Oil price crash brings subsea processing opportunities

August 1, 2016

Author: Jon Fredrik Muller, Partner

Publisher: Offshore Engineer

There has been few subsea developments sanctioned over the last year with the falling oil prices. With oil prices currently in the 50 USD/bbl range, sanctioning activity is still moving slowly. Cost compression and re-engineering of previously planned concepts are lowering breakevens of many projects, towards levels that could warrant sanctioning. Although Rystad Energy believes in a strengthening of the oil price towards 2020, we still see few offshore projects sanctioned this year. However, we do see an increasing interest to discuss possibilities for subsea processing. Especially subsea boosting and compression solutions, which could bring additional volumes from existing fields in a profitable way, have recently received increased focus from the operators.

Of the different kinds of subsea processing, it is subsea boosting that has matured the most. The main advantages of subsea boosting is accelerated production, increased production & recovery and development of low energy reservoirs, heavy oil fields, long tiebacks and other fields where pressure differentials might be an issue. The first subsea booster pump was a twin-screw multiphase pump developed by GE Oil & Gas, which was installed on Eni’s Prezioso field in Italy in 1994. Although GE was first, it is OneSubsea (through Framo Engineering) that has become the market leader with their helico-axial pumps. Today, several different solutions for subsea boosting have been installed, or awarded. Currently the portfolio of projects count close to 40 fields around the globe, ref. figure 1.

Conventional subsea boosting solutions have often involved large topside structures like variable speed drives. For brownfield applications, the need for topside equipment have in many instances resulted in potential subsea boosting projects being shelved, due to limited topside availability. However, new technology developments will likely reduce the need for topside equipment, or almost remove it all together. Several developments point in this direction, like developments of subsea booster pumps with integrated VSDs, like Fuglesangs Subsea is developing, or marinization of equipment that is normally put topside. There are also ongoing developments on smaller booster pumps, optimized for boosting single well streams. These solutions will likely increase the number of fields applicable for subsea boosting. These pumps could be configured as a traditional booster pump, but there are also developments integrating the boosters into flowline jumpers, as Aker Solutions and Baker Hughes have done.

Another subsea processing technology that could increase production from producing fields is subsea compression. Traditionally, producing gas fields with need for compression has installed gas compressors on an existing platform, or built a new platform. By taking the compression subsea one can reduce the need for additional platforms and place the compressor close to the well, which increases the effect. However, subsea compression systems are complex and require large gas resources to justify the investments.

Currently there are two subsea compression systems in operation, a dry gas compressor at Aasgard and a wet gas compressor at Gullfaks South, both Statoil operated fields. Aker Solutions delivered the Aasgard project, which includes pre-compression separation, while OneSubsea delivered the system for Gullfaks South. The Gullfaks South project has had some initial problems, but the Aasgard system has so far run like clockwork. Although somewhat costly projects, part of the costs should probably be allocated to R&D, and thus, future systems are likely to be considerably cheaper.

Subsea separation is the concept of separating gas/liquids or oil/water at the seabed, and might in some instances be a prerequisite for other subsea processing systems. Many of the applications so far have been in conjunction with subsea booster pumps, and subsea separation is today a proven technology. Whilst OneSubsea has taken the largest share of the booster market, it is FMC Technologies that has become the market leader in the separation segment, being system provider on the majority of projects completed, ref. figure 2.

Booster pumps are mainly used on oil fields with low gas to oil ratios, both for heavier and lighter crudes. The key regions have been, and will continue to be, Brazil, the US Gulf of Mexico, the North Sea and West Africa due to the water depths, reservoir characteristics and tie back distances. Subsea gas compression projects require somewhat larger resource base than the booster pumps, in order to be commercial. Key regions for this technology over the next coming years will likely be the North Sea, Australia, East Africa and the Mediterranean. Subsea separation systems have now been installed at 11 fields operated by Petrobras, Statoil, Shell and Total. All the fields lay in Brazil, Norway, US GoM or Angola, and going forward these areas, including the rest of the North Sea and West Africa, are seen as the primary markets for such systems.

Considering the number of subsea fields (~1,500) compared to the number of subsea boosting (~40), compression projects (2) and subsea separation (11) systems, the current technology adoption is low. The main reasons for this are related to costs, uncertainty regarding reliability (proven on boosting by now), and a general conservatism in the industry. In the current low price oil environment, we have seen clear signs that operators are looking into how to increase the production from existing fields to improve cash flows short/medium term. In some instances, the operator may prioritize such projects, over greenfield developments, due to a lower overall capex and time to production. Due to this, the current downturn may yield an increase in subsea processing projects for brownfield applications. Brownfield processing could be some of the more interesting projects before greenfield sanctioning picks up with an estimated recovery in the oil price towards 2020.

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Article Contacts

Jon Fredrik Muller, Partner
Phone: +47 24 00 42 00
jon.fredrik.muller@rystadenergy.com

Julia Weiss, VP Marketing
Phone: +47 48 29 87 61
julia.weiss@rystadenergy.com

About Rystad Energy

Rystad Energy is an independent oil and gas consulting services and business intelligence data firm offering global databases, strategy consulting and research products.

Rystad Energy’s headquarters are located in Oslo, Norway. Further presence has been established in Norway (Stavanger), the UK (London), USA (New York & Houston), Russia (Moscow), Brazil (Rio de Janeiro) as well as Singapore and Dubai.