Deepwater Subsea and Pipeline Projects in the Asia Pacific Region Where Next?

Neil Smith and David Phillips, J P Kenny Pty Ltd Presented at The Australasian Remote Field and Deepwater Development Conference Perth, 26 August 2002

ABSTRACT This paper presents a brief review of the milestones in deepwater subsea and pipeline projects in the Asia Pacific region, looks at the likely areas of regional deepwater activity over the next 5 10 years, and addresses the role of technology in meeting the specific needs of current and future projects. There is no official definition of where deepwater begins, nor for that matter the transition points from deep to ultra-deep and thereafter to super-deep. 300 metres is a commonly accepted definition of the commencement of deepwater, and will thus be adopted in this paper. Ultra-deep is assumed here to commence at 1,000 metres, and super-deep at 2,000 metres. The paper focuses specifically on subsea and pipeline technologies, and does not address subsurface, drilling, fixed or floating facilities issues per se. REGIONAL REVIEW SUBSEA PROJECTS Subsea production technology in the Asia Pacific region has a longer history than may people realise. Brunei Shell Petroleum installed an experimental Cameron subsea tree offshore Brunei in the early 1960s. But it is fair to say that the region has generally been a follower of developments in other regions, principally the North Sea and the Gulf of Mexico. After the Brunei Shell experiment, the main milestones in advancing subsea production as an accepted deepwater development concept in the region are as follows. Date 1992 1996 1996 Operator Alcorn BPAmoco WMC Location Philippines China Australia Project West Linapacan A Liuhua East Spar Water Depth 350m 332m 95m Notable Features Depth record First subsea/FPSO in China Control buoy, subsea heat exchangers, long tieback Multiphase pumping Depth record, remote location Depth record, pipe-in-pipe Depth record, geohazards

1997 1999

Statoil Woodside Esso

China Australia Australia Philippines

Lufeng Laminaria/Corallina Blackback Malampaya

333m 420m 685m 850m

2001

Shell

The East Spar project is clearly not a deepwater development. However, it represents an important milestone in the first application, both regionally and worldwide, of an unmanned communications and control buoy, not to mention subsea heat exchangers and subsea multiphase metering. All three are important component technologies for extending the industrys capability in remote and deepwater developments in the future. There have of course been other subsea projects in conventional water depths which have also contributed to the acceptance of subsea technology in the region. Nevertheless, it is fair to say that some operators in the region have been reluctant to include subsea technology in their development schemes, due to unfamiliarity with the technology and perceptions of novelty, unreliability and high intervention costs, even after it has been accepted in other parts of the world. As the list above shows, it is largely the major operators, with significant portfolios of subsea wells in operation in other parts of the world, who have applied the technology in progressively deeper waters in this region. REGIONAL REVIEW PIPELINE PROJECTS The major milestones in advancement of deepwater pipeline projects in the Asia Pacific region are as follows. Date Operator Location Australia China Malaysia Australia Philippines Indonesia Project Rankin Trunkline Yacheng 13-1 Trunkline MLNG Dua Blackback Malampaya West Seno Gas Export Diameter 40-inch 28-inch 38-inch 12/6-inch 16-inch 2 x 12-inch Depth 135m 110m 140m 685m 850m 1,030m

1984? Woodside 1994 1995 1999 2001 2003 ARCO Shell Esso Shell Unocal

The advancement of regional pipelines into deeper waters has generally lagged well behind other parts of the world, such as Europe, Gulf of Mexico, Brazil and West Africa. This has been due less to technical feasibility concerns, or lack of suitable installation equipment, rather to a lack of demand from either field developments or gas transmission projects. The major advances in deepwater pipelining technology have historically been driven by gas transmission needs, such as the TransMed system from Algeria to Italy in the mid 1970s, development of the Northern North Sea gas fields in the late 1970s, and the crossing of the Norwegian trench in the early 1980s. These projects led to the construction of a new fleet of socalled third generation pipelay vessels, which with occasional upgrading has been largely sufficient to meet world market needs for the following 20 years. As a result of only intermittent market demand, it has not to date been economic for lay contractors to base third-generation lay vessels in the Asia Pacific region. Consequently, those projects which have materialised have had to bear the high cost of mobilising the requisite lay vessels from their normal theatre of operation in the North Sea. In recent years this has become less of an issue, as the upsurge in regional deepwater or harsh environment pipeline installations has meant that vessels such as Allseas Lorelay and Solitaire, EMCs Semac-1 and Techip-Coflexips Apache are becoming more frequent visitors, and mobilisation costs can be shared across more than one project. The last couple of years have seen the coming of age of so-called J-lay (as opposed to S-lay) technology. This has been driven by field development requirements in West Africa and the Gulf of Mexico of 1,000 metres and beyond, and on the gas transmission side by the recently-completed Bluestream project across the Black Sea between Russia and Turkey. For this project, two 24-inch pipelines were successfully laid in depths to 2,1500 metres by the Saipem S-7000 semi-submersible J-lay vessel.

Although the Oman-India pipeline project of the early 1990s never eventuated, it is important to note that this project was responsible for much of the advancement in deepwater pipeline materials and installation technology which has made other projects, such as Bluestream, possible. The Oman-India pipeline project was to have comprised two 22-inch pipelines laid in water depths down to 3,000 metres. The exhaustive feasibility engineering phase of the project concluded that the project was technically and economically feasible, and it was unfortunate for the industry that the project was halted for wider commercial reasons. The recent Malampaya pipelines installation in depths to 850m, and the forthcoming West Seno gas export pipelines due to be laid next year in depths to 1,020m, have faced some notable technical challenges. The Malampaya pipelines were installed in a region of extensive geohazards, and consequently involved state-of-the-art route optimisation and stress analyses during design to demonstrate that the pipeline could be safely laid and operated in hazardous areas. The West Seno lines have also involved significant challenges in the design phase due to the rugged nature of the seabed in some parts of the route. Although Asia Pacific regional pipeline projects have not generally been at the forefront of deepwater advancement or difficult laying conditions, they have often been undertaken in remote areas with little or no infrastructure support in comparison with the North Sea or Gulf of Mexico. Notable examples would be the Yacheng gas pipeline laid from Hainan Island in China to Hong Kong, and more recently the Malampaya gas pipeline in the Philippines. These projects have overcome significant challenges in the areas of supply logistics and regulatory approvals in countries which have little or no previous experience of offshore pipeline projects. REGIONAL DEEPWATER DEVELOPMENTS FOR ECAST The hot spots for deepwater field development and pipeline activity in the region over the next 5 10 years are likely to include the following: India western deepwater blocks (400m to 3,000m) Indonesia additional developments offshore East Kalimantan, following Unocals West Seno (including nine discoveries to date in water depths of 980m to 1,680m) Philippines Camago and Malampaya Oil Rim (730m to 820m) Malaysia deepwater blocks offshore Sabah and Sarawak (eg Kamunsu and Kamunsu East North in 730m to 1,000m) Brunei deepwater blocks (possible Merpati development in 500m) Australia Exmouth Sub Basin offshore Western Australia, including Vincent/Enfield/Laverda discoveries in 350m to 850m Australia Greater Gorgon gas/condensate fields development on NW Shelf, in water depths to 1,300m Australia Block WA-33-P in Browse Basin, including Scott Reef/Brecknock gas/condensate discoveries in water depths to 750m Japan possible major gas pipeline from Sakhalin Island

J P Kenny has been involved in a number of specific projects either underway or planned in some of these areas. Details of some of these projects are presented below, to illustrate the wide range of technological challenges currently being faced on deepwater projects in the region. Woodside Energy - Enfield/Laverda Enfield and Laverda are heavy oil reservoirs (gravity 20 25 API) located in water depths of 550m and 800m respectively off the north-west cape of Western Australia. The project is currently in the concept selection phase, and first oil is planned for 2006. The proposed development concept is an FPSO with subsea wells tied back from each field.

The project faces a number of technical challenges, including: Environmentally sensitive location (close to Ningaloo marine park) Remote location relative to supporting infrastructure Heavy oil with strong emulsion-forming tendencies Slugging management in flowlines and risers Marginal reserves Relatively harsh metocean conditions compared to North West Shelf Multiphase subsea pumping is currently under evaluation for this project, representing one option for artificial lift. ChevronTexaco - Gorgon Area Extensive development work was carried out on the Gorgon gas project on the Australian North West Shelf in the mid 1990s, however the project was a casualty of the Asian financial crisis of 1997. Since that time further exploration has been undertaken in the ultra-deep waters of the greater Gorgon area, and a number of discoveries have been made, adding further reserves to the development. Interest in the project has recently revived, and during 2002 a range of engineering studies have been commissioned by operator ChevronTexaco. For example, J P Kenny and its sister company Frontier have recently carried out a study to verify feasibility of a multi-centre subsea development in around 250m of water for the Gorgon fields. The work involved multiphase dynamic and steady state modelling and focussed on the temperature profiles in the flowing system and the hydrate management risk and strategies arising. This has included modelling of start-up, ramping and shutdown scenarios to investigate hydrate and system slugging characteristics and implications for onshore slugcatcher design. The studies are aimed at achieving improved economics and operating characteristics of the system, as well as avoiding potentially difficult on-bottom terrain. Unocal West Seno Development The West Seno development comprises two TLPs, oil offloading by shuttle tanker and gas export to shore by means of two 12-inch pipelines some 60km in length. The pipelines are scheduled to be laid by Allseas Lorelay dynamically positioned pipelay vessel during 2003. The area is very benign from a metocean viewpoint, but the water depth represents a new record for a regional project at 1,020m. Some areas of the route exhibit significant bottom roughness challenges, which are currently being addressed in detailed design. Japan-Sakhalin Pipeline During 2001-2002, studies have been undertaken on behalf of the Japan Sakhalin Pipeline Feasibility Consortium of a prospective offshore pipeline system to carry gas from Sakhalin Island to the North to Shirako near Tokyo in Japan, with landfalls at the islands of Honshu and Hokkiado. The offshore portion of the route under study is 1,480km, and reaches water depths of 360m. The pipeline diameter is envisaged in the range 24-inch to 26-inch. Critical feasibility issues included areas of high bottom roughness and sandwaves.

CURRENT AND FUTURE TECHNOLOGY DEVELOPMENTS Many commentators in the deepwater industry have highlighted the pivotal role that technology development has played in the industrys rapid advancement to safe and economic oil and gas production in the water depths being exploited today. This rate of advancement has been much more rapid than was foreseen 20 years ago, and unlike the previous surge in technology that saw the development of the North Sea in the 1970s and 80s, it has been achieved in an era of declining real oil prices. The continuing advancement into even deeper waters is being driven by fundamentals of oil and gas demand, and technology will have an equally important role to play. Many current technology initiatives for cost reduction in deepwater developments, and the enabling of ultra- and super-deepwater developments, are in the area of exploration and development drilling for example, dual gradient drilling, surface BOP (or SX) drilling, underbalanced drilling and expandable tubulars. This is because around half the capital cost of a typical ultra-deepwater development is in well construction. These technologies fall outside the scope of this Paper. However, it is important to be aware of advances in this area, and their impacts on the subsea and pipeline facilities side of the project. The following sections describe current technology initiatives and trends which will enable cost-effective subsea and pipeline solutions to meet the needs of forecast regional deepwater developments. Development Concept Selection/System Architecture Issues Integration of Evolutionary Technologies A major study sponsored by the US Department of Energy in 2000 [ref 1] examined the obstacles to costeffective development of ultra-deep water gas reserves in the Gulf of Mexico. An interesting conclusion of the study was that, in the views of the contributors, some 50 80% of the value improvement necessary to make the ultra-deep and super-deep development opportunities competitive with imported energy alternatives will be achieved by the effective integration of the various evolutionary technologies across the disciplines (subsurface, drilling, subsea, structures, topsides). Specialist service companies, suppliers, operators and R&D organisations are typically pursuing such technologies in relative isolation. The industrys move into deeper and deeper waters places greater emphasis on the interdependence between a wide range of disparate technologies. Integration of these various technologies must be actively managed in order to realise reduced cycle times and reduced costs within a framework of appropriate risk management. Integrated Production Modelling A number of software packages are now available to undertake the integrated modelling of the production system from reservoir to topsides facility. Traditionally, the reservoir and well production simulation is decoupled from the flowlines and topsides process simulation (and often the flowlines and risers network model is decoupled from the topsides model). The primary benefit of integrated modelling is that the artificial and necessarily conservative boundary constraints between the traditional decoupled models are removed. In conventional (shallow water) developments this is of little consequence, but as water depth increases the direct costs to the facilities of these conservative assumptions has a dramatic effect, in particular for the mechanical design and flow assurance performance requirements of flowlines and risers. Integrated production modelling is not necessarily as straightforward as some software developers might suggest. Significant additional effort can be required to set up and run such a model. Correct simulation of the reservoir performance, which typically involves history matching against a separate full reservoir simulation model, can be problematic, and can provide misleading results unless appropriate checks and balances are maintained.

System Layout Optimisation by GIS Technology The benefits of system layout optimisation in the front-end phases of the project are significant for deepwater projects with large numbers of wells, due to the large costs involved of both well construction and subsea facilities. The risks of sub-optimal layout are commensurately increased, leading to erosion of project value. J P Kenny has pioneered the use of GIS technology for deepwater field layout optimisation, and currently offers the FOCU$ service which integrates layout and cost optimisation software within the projects decision making process. Through a structured series of workshops, all key discipline personnel involved in system layout development can explore in real time the impact on project NPV of moving facilities and wells, adding or deleting facilities (to represent for example upside and downside development scenarios). Alternative development concepts (for example well clusters and large flowlines versus individual wells and multiple smaller flowlines) can also be compared in NPV terms. The GIS technology in FOCU$ was developed for Shells Bonga project, where it was successfully applied during the project optimisation phase to realise development CAPEX savings in the order of several hundred million US dollars. In fact, this exercise alone accounted for some 60% of the total value improvement from all the optimisation initiatives undertaken. FOCU$ has subsequently been used on a number of projects in West Africa, the North Sea and offshore Indonesia. Further details are provided in Ref 2. Intervention Simulation Modelling During the facility concept evaluation and selection phase of most deepwater projects, there is a fundamental decision to be made between wet versus dry trees, ie are the wellheads to be on the seabed or on the surface facility. Calculating the comparative capital costs is relatively straightforward, but the real value difference often lies in the projected well intervention costs and predicted frequencies of occurrence. For ultra- and super-deep projects, the cost differentials become even more critical to correct concept selection. Recent advances in simulation modelling of comparative drilling and well intervention, such as the Sloop2 software developed by British Maritime Technologies (BMT) on behalf of a joint-industry group of 9 operators, allow multiple scenarios and a range of a ssumptions to be thoroughly explored within a reasonable timeframe. This offers the potential for significant improvement in the decision quality leading to facility concept selection. Geohazards One area of technology in which Asia Pacific developments can fairly claim to be world class is evaluating the risk from, and designing for, geohazards. A look at the map of the earths tectonic plate movements and earthquakes reveals why. A number of attractive oil and gas prospective areas lie on the fault line running through the Indonesian archipelago, up through the Philippines and through Japan. As discussed above, the Malampaya project included extensive analytical modelling of pipeline behaviour under seismically induced loads and fault displacements, as part of selecting the optimum route. Despite initial concerns, it was found that an unrestrained pipeline is actually quite tolerant of fault displacements of up to a few metres, depending on the fault direction. Faults that put the pipeline in compression were found to be the most critical from an operating stress viewpoint. Subsea production facilities and wellbores are not generally as tolerant to seismically induced loads and motions as unrestrained pipelines. Thus subsea developments proposed for seismically active areas need to be treated with some care, in order to ensure that the risks are understood and managed, mitigating measures are employed where practical, environmental impacts are assessed, and the development economics take into account of both geohazard-induced risks and management costs.

Advances in the methodology traditionally used to assess and manage geohazard risks on subsea developments have been made recently on BP Indonesias proposed Terang Sirasun subsea development in the Bali North basin. Although the water depths here are not notably deep, the methodologies are equally applicable to deepwater situations where geohazards are present. The project was undertaken by an integrated team comprising BP, J P Kenny, URS Corporation, K&M Drilling and GeoMechanics International, and took a fully multi-disciplinary view of hazard assessment and mitigation from wellbore target right through to the floating facility. The team used state-of-the-art 3D visualisation and mapping technologies in both the subsurface and seabed environments, applied probabilistic modelling to quantify risks, and managed an extensive offshore survey programme interactively with the hazard mapping and analysis work in the project office. Further details may be found in Ref 3. Flow Assurance Issues Trends in Hydrate Management Strategies As projects moved into deeper waters and the hazards of gas hydrate formation in flowlines began to become a critical design consideration, the first line of defence was normally to retain heat in the system, by provision of insulation, to keep the flowing product out of the hydrate formation region. Once the practical point of maximising passive insulation was reached, methods to provide active heating such as electrical trace heating or water jacketed bundles, were applied. However, the levels of active heating required for the ultra- and super-deepwater projects now under development are such that considerable topsides cost and weight penalties ensue, if such heating is to be provided on a continuous basis. The trend is therefore away from heat retention (impractical) or heating on demand (expensive) towards management strategies based on chemicals and intervention. An example of management by intervention design is the Shell/BP Na Kika development in the Gulf of Mexico. In this application, rather than providing the significant power generation capacity on the host platform required to heat the whole flowline, the flowline itself is constructed to be able to receive electrical power from an intervention vessel, based on heating of any one 4-mile section at a time. In this way a hydrate plug can be remediated without topsides cost and weight penalty (obviously the reaction time to remediation is longer, but on a risked cost basis it is a more economic solution). Low Dosage Hydrate Inhibitors An example of a management strategy based on chemicals is the recent development of low dosage hydrate inhibitors (LDHI). Two basic types of low dosage hydrate inhibitors are under development kinetic hydrate inhibitors, which slow crystal nucleation and growth; and anti-agglomerants, which reduce the tendency of crystals to accumulate into a plug. Each type has its benefits and disadvantages. On a volume basis they cost some 3 or 4 times as much as conventional inhibitors, but dosage rates are lower so the costs are comparable when dosage rates are normalised. As applications increase, the unit cost of the chemicals is expected to fall. The lower dosage rates lead to lower storage capacities and lower capacity requirements in the umbilicals, hence to reduced costs topside and subsea. For gas systems, they are a good solution if water production exceeds designs based on methanol or glycol. However, they are generally not s attractive for oil o systems due to the large volumes of water to be treated. Subsea Production Equipment Issues Water Depth Capabilities By inspection of the range of water depths of likely regional deepwater developments over the next 5 10 years, as summarised above, the maximum anticipated depth is around 1,300 metres. In principle this is well within the capabilities of the major suppliers of wellheads, trees, manifolds, controls and diverless connection systems, who have catalogue-ready equipment for installation and operation down to 2,000

metres, and in some cases 3,000 metres. Obviously not all items of equipment are currently available to this level, and specific project requirements must be evaluated on a case-by-case basis. But it would be fair to say that deepwater subsea developments projected for the region in the near to medium term are unlikely to be restrained by water depth capability limitations for these items. Fewer, Larger Rate, Better Placed Wells A key driver for deepwater projects in general is to reduce the number of wells required, and thus directly reduce the well construction costs. However, this necessarily implies that the wells are expected to flow at higher rates (within the constraints of reservoir deliverability), requiring higher flowrate hardware such as completions and Xmas trees. At the same time, there is an increased focus on accurate and optimal well placement, which calls in turn for better-quality seismic and appraisal well data acquisition and processing; more effective reservoir modelling; and well layouts better optimised and integrated with subsea facilities layout and hydraulic performance. Subsea Processing (Boosting, Separation, Metering) The Lufeng project offshore China has done much to demonstrate the effectiveness and reliability of subsea multiphase boosting as an alternative to gas lift or ESPs, and has improved the industrys confidence in this technology. Since Lufeng other subsea boosting projects have come into service around the world, and prototype testing of alternative pump concepts has been undertaken (eg Kvaerner Boosting System as part of the Norwegian Demo2000 project, and Westinghouses WELLAMPS system prototype installed this year on the Marlim field offshore Brazil). Subsea separation has to date only been put into practice in the Hamilton Field in the North Sea in the mid 1980s (BOET system), and more recently on the Norsk Hydro Troll C Pilot Project (ABB system). For product streams at the high gas fraction end of the composition spectrum, say above 95% GVF, multiphase pumps rapidly become inefficient. For this duty, wet gas compression is required. The Norwegian Demo2000 Project includes two wet gas compression concepts, the Framo WGC and the AkerKvaerner SCCM (subsea c entrifugal compressor module). These concepts are at the onshore prototype stage, and subject to a suitable field application can be expected to be deployed subsea within the next few years. Subsea multiphase metering is by now fairly well accepted as proven technology. However, as with all of the subsea processing concepts described in this section, care must be taken to match the capabilities of the units actually qualified with the service conditions across the full anticipated life of the development. Pipeline Technology Issues Autonomous Underwater Vehicles (AUVs) The costs of engineering data survey acquisition by the traditional towed fish method become prohibitively inefficient in deepwater projects. This is because an increasingly large portion of the tow vessels time, up to 60% on some projects, is taken up with turning and realigning the fish between tow lines, which is a completely unproductive cost. Autonomous underwater vehicles (AUVs) are starting to appear as an alternative data-gathering platform (eg BP Holstein and Mad Dog Projects in Gulf of Mexico, down to 2,225 metres), but have not yet to the authors knowledge been used in the Asia Pacific region. In theory AUVs can reduce the surveying time by around 30%, and the cost by 50%, compared to the conventional method. A marked improvement in the quality of data acquired by AUVs has also been observed. In the future the capability of AUVs will be extended beyond data acquisition into subsea intervention, offering the possibility of cost reductions to subsea facility inspection, maintenance and repair.

Reliability Based or Limit State Design Methods The DNV offshore pipeline standard OS-F101, which is based on limit state principles, is becoming increasingly accepted in the Asia Pacific region. It has been used on the BP Vietnam Nam Con Son trunkline, currently under construction, the Shell Malampaya trunkline and CRA flowlines now in successful operation, and Woodside Energys NW Shelf Trunkline System Expansion Project (TSEP) which will be constructed in 2003. The limit state approach embodied in the DNV standard can lead to capital cost reductions due to more advanced design principles leading to more efficient use of materials, at the same time taking credit for advances in linepipe manufacturing technology over the last 50 60 years. The approach also gives a more consistent approach to safety, and provides a more explicit formulation of safety levels, than could be achieved under traditional working stress design codes. For deepwater applications the ability to use a limit state approach offers even greater potential to achieve cost-effective designs, whilst at the same time improving understanding of levels of safety in the system. This is important as the consequences of failure are commensurately greater in deeper waters. However, the limit state approach, being more complex and sophisticated, places increasing demands on the users understanding of the code formulations and factors in order to ensure that the targeted levels of safety are in fact being achieved. This is even more critical in very deep waters, as the validity of the empirical tests and analytical models on which the code factors are based becomes questionable. The designer therefore needs to have a good understanding, not just of the contents of the code, but also how it is derived and the potential limitations inherent in what lies behind it. If in doubt, seek expert advice from a consultant with good experience of applying limit state principles! CONCLUSIONS Deepwater subsea and pipeline developments in the Asia Pacific region will continue to benefit from technology advancements in the Golden Triangle of Gulf of Mexico, West Africa and Brazil. Significant investments in knowledge management processes and practices by a number the major operators and service companies are making it easier for the expertise and lessons learned in these other regions to be accessed without the expense of transferring specialist personnel. However, there are dangers in simply purchasing technology from other regions without carefully considering the supporting factors, such as logistics and maintenance infrastructure, or specialist service vessels, which may not be present to the same degree. REFERENCES 1. 2. Offshore Technology Roadmap for the Gulf of Mexico, US Department of Energy, November 2000. Smith N T G and Mohhamadi S, Application of GIS Technology to Field Concept Development and Value Optimisation, SPE 64453, Asia Pacific Oil and Gas Exhibition and Conference, Jakarta, April 2001. Fenton C, Jayson D M, Gillies M and Parkins A, Integrated Geohazards Evaluation and Risk Assessment for Subsea Facilities, OTC 14271, Offshore Technology Conference, Houston, May 2002.

3.