British Gas is expanding overseas to compensate for lost revenues as the U.K.'s gas supply market is liberalized (OGJ, Sept. 4, 1995, p. 31).
The company has great experience in U.K. downstream gas projects, with which it can impress potential overseas partners. However, it has comparatively little experience with upstream project management.
Off the U.K., British Gas has been operator only of Morecambe and Rough developments. So it sees its current Armada development as a way to prove itself as an operator to potential overseas upstream partners.
The Armada platform will be installed on U.K. North Sea Block 22/5b next year to deplete Fleming, Drake, and Hawkins fields, which have estimated combined reserves of 1.2 tcf of gas and 50 million bbl of condensate.
Colin Friedlander, technical director of British Gas Exploration & Production, said Armada will develop three discoveries made in 1990-91 by other operators.
Phillips Petroleum Co. U.K. Ltd. found Maggie, later renamed Fleming; Amoco (U.K.) Ltd. found Hawkins; and Mobil North Sea Ltd. found Drake.
Armada plan
"At first there were three operators with no consensus on how to develop the finds," said Friedlander. "Because we had the largest equity in the three fields overall, we saw an opportunity to gain operatorship and subsequently demonstrate our E&P capabilities.
"The next challenge was to unitize the fields. Armada became one of the U.K.'s first fields to achieve fixed equity going into development, and there will be no redeterminations."
Then British Gas had to find the best development solution, said Friedlander. In 1993 the company came up with a two-platform concept, budgeted at £ 740 million ($1.1 billion).
"This was too expensive," said Friedlander, "so we halted the project and reengineered it. We ended up with a single-platform solution, which was expected to cost £ 540 million ($810 million) at project sanction."
This plan required British Gas to push the limits of extended-reach drilling. Armada A-8 development well set a world record mark, for an extended reach well from a semisubmersible rig, of 23,905 ft total measured depth.
Numbers squeeze
British Gas has cut costs since approval, through incentives agreements with contractors. Now the company reckons development will have cost £ 420 million ($630 million) when first gas flows in October 1997.
Colin Higgins, Armada facilities project manager, British Gas, said, "Our aim is the best fabrication efficiency in U.K. offshore industry. The current best is 200 man-hr/metric ton. The target at contract award was 180 man-hr/metric ton, and we now expect Armada platform will take 130 man-hr/metric ton."
Higgins explained that Armada is also expected to be the U.K.'s lowest-cost offshore development. The platform will have a crew of only 29, and operating costs are expected to be "well below $3/bbl."
British Gas recently brought Miskar field into production off Tunisia, and Dolphin off Trinidad and Tobago: "Now overseas companies are increasingly asking us about Armada."
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