Deepwater Petroleum Exploration
& Production is the most
comprehensive and authoritative
text available on the business,
engineering, science, and technology
of this multibillion-dollar industry.
NEW TO THE SECOND EDITION:
• New chapters on geology and
geophysics, rigs, and service vehicles
• Greater coverage of engineering and
scientifc schemes used in deepwater
• Final chapter presents the latest
technology used in the “third wave”
of industry evolution
ISBN 978-1-59370-253-3 / $85.00 US
OR CALL 800-752-9764!
To respond to articles in Offshore, or to offer articles for publication,
contact the editor by email ( firstname.lastname@example.org).
C O M M E N T David Paganie • Houston
Offshore economics continue to improve
With the OPEC production cap renewed through the end of this year, the offshore
oil and gas recovery is expected to continue along a positive trajectory. Leaner offshore
projects are increasingly competitive with onshore development and thus the number of
FIDs continues to rise year-over-year. The long-term outlook for offshore is even better
as a supply gap may emerge due to a lack of new investments during the downturn. This
confluence of lower development costs and potential future supply deficit should help
boost offshore activity.
Cost compression has made offshore projects increasingly competitive since the downturn, and the gains are expected to be partly retained thanks to fundamental changes
in the way operators approach projects, writes Evelina Pagkalou and Anna Nikitina with
McKinsey Energy Insights.
Drivers of reduced costs include greater standardization and modular design, higher
use of existing facilities through tiebacks, as well as better coordination between operators and suppliers. Lower personnel costs and rig rates are also expected to last for some
time, and single source service suppliers should help keep costs down. The use of newer
and more powerful rigs further helps improve project economics, as do more competitive
fiscal terms from governments that are seeking to encourage development.
As a result, deepwater breakeven levels are likely to continue being 20-25% lower than
2014 levels. The wider margin created by lower costs should place deepwater investments
firmly at the left side of the global oil cost curve, making these projects viable and thus
helping to close a possible future supply gap. Incremental new deepwater production
from pre-FID projects could thus reach 10. 4 MMb/d by 2030, which along with increased
shallow-water output will be sufficient to meet the estimated 15-16 MMb/d required to
meet demand and replace the declines in existing offshore fields.
The complete offshore industry outlook by Pagkalou and Nikitina begins on page 19.
In the North Sea, operators are reassessing their options for satellite field developments.
In the southern gas basin, the standard solution has been a “building block” approach,
tying in lightweight, low-cost wellhead platforms to existing complexes in shallow water
depths, writes Jeremy Beckman, Editor-Europe. There could be a market for such a
concept also in the deeper, harsher waters farther north, particularly in the Norwegian
North Sea, where there have been concerns about the high equipment maintenance and
intervention costs associated with multi-well subsea tiebacks.
Statoil took this view when opting for an unmanned wellhead platform – the first ever
offshore Nor way – for its current Oseberg Vestflanken 2 project in the North Sea. Statoil
claims that improvements during the engineering phase have helped lower the project’s
breakeven price by around 30%.
An engineering firm recently developed a more generic design, a low-cost modular
wellhead platform that can be adapted according to different fields’ needs. It sees potential
applications for at least 20 of these structures over the next 10-20 years in the Nor wegian
Beckman reviews the new modular wellhead platform concept and its potential applica-
tions, beginning on page 42.
Recent improvements to subsea technology are also enhancing project economics.
A subsea technology provider makes a case for mudline boosting as a commercially
attractive IOR solution, beginning on page 46. A brownfield subsea multi-phase pump
project is used to illustrate the economic benefit. The improvements include reducing
system complexity, adding standardization, minimizing the size and weight of boosting
stations, implementing integrated project strategies, and maximizing the use of existing
infrastructure in brownfield applications. The results show that the total subsea boosting
system capex has been reduced by 50%. The potential ROI of the production improvements
and capex and opex reductions indicate that between 250 and 500% ROI can be achieved,
contingent upon oil prices.