Over the past 5 to 10 years, there has been an increasing focus in the offshore oil and gas industry on predicting and quantifying an asset’s expected production performance. This “performance risk” has always been considered one of the key risk factors for an offshore development, in addition to subsurface, economic, safety, and environmental risks. However, with the shift of offshore developments to harsher environments and deeper water, the traditional method of estimating expected availability and production performance figures, using extrapolated data from previous experience, is increasingly considered insufficient.
With increased investment required for some of the ambitious new offshore developments (floating liquefied natural gas [FLNG], Arctic, and ultradeep developments), there is growing pressure to address any risk to the bottom line and understand how the impact of changing environments and operating conditions will affect economic return and expected revenue. As a result, most operators are now adopting more robust methodologies, such as using simulation technology tools, to evaluate and predict expected performance.
Several key areas in the offshore industry illustrate where these “new” production risk factors are especially relevant.
The subsea industry, in particular, continues to undergo rapid transformation as it seeks to exploit untapped reserves. Subsea fields exploited since the late 1990s in the North Sea, US Gulf of Mexico (GOM), and offshore Brazil are now considered areas using proven technology and their performance is well understood. However, pushing subsea developments into ultradeep locations does result in additional performance risk. The 2010 Macondo accident in the GOM clearly showed that the potential impact and escalation of subsea failures or incidents can be dramatically increased because of high water depths. The ultradeep environment will affect potential diagnostics options (Is there a leak? Where is it coming from?), and mitigation and repair options (What intervention activities are possible? Which vessels are available at short notice?). A relatively minor failure, which could have been addressed quickly by divers or remotely operated vehicles in shallower waters, can potentially result in long well or even field outages. In addition, public scrutiny concerning any potential environmental impact would make it likely that operators would now opt for conservative decisions (e.g., a shutdown) in the event of any uncertainty about potential subsea leaks or failures.
The global drive to harsher environments, including West of Shetlands and Arctic locations, introduces its own set of uncertainties and risk to asset performance. Experience on fields such as the Schiehallion or West of Shetlands, has shown that the impact of the harsh environment is significant, both in operation of floating production facilities and access to the subsea wells. For example, any well or subsea intervention during the winter season will result in significant additional intervention durations, increased operating expense, and long well outages. For such locations, an analysis and understanding of expected metocean conditions and their effect on operations is key to understanding production performance. For Arctic developments, there is the additional problem of access to facilities during periods with ice and the impact of Arctic conditions on maintenance activities.
Another major development for the offshore industry in the past few years is the option to consider FLNG plants for large stranded gas reserves. Many operators are currently considering FLNG options for some of their biggest investments. The potential risk of taking a complex LNG facility to an offshore operating environment is significant. There are uncertainties as to how LNG-specific equipment will operate under offshore conditions and wave motion, how reliable the LNG offloading operations will be, and how major maintenance activities will be executed for a complex facility with less access to personnel due to bedding constraints.
A recognition of the importance of these risks is apparent by the decision of some operators, during the design competition for the Masela and Tupi fields, to consider FLNG production risk a key performance parameter when comparing designs during the front-end engineering design competition for FLNG developments (in addition to comparison of overall capital expenditure and safety risk).
A final area in which future production performance risk is a major issue is the aging facilities in mature offshore provinces, such as the North Sea and GOM, where lifetime extension projects are being considered. For these facilities, production is extended beyond original design life and there will be future downtime associated with additional maintenance requirements, both preventive and corrective. In many cases, and as an added risk factor, these facilities will have changed ownership, introducing new operators and operations personnel to the facility and potentially losing some historical operational experience. These factors pose a tough challenge to maintaining strong production performance, while minimizing operating costs, without jeopardizing the safety and integrity of the asset. For these types of projects, a clear framework for assessing future performance against best-in-class performance and identifying the potential main bad actors at an early stage is essential.
The additional complexity in the operation of offshore assets demands more accurate and sophisticated tools and methodologies for assessing potential performance. These methodologies, combined with a thorough understanding and qualification of the new technologies employed, will ensure that future asset owners and investors can define a better picture of future performance. The developed performance models will also provide a clear auditable framework, clearly showing the links between input data assumptions (on reliability, operability, environmental conditions, etc.) and bottom-line performance. In addition, these models allow testing of alternative scenarios to mitigate identified potential production loss. It is not surprising that for many operators such performance prediction tools are now mandatory requirements as part of the project “decision gate” processes.
By making potential risks more transparent to all stakeholders, the consistent implementation of better performance risk analysis should assist the industry in raising awareness of the critical improvements that are required to push forward into new territory.
| Frank Ketelaars is head of UK Advisory Services at DNV with overall responsibility for its advisory units in London, Manchester, and Aberdeen. He began his career at Shell International in 1989. Later, he worked for 10 years for Jardine and Associates, specializing in asset performance and availability analysis covering upstream, midstream, and downstream assets. Ketelaars joined DNV as part of the company’s acquisition of Jardine in 2005, and has worked as head of the DNV advisory unit in London since 2008, responsible for advisory activities covering safety, and environmental and asset risk. |