Published: 2013
Courtesy of ABS
Innovation Spotlight: TAISUN OF THE SEA
Jackup meets jacket in a new ‘do-all’ rig design
Having changed one industry’s mindset about cranes, Brian Chang now hopes to change another’s regarding jackups. Chang shattered the shipbuilding sector’s preconceptions about heavy lift capacity and large-unit construction when his giant Taisun gantry crane set a world record by raising a weight of more than 20,000 metric tons and subsequently led Yantai Raffl es Shipyard to a place of prominence in semisubmersible construction. Now, through a new venture named Calm Oceans Pte. Ltd., the veteran offshore entrepreneur is rolling out another mindset-breaking concept: the Mono-Column Platform (MCP), a highpayload, multipurpose jackup unit with only one leg. This radical departure from convention makes the equally radical promise of being an economical platform for all manner of offshore exploration and development in water depths to 500 feet. The key to its bold offer is an innovative design that, Chang says, is versatile enough to be the foundation of a new family of effi cient, accelerated and relatively low-cost development solutions that could make feasible even the most marginal offshore resources. The prototype MCP, named Calm Ocean 101, is currently under construction to ABS class in China. When delivered in late 2014, it will look like nothing else at sea: a broad, square deck surrounding a lone open-truss square jackup leg measuring 20 meters on each side. The biggest such leg yet built, its perimeter is so large that, says Chang, the operator will be able to drill through its center, similar to the way a drillship uses a moonpool. In addition, the massive leg will protect the drillstring and risers like a fixed jacket structure.
These two features, coupled with the unit’s 5,000-ton payload capacity, will enable the MCP to transition seamlessly from development drilling to production service and, when the fi eld is depleted, to depart without leaving behind a structure that needs to be removed. At least one aspect of the unit’s design is familiar. The MCP is a ‘mat-supported’ rig, meaning the bottom of its leg is fi xed to an independent second hull (the ‘mat’) that is ballasted and jacked down to the sea fl oor. A concept pioneered by Bethlehem Steel in the early years of offshore exploration, the mat base works somewhat like a snowshoe, distributing the weight of the rig over a large area and enabling it to stand securely on even very soft soil. Although the mat eliminates the risk of ‘punching through’ soft layers of seabed, it does need to rest on a fl at surface. Because the independent leg (spudcan) jackup is able to stand securely on virtually any topography, it became the offshore industry’s favored choice for exploration and today is the rig type most commonly used in shallow-water projects. Often, exploration with a spudcan jackup is followed by development drilling with a jackup and tender vessel and then installation of a fi xed jacket production platform. While an effective solution, its expenses – which include building, installing and (eventually) removing the jacket – contribute to the cost barriers that keep many small or ‘marginal’ oil and gas fi elds undeveloped. The evolution of the mat concept embodied in the MCP proposes to change all that. First envisioned some 30 years ago by Chang and then-partner Peter Nimmo (a senior designer at Bethlehem Steel who later became President of Baker Marine) and now realized by the Calm Oceans team, the MCP hopes to bring the mat rig back into the spotlight as the centerpiece of some daring new development scenarios for shallow-water fi elds of any size.
Making Marginal Fields Feasible
Chang has four decades’ experience in jackup construction, and says he is building the MCP in response to years of client requests for economical, higher-load capacity jackups and to today’s heightened desire to develop marginal oil and gas fields – a desire particularly strong among national oil companies struggling to meet rising domestic energy demands while production from their primary reserves decreases. Many of these companies see at least part of the solution coming from the small, isolated oil and gas fi elds in their areas that have heretofore been uneconomical to develop.
For example, in February 2013, India’s Oil and Natural Gas Corporation announced a $1.3 billion investment in offshore development in the Arabian Sea would include eight marginal fields. In July, Malaysian national oil company Petronas announced incorporation of a new subsidiary that will focus on development and production from small, marginal and mature oil and gas fields locally and abroad. A month later in Nigeria, where marginal fields account for just over 2 percent of total national production, the government announced its first positive outlook in more than a decade on increasing that figure, saying that years of encouragement under the country’s Marginal Fields Program were finally beginning to pay off.
At the same time, enterprising private firms have also been at work seeking to monetize marginal assets. In September, Canada based Enegi Oil announced plans to develop marginal North Sea gas fields using a new technology that the company says can be applied to 116 ‘stranded’ fields in the area. Meanwhile, Australian startup Hydra Energy has acquired clusters of marginal fields in local waters and been seeking innovative ways to bring them to market. Public and private interest in marginal field development is so high, in fact, that a special conference on the subject took place in Kuala Lumpur in November. “For every oilfield that gets developed there are at least 20 more marginal fields that are put on the shelf because they are classified as uneconomical,” Chang says. “I know of a huge number of marginal fields in waters less than 500 ft deep that the MCP could be used to produce.” While Calm Oceans is not exclusively targeting marginal fields, Chang expects that to be the application where the MCP makes its breakthrough. Compared with standard
jackups, he says its unique combination of increased deck space, higher payload, operational flexibility and lower construction costs will put a lot of forgotten fields on the map. To illustrate the possibilities of the new design, he compares it with a standard triangular jackup that fits the same footprint, a square 65 meters on a side. The traditional rig, with three triangular truss legs, needs nine jacking units; the MCP needs only four, which both simplifies engineering and construction and lowers building costs by reducing the amount of flanges, valves and piping by up to 60 percent and cabling systems by about 50 percent. Having one central leg also gives the MCP more open deck space. While usable deck area on the triangular design is in the 1,900-m² range, usable deck area on the MCP is 60 percent greater at 3,200 m². In addition, the unit can be outfitted with a rail track onto which a modular drilling package can be mounted. Drilling can then be done off the side of the rig, through a detachable slot, as well as through the leg.
Calm Oceans also reports that the MCP will offer both environmental performance and a payload that are significantly above average: at its maximum 500-ft depth, the unit will be able to withstand 15-meter (50-ft) wave heights, while at 400 ft depths it will take 30-meter waves, equivalent to what harsh environment rigs offer; and, with 24 pinions (6 per side), each carrying about 450 tons, the platform has a theoretical net deck load of between 5,000 and 6,000 tonnes. At press time, this innovative unit was undergoing review by ABS. With the added deck space and high payload, the MCP will accommodate a great deal of equipment that triangular rigs cannot, Chang says. In addition, because the mat support distributes the rig’s weight, the unit exerts a load on the seabed of 3 tons per m², as opposed to 40 tons per m² exerted by the independent leg rig – potentially a make-or-break difference for projects proposed in areas with soft soil or an otherwise low-load-bearing seabed. The MCP also offers advantages in the all important area of capital expenditure (capex), he notes. “You can still get a three-leg jackup in China for under $200 million, but it won’t be something you can use in 400 feet of water or in harsh environments,” he says. “For that level of specifi cation you have to look to the top-of-the-line jackups or a semisubmersible, either of which costs about $670 million today. By comparison, our unit costs much less due to efficient use of steel, materials and labor.” While Calm Oceans is not positioning the MCP as an across-the-board replacement for standard cantilever jackup platforms working on wellhead platforms, it does say the unit has great potential for greenfield operations and as a temporary or permanent support for brownfield operations. The company has produced concept drawings for the platform in drilling, production, power generation and accommodations services. Its unique package of attributes leads Chang to declare the unit ideal for large greenfield projects and to propose several new development scenarios through which the MCP might lead a revolution for marginal resources.
Offshore Development Under a New Mindset
Chang’s fi rst alternative scenario involves early monetization of resources. “A typical project scenario starts with a jackup doing exploration and drilling test wells; then another jackup comes back to do proving wells; then, after the front end engineering and design (FEED) study on the total development, another unit comes out to produce. That means you spend millions of dollars and 36 to 120 months before getting fi rst oil. You could do all that with one MCP, from exploration – if conditions are right – to production, with signifi cantly reduced capex and a much shorter timeline,” he says. Among his suggestions is a phased-in development scenario, perhaps using more than one MCP, that would yield early fi rst oil.
“Say, for example, you get 4,000 barrels of oil per day on your fi rst well. With a normal jackup, you have to fl are off this initial gas and oil because, although you have a test separator on board, there’s no room on the rig for real processing equipment. Wouldn’t it be better if you could process that initial oil and put the money in your pocket instead of sending it into the air? With an MCP, you can,” he says. “If you just install some simple processing equipment on board and pipe the oil into a tanker, you can start producing on Day One. You can be producing even while you are making the long-term decisions for the field. The important thing is that you can be getting oil within three months of the drill bit going into the ground, instead of three years. If the field is proven to be uneconomic, then at least you can drain whatever is possible before capping it.” Another capex-lowering feature of the MCP springs from flexibility with drilling equipment. “You don’t need to buy a new $60 million drilling package for our unit,” he says. “You could, but you could also take a used modular drilling package out of storage and mount it on our rails – you could even mount a land drilling rig on board if it has the specifications you need.”
Further, because the MCP supports drilling and processing equipment, it will also allow the operator to explore neighboring areas of interest through horizontal drilling, without interrupting production, he adds. This leads him to his second new scenario: how a rabbit sized operator can handle an elephant field. “Let’s say you’re a small energy company and you discover a monster oilfield,” he proposes. “You go into debt up to your neck just to drill your additional wells and then, when you’re confronted with the investment in a central processing platform, the financial burden becomes so great that the only practical alternative is to sell your interests to one of the big boys,” he says. “With our solution, you can forget about central processing – just build or hire another MCP and outfit it with a complete processing plant,” he says, pointing out that a typical 20,000 to 30,000 barrels-per-day production facility with drilling capabilities makes for a deck load of about 3,000 tons, well within the unit’s capacity. If output ramps up, more MCPs could be brought on site. “Remember, while you’re producing, you can also be drilling more wells,” he says. “You can spread MCPs over a big field, with each platform doing its own drilling and processing and the outputs all piped to an FSO. And when you are done, you don’t have lost assets that you need to decommission; you have working assets that people want.” His third scenario involves a new strategy for monetizing gas fields. “The typical scenario for a gas field is to drill the well, produce the gas and pipe it to shore, where it is burned in a power plant.
We suggest the MCP can offer a new business model to the resource owner: instead of selling gas to the power company, put gas turbine generators offshore and sell electricity,” he says, pointing out that the lower capex of laying electrical cable instead of gas lines could be critical to making isolated gas fields profitable. “The power generation scenario can be better for the resource owner because, since the rig itself is portable, he can move the whole setup, including the power plant, to a new location when the field plays out. That’s an ideal solution when an area contains a number of small gas fields,” he says. “The ability to relocate and adapt equipment is one of the most important factors when looking at small field development,” he adds. “For example, you cannot relocate a jacket, which means spending an additional $40 to $60 million per well. If, instead, you commit a little more money on our unit, you have a tool that can be redeployed to other fields or hired out when you’re done,” he says, pointing out that the design’s versatility effectively makes it a portable artificial island – so much so that Chang has taken to referring to it as offshore real estate. “The MCP can be used for exploration, if conditions are right, for development, for production, for workover, for housing and, I’m sure, for applications that haven’t even been thought of yet,” Chang says. “A lot of small field developers could really run with this solution.”
Marginal Fields Make News
From Ireland to Australia, technology advances and government incentives are combining to stimulate development of marginal offshore oil and gas fields. The definition of a marginal or stranded field is, basically, contextual. It refers to any field that, at a given moment in time, is deemed unprofitable to develop. Such assessment is based on a number of factors that change over time, including the market price of oil, the overhead costs of the developer, burdens imposed by local tax and regulatory regimes and, very importantly, available technology for the practice known as enhanced oil recovery (EOR). One typical scenario involving marginal fields is when oil majors sell declining assets to smaller companies whose lower operating costs make continued development of the field worthwhile. The shallow-water Gulf of Mexico is full of such handed-over projects. Now, offshore fields around the world that were never developed and others that have been shut down for years are being seen in a new light. Since 2010, tax breaks and other incentives from governments around the North Sea, including the UK and Holland, have helped stimulate use of new solutions to bring small fields into production. In November this year, Providence Resources and Advanced Buoy Technology (ABT) partnered to develop two marginal fields in the Celtic Sea offshore southern Ireland, using unmanned production buoys developed by ABT. One of those fi elds, Helvick, was found in 1983. Its discovery well fl owed 9,900 barrels per day of oil, but the field was determined not viable because of its small size and the low oil price at the time. Similarly, reservoirs that once fl owed but were shut down when their fl ow rates slowed are being reawakened. Late last year, Scotlandbased Unmanned Production Buoy (UPB) was awarded rights to develop the decommissioned Angus and Fife fields in the UK central North Sea, once operated by Hess using floating production systems.
The company expects its first commercial units to be online in 2016, with the first three deployed in marginal fields offshore England, Ireland and Denmark. These unmanned buoy systems expand on technologies currently used offshore for utilities, power generation and the remote control of wells, by adding processing and hydrocarbon storage systems, and are said to be economic for fields with daily production rates under 5,000 barrels per day. In Southeast Asia, where demand for oil and gas is steadily increasing, one emerging hot spot for marginal field development is Malaysia. In 2010, the Malaysian Government began offering tax incentives for investment in both EOR and marginal field development projects, even waiving export duties on total oil production from small fields and giving tax allowances of up to 100 percent of capital expenditure for EOR projects. Earlier this year, Malaysian national oil company Petronas formed a new subsidiary, Vestigo Petroleum, to focus specifically on development and production activities from small, marginal and mature fields in Malaysia and elsewhere. In 2011, Petronas implemented a new production arrangement called a risk service contract (RSC) to stimulate marginal field developments. Under an RSC, Petronas is the project owner while a contractor group is the service provider; the contractor provides up-front development costs and is compensated based on production and performance. Just over 100 marginal fields were identified under Malaysia’s 2010 Economic Transformation Program, with total reserves estimated at 600 million barrels of oil. About 25 of them have been marked for development through RSCs. The decision to push development of marginal fields has proven to be a wise one. Recently, one field named Cendor, which for a decade had been identified as marginal and was abandoned by an international oil major, turned out to be one of Malaysia’s biggest-ever finds, following an aggressive appraisal and development campaign by the contractors. For Petronas, pursuing marginal fields through RSCs has proven to be a risk worth taking.
