spur on projects
While the lower-for-longer oil price has
made, for the most part, the sanctioning of
large offshore projects financially unviable, a
recent report by analyst Douglas-Westwood
(DW) found that the subsea sector could be
turning around. The reality of current market
conditions can be tempered by a long-term
view of the fact that subsea development will
remain a critical aspect for future field developments as new reserves are found in more
remote and deepwater basins, Mark Adeosun,
of DW London, wrote.
One reason given was that majors have
opted to focus on subsea well tiebacks, as
the analyst noted that floating production
platforms are growing scarcer.
In the days after Adeosun’s update was
released, a few announcements were made
that could serve as illustrations. Centrica
Norge announced that it had submitted
development plan for the shallow-water
Oda (ex-Butch) field in the Norwegian
North Sea to the Norwegian Ministry of
Petroleum and Energy. Located 13 km ( 8. 1
mi) east of the BP-operated Ula complex,
Oda’s proposed development plan calls
for a four-slot seabed template with two
production wells and one water injection
well, tied back to the Ula platform, now
operated by Aker BP.
According to Faroe, a partner in both
Oda and Ula, the tie-in is an innovative solution that involves reusing the existing Oselvar
infrastructure (Faroe 55% and operator) from
the Ula platform.
Centrica’s plan is progressing, as Subsea 7
was later awarded an engineering, procurement, construction, installation, and commis-
sioning (EPCIC) contract for the Oda-Ula
tieback, as well as a separate award from
Woodside Energy for the Greater Western
Flank Phase 2 tieback off Western Australia.
Further evidence is Statoil’s recently submitted
plan for the development and operation of the
Trestakk discovery on the Halten Bank. Once
again, we see a tieback helping to enable the
project’s progress: The operator plans tie the 76
MMboe discovery back to the Åsgard A oil production vessel, with startup anticipated in 2019.
Returning to the DW report, the analyst
found many original equipment manufacturers
(OEM) recording a decline of about 40% in
their subsea backlogs compared to 3Q 2015,
which it said was an indication that the subsea
industry is at a crossroad. Adeosun noted
that, with substantial cost-cutting already
achieved, and as E&P companies continuing
to squeeze their supply chains, there is reason
for optimism that E&P companies will be able
to sanction new projects, with many needing
to ensure production inventory remain high.
Once again, quickly following the update,
BP sanctioned its $9-billion Mad Dog Phase
II project in the deepwater Gulf of Mexico.
Bucking the tieback trend, BP envisions a new
floating platform with the capacity to produce
up to 140,000 b/d of crude oil from up to 14 production wells. First oil is expected in late 2021.
In 2013, BP and its Mad Dog partners decided
to re-evaluate the project, and the operator said
that it worked with co-owners and contractors to
simplify and standardize the platform’s design,
reducing the overall project cost by about 60%.
The project, which also includes capacity for
water injection, is projected to be profitable at or
below current oil prices, the E&P noted.
Bob Dudley, BP Group CEO, said: “This an-
nouncement shows that big deepwater projects
can still be economic in a low price environment
in the US if they are designed in a smart and
D W’s report continued by noting that many
operators will also be aiming to take advantage
of the price pressures on the supply chain due
to the current market downturn. The current
woes experienced by OEMs due to limited
order intake over the past two years could
evolve into long-term stability, as the industry
continues to collaborate and resize itself.
More good news from the analyst firm was
that it felt that subsea tree orders have bot-
tomed out, with mega subsea projects such as
Mad Dog Phase II, Anadarko’s Shenandoah,
Eni’s Zabazaba and its commitment to the
Coral South project offshore East Africa all
expected to be sanctioned in 2017.
DW expects a trough in subsea tree in-
stallation to linger well into 2017 and 2018.
However, installation is expected to grow at
4% compound annual growth rate over the
next five-year period, an indication of a light
at the end of what has been a long tunnel.
Dalmatian gets subsea
Murphy E&P has awarded Subsea Integra-
tion Alliance a deepwater integrated subsea
EPCIC contract for the Dalmatian field in the
Gulf of Mexico.
The contract calls for the supply and instal-
lation of a subsea multi-phase boosting system
that includes topsides and subsea controls, as
well as a 35-km (22-mi) integrated power and
This is the first EPCIC project award for
Subsea Integration Alliance, which was
formed in July 2015 between OneSubsea and Subsea 7. The alliance enables
a turnkey integrated project from design
through supply, installation, and commissioning. Offshore installation activities are
scheduled for 2018.
Mike Garding, president, OneSubsea,
Schlumberger, said: “This fit-for-purpose
subsea boosting technology will improve
Murphy E&P’s ultimate recover y through
a cost-effective, record tieback. The in-
novative business model of the alliance
further contributes to greater certainty
of cost and return on investment.”
Subsea 7’s CEO Jean Cahuzac added:
“This contract recognizes our success-
ful alliance model that brings together
Subsea 7’s SURF technology and ex-
tensive track record in delivery of
large-scale complex EPCIC projects, with
OneSubsea’s reservoir and subsea produc-
tion, and processing systems technologies.
“Our alliance presents Murphy E&P with
many opportunities to improve their field
economics, and reduces complexity, cost, and
risk to achieve production objectives safely,
on time and within challenging cost targets.”
Fugro halts divestment
Fugro NV has decided that it will no longer
pursue the divestment of its subsea services
business in Asia/Pacific to Shelf Subsea. The
company said that the parties were unable
to reach agreement on some closing conditions, and that it would no longer pursue the
As a result, Fugro will retain the vessels,
ROVs, other equipment and personnel related
to the business. In addition, it will not acquire
an equity interest in Shelf Subsea, as was previously communicated. The subsea services
activities in Asia/Pacific will be incorporated
in and reported as part of the Marine division
in the new divisional structure as of 2017.
Fugro will continue to explore partnership
opportunities to reduce its exposure to the
larger vessels used for the installation and
construction part of the business. •
Centrica Norge’s proposed development plan
for Oda calls for a four-slot seabed template
with two production wells and one water injection well, tied back to Aker BP’s Ula platform.
(Image courtesy Centrica)