There’s oil in those small pools - and its exploitation stands to benefit larger fields
Only a handful of operators are actively exploiting small pools in UK waters, but cheaper and more-advanced technology could provide access to an untapped 3 billion barrels-of-oil equivalent in those pools.
A recent study by Aberdeen University and the National Subsea Research Initiative (NSRI) study showed that extracting oil from pools with more than 5.8 million barrels (MMbbl) of oil equivalent in resources could bring as much as $8 billion in tax revenues for the UK Treasury.
Until recently, small fields were more of a chore than a bonus for oil operators because they were costlier to develop than larger ones. But as larger fields near end of life, small pools are attracting interest not only as an additional source of oil but also because they could help breathe new life into adjacent larger oil fields.
Technology is one part of the solution; the industry must also be more receptive to new operational processes, Gordon Drummond, Project Director at the NSRI, told Upstream Intelligence.
“Even with new technological applications, operators may still have to form clusters to work on small pools to achieve the economies of scale required to shift them from marginal to economical,” he said.
Halving of costs is achievable
Pools with more than 11.8 MMbbl in resources can be successfully commercialized using existing subsea tieback technology, according to the Aberdeen University-NSRI study. With a 25% reduction in capital and operating expenditure, fields as small as 9.1 MMbbl could be exploited. If costs were cut in half, this would provide access to all fields with more than 5.8 MMbbl in resources. The study estimates that these fields could be developed at a combined $19 billion in capital expenditure and $16 billion in operating expenditure.
Halving current costs may seem a tall order, but some companies have come close to achieving it. Enquest, an independent producer that co-owns the Kittiwake field with Dana Petroleum, has developed the two-well Scolty Crathes project from discoveries north of Kittiwake to access about 7 MMbbl of oil-equivalent in resources from Cromarty sandstone reservoirs. The company has achieved a 40% capex reduction since completing the concept work on Scolty Crathes, mainly by working with its supply chain.
“Being able to deliver these fields economically relies on rapid delivery of standard equipment such as standard valves, valve design, manifold configurations, basic pipelines and umbilicals, coupled with the use of smart technologies, where appropriate,” an Enquest spokesperson told Upstream Intelligence.
The amount of oil extracted from the Crathes well has exceeded predictions, thanks to use of a well-bore tracking tool. This low-risk strategy meant Enquest was able to progress from final investment decision to first oil in one year.
Colin Morrison, Managing Director of Caltec, said that although small fields are frequently not economical on their own, an adjacent mature field can have its life extended by a number of years by using the pressure from the small field. Caltec’s surface jet-pump technology has been used successfully on more than a hundred fields around the world operated by major oil companies.
“Mature fields tend to be surrounded by small fields which were either not discovered initially or were not economic at the time of major field development. If you link the small pool into existing infrastructure they can be very useful and can generate significant returns in a short period of time,” Morrison told Upstream Intelligence.
Caltec’s surface jet-pump technology takes a high-pressure source – a small pool - to boost the low pressure in the mature field, extending its life by a number of years. “The technology is a scalable piece of pipe; it can be in place very quickly and the cost can be as low as £1-2 million ($1.45-2.9 million) if the mature field and the small pool are already linked,” said Morrison.
Four approaches on offer
According to the NSRI, the four approaches with the biggest potential to unlock small, stranded fields are, in no particular order: using the “plug and play” approach, stand-alone mobile units, compact floating production, storage and offloading vessels (FPSOs) and remote production.
“Plug and play” means using standardized equipment to extract oil, rather than customized equipment for specific operators.
Stand-alone mobile units can be moved easily from pool to pool. An asset’s capital cost can be written off against a number of smaller resources that would not be commercially viable on their own. BP was the first operator to implement this approach, but it abandoned the concept because too much time was lost in shuttling the product to the point of sale and because it did not have enough small pools of its own. This technology is reasonably well developed and is offered on a commercial basis, but a new vessel would need to be built and delivery would take two years.
Compact FPSOs work along the same lines as stand-alone mobile units but include on-board oil-and-gas storage. The facilities are not optimized to field conditions but configured to exploit the easy reserves and then move on to a new pool.
Premier Oil is using the remote production approach at its Solan field, for its ability to minimize offshore processing by producing straight to a tanker. This approach does not require continuous production; instead, production takes place only when the tanker is present.
All four approaches are technically feasible, broadly applicable to most of the small pools, and can be put in place reasonably quickly.
Drummond said: “If the subsea industry and academia can rise to the challenge of economically tapping into these pools, the North Sea could have a whole new lease of life.”
By Vanya Dragomanovich