discoveries rely on a technically achievable associated gas disposal solution to make oil production economically viable in the absence of a gas market. Continuous gas flaring is not an option and often, the quantity of associated gas does not warrant construction of a deepwater pipeline and onshore gas plant. Therefore, in areas remote from export markets, associated gas is seen as a problem and is frequently disposed through re-injection. In economic terms, this results in a net cost penalty to the oil development and a lower Net Present Value (NPV). Re-injection involves considerable investment in high pressure compressors, deepwater sub-sea equipment, flowlines, drilling and completion of injection wells, and, if the gas is re-injected into the producing reservoir, it may be detrimental to long-term reservoir performance and reduce future oil revenues. As re-injection is both costly and precludes generating business from the gas resource, a solution addressing both these issues will improve field development economics.

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FONG provides such a solution as a robust alternative to gas re-injection. Well-stream fluids from the reservoirs are processed into two products within sales specifications: oil and gas (as LNG). The combination of increased revenues from LNG and cost avoidance of gas re-injection allows smaller oil accumulations to be developed economically and increases the value of production from larger fields (see Figure 3). FONG also allows production of nonassociated gas from nearby gas fields via the same production unit. Through the unique FONG solution, a broader range of produceable hydrocarbon resources can be brought to market.

Net Present Value ($s)

FONG
+ NPV for smaller fields Lower reserves threshold

Increased value for all field sizes

FPSO

0
Small Medium Field Size (Oil Reserves)
Figure 3 The FONG added Value Opportunity

Large

To determine the value impact on profitability and field size viability, an economic analysis was conducted to compare deployment of FONG technology versus the use of FPSO and gas injection. The evaluation covered a variety of field development sizes, ranging from 200 to 550 million barrels with a GOR of 700-1000 scf/b. Fiscal terms for both Nigeria and Angola were used for the value comparison as shown in Figure 4. The analysis concluded that implementation of FONG across the range of field sizes creates up to 30% improvement in NPV for the Joint Venture and resource holder. For the evaluated economic scenarios, additional capital investment for FONG (vs. FPSO) is offset by LNG sales revenues and avoidance of gas injection costs. The higher profitability thus created also results in a reduction of some 10-15 % in the minimum oil volume required (the threshold) for an economically viable development (all boes contribute to revenues).

Joint VentureV (A alue ngolaTerm s)

Joint V entureV (N alue igeriaTerm s)

Injection FO G N

Injection FO G N

N et P resent V alue

N et P resent V alue

200 m bo m

500 m bo m

200 m bo m

550 m bo m

Figure 4 Joint Venture Value Generation

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FONG allows smaller fields to be developed than otherwise would be the case with an FPSO in combination with gas injection, thus creating more development opportunities and growth for already discovered but currently uneconomic fields, and fields to be discovered in the future.

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FONG contributes to Sustainable Development

In addition to the demonstrated economic benefits of FONG, there are also contributions to reduction of emissions and increases in efficiency of resource recovery. Shell has adopted Sustainable Development (SD) in its business principles and through specific focus on these SD Principles, helps to integrate economic, environmental and social components in field development solutions. The specific contributions made by FONG to the SD principles are highlighted in Table 1. This takes account of the wider benefits of oil & gas field developments to stakeholders and generally offers a win-win proposition to the State, the oil companies, the service companies and contractors, and the community at large.

Sustainable Development Principles

Minimize impact on the environment Use resources efficiently Maximize economic benefit

FONG Contribution
FONG has no continuous flaring of gas and leaves a minimal environmental footprint Sales of both oil and LNG products are maximized; propane and butane are used as fuel Development of otherwise uneconomical fields and the sale of associated gas as LNG

Maximize socio-economic benefits to the community

Introduction of new technology and a higher potential to develop future smaller and more remote oil and gas fields In-country opportunities for technical staff, transfer of technology and longterm operations support

Table 1 FONG Sustainable Development Contribution

Oil & gas developments could also provide the stimulus to build a local in-country support industry and related infrastructure.

Where can FONG Technology be applied?

While FONG can be applied to a wide range of field discoveries, it is an ideal solution for discoveries located offshore Africa, Brazil, the Caribbean and in the South China Sea. Key location selection criteria include: hydrocarbon basin prospectivity and exploration success (discovering the oil and gas fields), distance and access to LNG markets (to sell LNG/gas at a competitive price in the market), contract terms for gas (to generate gas revenues and profits) and prevailing met-ocean conditions (to meet the FONG barge and offloading design conditions). Particularly for West Africa, conditions are favourable to comply with these criteria and application studies currently focus on this region (see Figure 5). Many fields in this area have already been discovered and are facing the associated gas disposal issue for development. Project application studies for these fields, targeting LNG markets in Europe, North

Figure 5 Global FONG Application Areas

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America and South America, commenced early 2002.

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FONG Technology Development

The key technical challenges for FONG include both product and location issues. By introduction of LNG as an export product the combination of oil and LNG storage in one single barge needed to be addressed, as well as integration of oil production and LNG liquefaction facilities to arrive at a deck layout that meets all safety requirements. The shift from traditional coastal LNG plant locations to very remote offshore environments presents challenges in terms of LNG plant marinisation, and design of dynamic LNG offloading systems suitable for operation under the prevailing met-ocean conditions. Screening studies carried out in 1999 and assessment of the economic potential for both oil and LNG production from example deepwater fields was sufficiently encouraging to justify a substantial engineering development program. Review of production requirements for FONG suggested that a unit based on 85,000 BOPD crude, and 85 MMSCFD of gas (the 85/85 base case) would be appropriate as a base case, with provision to double either oil or gas throughput in order to achieve a high degree of production flexibility (the expanded 170/170 case). The FONG feasibility study conducted in 2000/2001 achieved Catalog Ready engineering definition. This essentially means that there are no remaining technical showstoppers for the concept to be taken forward to pre-FEED studies. The feasibility study covered the 85/85 base case FONG production capacity as well as the expanded 170/170 case, and delivered the concept engineering definition, a thorough safety and risk assessment, a detailed cost estimate and a project execution strategy. The feasibility study was executed across many organizational interfaces, involving four Shell companies in different parts of the world in collaboration with contractors and consultants. FONG has integrated many technology innovations in one single production unit, which is described in more detail in the sections below. An overview of these innovations is shown in Figure 6. A detailed description of each of the technology innovations is provided in Appendix I.

FONG Technology Innovations

Unique LNG Vaporization System Vaporized LNG used for start-up of oil process Vaporized LNG used for turn-down control LNG plant Nitrogen refrigerant Modules for 85 & 170 MMscfd Integrated Oil/LNG Utilities

Innovative Product Management Crude Oil Stabilisation & LPG Extraction LPG Distribution across Oil and LNG sales products, with balance to Fuel Gas

Double Hull Barge Design Atlantic Met-ocean design conditions Oil storage 1.4 million bbl LNG storage 160,000 m3

Side-by-Side LNG and Oil Offloading Dynamic LNG Loading Arms Recovery of Volatile Organic Compounds (VOC)

Worlds Largest External Turret Bow-mounted, rotating design 9 mooring lines and 16 risers

Figure 6 FONG Technology Innovations

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Shells Capability to Deliver

Shells technology breakthroughs in ever-increasing water depth have shaped the offshore industry for over half a century (see Figure 7), with more than 40 years of in-house expertise in LNG shipping, onshore LNG plant design, construction and operations. Through integration of LNG technologies with more than 25 years of project management, construction and installation of deepwater production facilities, Shell has been a global leader in the offshore deepwater and LNG business. Convergence of Shells capabilities makes Floating LNG solutions such as FLNG and FONG a reality2.

First single point mooring system First subsea (Malaysia) Completion in the GoM

First dynamically positioned drill ship First FPSO (Spain) Deepest fixed steel platform (Bullwinkle) Successively deeper and cheaper 5 Tension Leg Platforms in GoM Deepest subsea field development

50s

60s
1st LNG Plant 1st LNG Cargo

70s

80s

90s

00s

FONG

Liquefaction technology evolves: Bigger and cheaper

Modern Onshore LNG

Floating LNG concepts

Figure 7 Convergence of LNG and Offshore Technologies shaped FONG

Efforts by industry to increase profitability and reduce economic cut-off reserves have been mostly focused on reduction of costs and increase in capacity by leveraging learning curves. Functional repetition of proven solutions (eg Shells Tension Leg Platforms (TLP) in the Gulf of Mexico), has resulted in continuous improvement and reduced unit development costs over time on a global basis. Figure 8 shows the consistent reduction of relative capacity costs across recent Shellmanaged deepwater development projects in the GoM, Nigeria and The Philippines.
Nakika
Next Projects Jan-89 Jan-91 Jan-93 Jan-95 Jan-97 Jan-99 Jan-01 Jan-03 Jan-05 Figure 8 Shell Deepwater Projects Capacity Cost Index

100% 80% 60%

Auger

Mars 40% 20%

Ram-Powell Malampaya Bonga Ursa Brutus

FONG directly benefits from this experience curve and continues to further drive the curve.

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Conclusions
The breakthrough design of FONG with its unique product management system offers a range of benefits over and above an FPSO development with gas disposal. These benefits are summarized in Figure 9.

Stakeholder Benefits

FONG
Oil & Gas Revenues generate higher NPV and accelerated cost recovery Monetizing stranded gas LNG sales enable smaller & more oil field developments Improved Ultimate Recovery LNG Marketing & Shipping In-country support industry Sustainable Development

FPSO + Gas Disposal

Oil Revenues only Gas is a Cost to the oil Gas Resource is lost Many fields are uneconomic GI detrimental to reservoir performance

Figure 9 FONG Value Creation

Shell is positioned to leverage proven in-house capabilities for near term FONG project implementation resulting in a safe, reliable and economically viable stand-alone offshore field development solution, which delivers both oil and gas revenue streams.

References
1. Shells Floating LNG Plant for the 21st century, Shell International Exploration and Production B.V. and Shell International Oil Products B.V., paper presented at the IGU World Gas Congress, June 2000, Nice, France. 2. Faber, F., Bliault, A.J.E., Resweber, L.R., Jones, P.S., Floating LNG Solutions from the Drawing Board to Reality, paper prepared for OTC, May 2002, Houston. 3. Liquefied Gas Production and Export in the Offshore Environment, Norsk Hydro/FMC paper presented at the European Chapter Meeting of the European Gas Processors Association in London, November 1993.

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Appendix I - FONG Technology Innovations Sub-sea System Development

While only one producing field is necessary to deploy a FONG development, the sub-sea system was designed to support production of up to three fields in a cluster arrangement, with each field having the possibility to be developed independently in a phased manner. The FONG barge would notionally be located close to the first developed field, with dual flexible flowlines carrying produced fluids to the barge (see Figure 10). Hydrate control for cold shutdowns of the short offset field would be through the use of methanol pumped into the sub-sea system and by using flowline pressure blow-down. Hot oil circulation capability would be available prior to production startup.

Figure 10 FONG Sub-sea Architecture for single field case

For the longer offsets studied (25 km and 65 km respectively), electrically heated pipe-in-pipe single steel flowlines would be used to maintain temperature during cold shutdown, and for hydrate remediation, if required. Chemical injection capability for corrosion inhibition and paraffin inhibition is provided. Flow assurance for both gas and oil production at any three of the notional offset fields can be provided through appropriate selection of sub-sea systems.

Worlds Largest External Turret Design

A bow-mounted turret concept was developed to accommodate a total of 9 mooring lines and 16 risers for a three-field cluster development. The study was carried out by a joint effort between Shell Deepwater Services and Single Buoy Moorings (SBM). The lower chain table of the turret is 11.6 meters in diameter, and the main bearing of the turret is 7.8 meters. The overall height of the turret is 74 meters, extending 34 meters above the deck of the barge. The turret is supported by structure extensions at the front of the barge hull. The total dead weight of the turret is approximately 2500 tonnes. The swivel stack for fluid transfers between the barge and the turret includes eleven swivels for respectively, waterflood (1), production (2), hot oil/testing (1), gas-lift (1), pressure relief (1), firewater (1), utilities (2), and electric power (2). The total number of swivels will be optimized during the detailed engineering phase.

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LNG plant development

The initial target for taking LNG offshore had been small-scale gas production rather than large gas fields. Finding an oil-driven solution for FONG brought us back to that objective. Shells onshore LNG plant designs were oriented around high efficiency at high volume. Production of associated gas is directly linked to the oil production and needs flexibility of operation rather than absolute efficiency. A new look at processes based on peak shaver plant designs with nitrogen refrigerant suggested that this approach may offer a way forward to a low risk small scale plant that can be installed on a floating barge. LNG liquefaction schemes for both 85 and 170 MMSCFD were developed using the nitrogen refrigerant process. Utilities for the crude oil and LNG processes were integrated, with careful attention paid to flexibility of operation. Standard module packages were prepared in outline and included in a preliminary topsides layout. At this stage a high-level risk analysis was prepared to check that the production system could meet global industry safety requirements.

Innovative Product Management

The key enabler for FONG is its innovative product management system (Patents Pending). A simplified process flow diagram is shown in Figure 11.

Riser Gas Lift

Water removal system

Liquefaction LNG Tank

Riser K -O compress or

CO 2 Removal

Hg removal system

60 27

65

Amine Regeneration

FLARE CO 2/H20 gas VRU LPG Oil

Fuel gas system

FGC

22 3-Phase Separation

Water
30 Pressure ( bara )

Oil treatment Water

Treatment

Crude tank Oil

Produced Water Discharge

Figure 11 Simplified FONG Process Flow Diagram

The well-stream fluids are processed and treated to export crude oil and LNG products at sales specifications, without the need for flaring or separate LPG (propane and butane) storage and offloading. This is made possible through extraction of light fractions (C1-C4) from the crude oil stream (over-stabilisation), and extraction and stabilization of LPG and condensate (C3-C5) from the gas stream by means of a de-ethaniser. The overheads from the de-ethaniser (C1-C2) are routed to the liquefaction system, stabilised condensate is routed to the oil rundown, and LPG is distributed across the oil and LNG streams to remain within sales specifications for both products. Excess LPG is utilized as fuel for the power generation turbines. Process simulations for a variety of West African crude types confirmed production of oil and LNG from FONG within product specifications.

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Unique LNG Vaporization System

Heat transfer through the insulated LNG cargo tanks and during the LNG offloading process causes a small amount of LNG to vaporize. This vapor is recovered, compressed by a 7 MMSCFD boil-off compressor, and recycled to the LNG process. An LNG vaporization system with a capacity of 30 MMSCFD gas is also included to provide fuel gas for start-up and pressurized gas for riser unloading. The LNG vaporizer may also be used for turndown management.

Double Hull Barge Design

The FONG barge design has been developed from the earlier FLNG barge design work. The FONG barge is 384 meters long, 70 meters wide, 36 meters deep and contains storage for 1.4 million barrels of crude oil and 160,000 m3 of LNG. Storage capacities correspond to standard offloading parcels of 3 one million barrels of crude oil and 135,000 m of LNG with offloading of individual parcels achievable within a nominal 24-hour period. A double hull is employed throughout. Crude oil is stored in six tanks (two forward and four aft) and LNG is stored in four insulated tanks in the center of the barge, near the LNG offloading arms. To provide a clear upper deck for the processing topsides, the membrane containment design has been utilized for LNG storage. Storage for injection chemicals and process drains is also provided within the hull. The design of the FONG hull and offloading systems is based on the prevailing Atlantic met-ocean conditions of West Africa, Brazil, Gulf of Mexico, South China Sea and similar ocean environments. The machinery space aft contains utility equipment/systems to support the topsides (e.g. compressed air, fuel etc), accommodation (e.g. potable water, sewage, HVAC cooling etc) and cargo systems (e.g. nitrogen plant, hydraulic power packs etc). Fire pumps are located aft in the machinery space and forward in the focsle. Bulk foam and dry powder systems are provided forward and aft for crude oil and LNG fire fighting. The accommodation block forms the aft temporary safe refuge and provides facilities for up to 110 persons. The Central Equipment Room (CER) and Central Control Room (CCR) are also provided within the accommodation unit. All key features of the facility are operable from the CCR. A helideck is provided above the accommodation. Free fall lifeboats are provided aft of the accommodation. A smaller Temporary Safe Refuge is provided forward.

Dynamic Side-by-Side LNG and Oil Offloading Systems

Crude oil pumping is achieved by submerged hydraulically driven cargo pumps within each tank, with offloading via an oil hose manifold. LNG pumping and offloading is achieved by electrically driven submersible pumps and insulated offloading hard arms. LNG offloading is achieved by side by side offloading into standard LNG carriers. This allows the use of conventional LNG offloading systems, which has been extended to side-by-side crude oil offloading enabling recovery of Volatile Organic Compounds (VOC) from the trading tanker. The FONG barge is provided with side thrusters for positioning and creating a lee for optimum berthing of an LNG carrier alongside.

System Integration
A central power generation and distribution system has been selected to provide power to all motordriven rotating equipment, such as loading pumps, water injection pumps, gas compressors, and LNG refrigeration compressors. Although this solution does not result in direct equipment capital cost reductions, it provides major benefits in deck layout design and overall cost and safety considerations. The FONG deck layout and cross section is shown in Figure 12.

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For the 85/85 base case FONG design, the power generation system produces some 80 MW of electrical power from three turbine generator units. Two smaller auxiliary turbine generators are available for additional generating capacity during crude oil offloading and other start-up operations. Two additional turbine-driven generating units are required to produce a total of 150 MW for the expanded 170/170 case.

HELI DECK

UPPER DECK

PRINCIPAL DIMENSIONS Length Overall.................. 349.00 m Length Between Perps..... 349.00 m 70.00 m Breadth Mld..................... 36.00 m Depth Mld........................ 17.80 m Design Draught................ Scantling Draught............. 18.50 m

FONG Principal Dimensions: Length = 384 m, Breadth = 70 m, Depth = 36 m

Figure 12 FONG Deck Layout and Cross Section

Safety and Risk Assessment

FONG is using many components already known to the oil and gas industry, however, their combination on an offshore barge to produce and process both oil and gas/LNG in a remote area presents challenging HSE issues. This also introduces novel HSE risks when combining oil and LNG storage in the same barge, for the side-by-side offloading (oil and LNG) and the effect of cryogenic liquids on materials of construction (e.g. in the unlikely event of spillages on the steel deck). Early in the concept design an extensive Hazard Identification (HAZID) study was carried out and the key results were further evaluated in specialist studies on LNG carrier venting hazards, oil tanker venting hazards, deck layout and a preliminary Quantitative Risk Assessment (QRA). These studies indicated that Individual Risk Per Annum (IRPA) and Temporary Refuge Impairment Frequency (TRIF) for the FONG base case are in the same order as for existing FPSOs. The main contributors to the individual risk are process related incidents, helicopter travel and offloading incidents. Results of the layout studies were integrated in the topsides design. For the base case FONG, adequate separation between modules is achieved to keep explosion overpressures in the manageable range. Other HSE risk and impact reducing design features include the selection of all electric motor driven equipment, the choice of nitrogen as refrigerant, and VOC recovery. These features collectively resulted in the selected low risk topsides layout.

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