Operators are increasingly putting pressure on contractors to reduce the cost of offshore field developments, forcing them to work out where they best achieve further cuts.
Rasmus Sunde, president of ABB Offshore Systems AS, Oslo, reckons that a reduction in production costs of up to a further 40% is within reach. Half of this potential reduction would come from new technologies, with 30% from improved work processes and 20% from streamlining of fiscal regimes.
"Production costs per barrel can be reduced by up to 40% through improved work process and commercial processes and by applying emerging technologies," said Sunde, "but a profound change of mindset is necessary on the part both of operators and suppliers.
"To a fast-increasing extent, solutions will be tailor-made for each and every field. By analyzing reservoir data and conducting front-end field studies, we are able to identify the technology gap, thus enabling us to focus our research and development across company boundaries.
"This makes for closer cooperation and novel constellations between technology suppliers, yards, ship-owners, and operators. The result is solutions that are making use of tomorrow's technologies rather than relying on overall designs that were developed decades ago, when oil prices were significantly higher than they will be in the future."
Sunde expects emerging subsea technologies to enable accelerated oil production rates and enhanced recovery from both new fields and subsea satellites of existing production facilities. Thus development costs can be reduced by 30-50% and operating costs by 30-60%, he maintains, allowing profitable developments with an oil price of $8-10/bbl.
"Further cost reductions are possible by closing identified technology gaps," said Sunde. "Already emerging are processing technologies like subsea gravitational separators, single and multiphase pumps, subsea sand handling, and oil-in-water monitoring.
"Downhole technology will undergo rapid development: here I will just mention optical pressure and temperature sensors, high temperature electronics, downhole chokes with actuators, and downhole flow meters."
Shell/BASF JV opens world class petrochem plant in the Netherlands
A joint venture of Shell Nederland Chemie NV and BASF Nederland BV officially opened a new styrene monomer and propylene oxide plant at Moerdijk, the Netherlands.
The two companies hold equal interests in the plant, which was built at a cost of 1 billion guilders ($485 million) alongside an existing Shell styrene monomer and propylene oxide unit.
The new plant has capacity to produce 565,000 tons/year of styrene monomer, a 'building block' for polystyrene and high-grade resins, and 250,000 tons/year of propylene oxide, which is used to make plastic foam.
Shell said linking the new plant to the existing facilities brought significant synergies to the project, which is one of the world's largest styrene monomer/propylene oxide plants.
Shell Group Managing Director Jeroen van der Veer said, "At a time when almost all news concerning Shell Chemicals is devoted to divestments - we are in the process of selling 40% of our chemicals assets - I feel excited to e present at the start of this new investment.
"I consider a new joint venture between two leading chemicals players, like BASF and Shell, as a sensible way for large investments in the future."
BASF Director Dr. J. Hambrecht added: "The ever-increasing global competition forces petrochemical and chemical companies into investments which represent most modern technology, the biggest economies of scale, and an optimal integration into a 'Verbund' site. All these basic conditions are fulfilled within this SMPO plant of Basell."
Denmark plans new offshore field development
Denmark's Dansk Undergrunds Consortium plans to develop the recently discovered Halfdan reservoir, which has estimated reserves of 70 million bbl of oil.
DUC is a venture comprising operator Maersk Olie & Gas AS 39%, Royal Dutch/Shell 46%, and Texaco Inc. 15%. Texaco said DUC is seeking development approval from the Danish Energy Agency, with a view to beginning drilling and construction work this year.
DUC plans to install a small platform in the field, which would export oil to nearby Gorm field by pipeline. A total of nine development wells is planned, to give a combined output of about 25,000 b/d. First oil is anticipated in early 2001 and the development cost is expected to be 1.5 billion Danish kroner ($216 million).
Project focus: UK safety body warns on FPSO design methods
The UK Health & Safety Executive has completed a review of the analysis methods available for designing floating production, storage and offloading systems and concluded that conventional tanker design rules are not necessarily appropriate for ship-shaped FPSOs.
Conventional oil tankers are mainly designed using Ship Classification Rules that are predominantly empirically based, and which use a limiting stress approach. This contrasts with the approach to designing offshore platforms, in which the structural analysis is detailed and the environmental loading is site-specific.
"The operation of offshore structures," said the HSE, "has been very successful and it is evident the levels of reliability demanded of the structures guarantees protection of the operators investment.
"In contrast, it is fair to say that the ship classification rule approach to the design and analysis of FPSO structures provides no real basis to evaluate the effects of different operating practices when the FPSO is fixed on-station and subject to harsh environmental conditions.
"Furthermore, whereas all platform structures incorporate significant redundancy in their structural geometry, an oil tanker type structure tends to have very little capability to redistribute internal loading following the failure of part of the structure.
"This feature further emphasizes the importance of accurately calculating the response of the structure to extreme loading conditions and account for this in the evaluation of the target reliability values."