Important Marginal Production Demands Innovative Technology

Abstract: When demand made it attractive for Shell-Esso to develop North Sea gas reserves once considered economic, they took a page from the independents' workbook and produced a new production platform--one that could see use elsewhere in the world.

Analysis: The prospects for developing offshore natural gas resources, particularly in the Gulf of Mexico, off Eastern Canada, and in the North Sea, have taken on even more importance in the last few months. With ever-rising gas prices that probably will never return even close to the $2/mcf level, offshore operators--particularly independents--have set out with a vengeance to develop both proved and prospective offshore gas.

In addition to exploring for undiscovered reserves in deepwater, operators also are paying considerable interest to discoveries made in shallower water--sometimes years ago, at which time they were considered uneconomic.

In recent years, industry conferences and the trade press have given a lot of attention to such reserves. The largest offshore get-together, the Offshore Technology Conference, has focused a fair amount of attention on them, even though most new offshore technology development discussed and exhibited at OTC has addressed finding and developing the deepwater stuff.

So-called "marginal" properties are now even generating their own industry gatherings. One such confab, for instance--a two-day affair titled, "Offshore Marginal Field Development: Prospects and Potential," sponsored by the Strategic Research Institute, starts tomorrow in Houston.

The renewed development of many of these shallow-water reserves is being undertaken by smaller companies, most of whom seem able to cut development costs to the point that even minor product price hikes translate into significant profits. That's particularly true today. However, even though most have concentrated their E&P expertise and capital on the high-ticket deepwater market, major companies have not ignored marginal reserves altogether.

In the North Sea, for instance, Shell U.K. Exploration and Production (Shell Expro) and its oft-times partner, ExxonMobil subsidiary Esso Exploration, are developing a number of natural gas discoveries made earlier in the southern portion of the U.K. sector of the North Sea--the area from which all North Sea oil and gas development sprung back in the 1960s.

And they're doing it for far less money.

In many cases, Shell Expro and Esso discovered such marginal gas in this heavily drilled area in the 1960s and early 1970s, but didn't develop them until the 1990s and early 2000s. Gas demand--and price--was not sufficient to do so. However, with Great Britain's commitment over the last 20 years or so to replace coal with natural gas as its industrial and home heating fuel of choice, development of some of those early offshore discoveries finally made economic sense. Numbered among them is a series of shallow-water, medium-depth discoveries that Expro, as operator, named after types of sailing ships. These included fields like the Galleon and Clipper complexes, which were developed in the 1990s. Later, however, the Brigantine and Skiff discoveries, made in the 1960s, were developed (in 2000-2001), adding much-needed throughput into the British gas grid. Additional discoveries, including the nearby Carrack field, are being readied for production later this year.

Generally, these fields lie in the 100-200 ft (40-46 m) water depth range. All have nearby access to existing offshore compression facilities and gathering and transmission pipelines to shore, thanks to previous development of larger southern area fields.

But to develop them profitably, Shell Expro and Esso had to lift a page or two from the independents' workbook--at least, in terms of adopting new ways to hold down costs and develop target reservoirs to their fullest.

One way to help guarantee lower development costs was in the offshore hardware employed. The North Sea area, in general, is considered one of the stormiest, most hostile offshore environments on the planet, and for the most part, North Sea production facilities are designed to withstand the highest wind and wave criteria. Therefore, facilities are extremely expensive. In its southern reaches, however, North Sea storms are generally less severe; therefore, smaller production facilities can be considered.

But conventional platform design, which entails a heavy steel jacket fixed to the seafloor with piles and a separate deck section to support wells, adds a lot to development costs, even in shallow water, particularly since they must be installed with expensive floating derrick barge equipment. So, Shell Expro engineers reconsidered what was necessary. The result was a new multi-well, normally unmanned platform that borrows from the basic concept of another type used extensively in the Gulf of Mexico and in Southeast Asian waters for single-well installations. Shell calls it their Trident platform.

The Trident design uses the wells themselves as the platform's foundation, eliminating the need for separate piled foundations. This cuts construction cost to about half that of conventional fixed platforms. The reduced weight means that the mobile rig that drills its wells also can install the platform itself (in the case of the Skiff field, installed in April 2000, this was a cantilever jackup). Shell says that at the water depths involved, this installation method can save as much as $3.3 million (2 million U.K. pounds) by eliminating the need for derrick barge equipment.

In addition to being one-half to one-third smaller and lighter than conventional equipment, the Trident is less complicated and fitted with only essential facilities. The company says it generated "huge" savings by using boats and ladders for platform access, rather than helicopters. The Trident has no helideck, whose added weight, bracing, and horizontal extension normally would require use of a derrick barge for platform installation.

Apparently, Shell Expro has installed two Trident platforms so far, one at Skiff and the other at nearby Brigantine, both located about 62 miles (100 km) from Bacton, a major U.K. gas terminal on the north Norfolk coast. While no reservoir information was available on the Skiff field, Shell has indicated that the Brigantine reservoir cluster overlies estimated reserves of about 280 Bcf of gas and is now producing at a rate of about 130 Mcf/d. Estimated total cost for the Brigantine project was about $245 million (150 million British pounds). With conventional production facilities, the cost could have been much higher, perhaps even twice that amount.

However, downhole technology also contributes to the overall economics here. The wells whose conductor pipes serve as the platforms' foundations are slimhole, extended-reach horizontal producers, several with multilaterals. A large portion of each well was drilled underbalanced to protect producing formation intervals. Additionally, the operator installed a 7,000-ft. string of 4-in. expandable sand screen (ESS) in one well and 4,000 ft in another from the Brigantine field platform, setting world records at the time (October 2002 and March 2001) for ESS installations in 6-in. horizontal hole. These and other leading-edge completion techniques help to improve gas recovery over the lives of such wells, and would be used in other area wells, where possible.

Industry sources say more Trident installations are planned for other shallow-water, "ship" type of gas discoveries in the southern North Sea. The company recently elected to develop its Carrack discovery in the same general area, but farther offshore, near the Dutch sector. Carrack, with estimated recoverable reserves of 300 Bcf, will be developed using the central "hub" platform concept, with a large, conventional platform in place. Trident platforms reportedly could be used in future development of satellite fields in the Carrack area.

The Trident platform, which borrows from existing technology elsewhere but which was totally new to the North Sea, received the British Government Construction Industry Civil Engineering Award in 2000, recognizing its novel design and drilling rig installation method.

This all goes to show that when challenged with delivering oil and gas from reserves once thought marginal, the offshore petroleum industry usually comes up with a viable solution. No doubt, the "Trident" type of platform technology will be improved upon by Shell Expro and others, and perhaps transferred to other areas--perhaps to the Gulf of Mexico and even to waters off Eastern Canada--to bring both oil and natural gas to markets.