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Improving Offshore Production Whitepaper

Benefit from a short whitepaper which reviews two recent presentations by senior representatives at EnQuest and Wintershall. The whitepaper looks at their approaches towards improving production efficiencies regarding their North Sea interests.

The report shares critical insight, including:

- A review of EnQuest’s production optimisation model currently being used in the North Sea to improve current operations
- A look at the planning that is going into extending the lifetime of Brage and how Wintershall are taking steps towards improving production
- Future considerations and development plans for EnQuest and Wintershall within the North Sea

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Improving Offshore Production Whitepaper

  1. 1. IMPROVING OFFSHORE PRODUCTION By Offshore Network Disclaimer: Whilst every effort has been made to ensure the accuracy of the information contained in this publication, neither Offshore Network Ltd nor any of its affiliates past, present or future warrants its accuracy or will, regardless of its or their negligence, assume liability for any foreseeable or unforeseeable use made thereof, which liability is hereby excluded. Consequently, such use is at the recipient’s own risk on the basis that any use by the recipient constitutes agreement to the terms of this disclaimer. The recipient is obliged to inform any subsequent recipient of such terms. Any reproduction, distribution or public use of this report requires prior written permission from Offshore Network Ltd.
  2. 2. IMPROVING OFFSHORE PRODUCTION The average recovery rate of hydrocarbons within the North Sea currently stands at approximately 66% with 34% or reserves being unrecovered. According to the Department of Energy & Climate Change (DECC 2014), total oil production from offshore fields in the North Sea between 1975 to 2013 stood at 3.32 billion metric tonnes (MT) - this means that approximately 2.21 billion (MT) of oil remained unrecovered in offshore reservoirs. This figure represents a substantial economic loss, which compounded by a general decline in remaining conventional reserves, increased environmental awareness and adverse international geopolitical events, has incited stakeholders in the upstream oil and gas sector to seek methods of optimising production processes. The Offshore Production Optimisation Conference (OPO 2014) in November 2014 brought together operators, service companies’ and production experts to analyse the past, present and future developments of optimisation processes involved in offshore hydrocarbon production. The scope of topics presented were not limited to engineering disciplines associated with reservoirs and production facilities, but also included presentations on the global financial perspective as well as an emphasis on the significance of hydrodynamic reservoir support, research and development and adaptation of existing technologies such as computational fluid dynamics for use in optimisation procedures. This document will outline presentations given by two North Sea operators and covers the challenges that they faced and the solutions they used to overcome these issues. The presentations reviewed are: 1. Optimising Production in the North Sea: An Operators Perspective: Neil McCulloch, President, North Sea, EnQuest 2. Brage Case Study Planning For The Future: Alv Bjørn Solheim, Technical Director and Deputy Managing Director, Wintershall For any queries regarding this whitepaper, please feel free to drop me an email: Dean Murphy Director | Offshore Network Ltd. t: +44 (0) 203 468 9461 e: dmurphy@offsnet.com
  3. 3. PAGE 3Offshore Network Limited, Registered in England and Wales, Company Registered Number 8702032 Optimising Production in the North Sea: An Operators Perspective: Neil McCulloch, President, North Sea, EnQuest The Wood Review The UKCS Maximising Economic Recovery Review by Sir Ian Wood published in 2014 widely referred to as the Wood Review was used as reference to highlight the challenges associated with producing the remaining 10 -24 billion barrels of oil reserves remaining within the North Sea. It was noted that production optimisation is an end result of collaboration between three major parties; 1. Government 2. Operators 3. Supply Chain As a result, optimisation would be a difficult endeavour to achieve if the current operating relationships between these parties remained unaltered as it had the potential to result in the prolific squandering of reserves and the possible abandonment of remaining North Sea infrastructure prematurely hence resulting in the inevitable loss of recoverable reserves. Based on the premise of achieving optimisation EnQuest pledged its support for the guidance offered in the Wood Review and added that industry needed to work together to achieve the following: Government Operators Suppliers Bring certainty Working collaboratively Quality Reduce complexity Assets in the right hands Improve efficiency/ reduce waste Stimulate investment Access to infastructure Lower marginal costs Recommendations to achieve production optimisation (Enquest 2014)
  4. 4. PAGE 4Offshore Network Limited, Registered in England and Wales, Company Registered Number 8702032 A Production Optimisation Model The results of the 2013 operator efficiency study conducted by the UK North Sea Production Efficiency Task Force placed EnQuest within the upper quartile of all operators in the region with a production efficiency of greater than 80%. EnQuest were able to achieve this milestone despite the following challenges: • Difficulties in the acquisition or use of existing infrastructure and other transportation facilities • Increasing operational expenditure • Operating mature assets within fields with high water cuts • Increasing reserve to production expenditures These challenges meant that EnQuest had to develop a methodology to stabilise operational expenditure whilst simultaneously boosting brownfield production. This was accomplished as follows: Asset transfer Invest Capital Expenditure Modify and Simplify operational processes Removal of bad actors from the supply chain Focus on utilisation and development of inhouse expertise The model shown above represents EnQuest’s belief in asset transfer where facilities such as production platforms with declining production efficiencies could be transferred to other operators. This would allow other oil companies who are able to invest capital and optimise production rates through the simplification of processes, removal of bad actors in the supply chain and the utilization and development of in-house expertise to execute project works effectively.
  5. 5. PAGE 5Offshore Network Limited, Registered in England and Wales, Company Registered Number 8702032 EnQuest Case Study An example where EnQuest’s optimisation model was successfully applied was given as the Thistle production platform, which was commissioned in 1978. On initiation of the late life extension project, Thistle was producing 3000 barrels of oil per day (bopd). By applying the EnQuest optimisation model, production was increased to daily peaks of 18,000 barrels and in the first half of 2014 stood at an average of approximately 10,000 bopd with a production efficiency of 84%. This is a fantastic achievement. Future Considerations Following the presentation, EnQuest urged operators to adopt the “My Industry” rather than “My Company” approach to operations. This was proposed as a means of solving many challenges faced by operators in the North Sea especially as it assured improvements between operator to operator and operator to supply chain relationships. In addition, EnQuest also suggested that Governments should stop chasing unrealistic windfalls and agree to sustainable profit margins for operators within the North Sea region. The results of these measures would not only allow production optimisation to be achieved but also ensure that the remaining North Sea reserves are produced and the corresponding economic value acquired.
  6. 6. PAGE 6Offshore Network Limited, Registered in England and Wales, Company Registered Number 8702032 Brage Case Study Planning For The Future: Alv Bjørn Solheim, Technical Director and Deputy Managing Director, Wintershall Brage Acquisition Process Wintershall, established in the oil and gas business since 1930, is one of the largest oil producers in Germany. Within the last decade Wintershall has begun to expand operations into the Norwegian sector of the UKCS oil reserves via the acquisition of Revus Energy in 2008. Since then, Wintershall has expanded economically by embarking on a series of licence agreements, asset based acquisitions and joint ventures primarily with Statoil. This was done in order to achieve the following objectives: • Diversification and establishment of operations within the Norwegian energy sector • Increase profitability of acquired assets via production optimisation processes • Enhance in-house expertise in the areas of deep water hydrocarbon production and advanced subsea systems Moby Dick Initiated May 2011 Agree Scope Project Kick Off Asset Reports Operatorship Requirements Execute SPA’s Pegasus Initiated April 2012 Data Rooms Operatorship Discussions Bid Completion Wintershall Operator Systematic approach to Brage acquisition (Wintershall 2014) The above infographic outlines recent steps taken by Wintershall to acquire the Brage offshore platform and field license in 2013. The Brage platform was commissioned in 1993 and has a production capacity of 120,000 bopd with current production rates standing at 11,000 bopd. Future post life extension initiatives on the Brage platform and field is expected to maintain oil production up to the year 2030 with forecasted rates sitting at a high of 20,000 bopd with 15,000 bopd being the median long term production target.
  7. 7. PAGE 7Offshore Network Limited, Registered in England and Wales, Company Registered Number 8702032 Wintershall Optimisation Approach Brage Facilities In order to optimise production rates from Brage, Wintershall spoke about a number of proposed activities they had in place in order to do this: • Invest capital expenditure on corrosion inhibition and insulation upgrade exercises • Replace process control systems and upgrade production technology • Use additional template and subsea tie back systems to produce oil deposits beyond the current 8400m platform drilling limit Brage Field Wintershall are currently conducting research and development activities into a biopolymer that is capable of effectively increasing the extraction of oil from high temperature, high salinity reservoirs. Field test are currently being conducted in onshore wells in Germany Bockstedt and are yielding positive results. However some difficulty is envisioned with respect to offshore applications in terms of transportation of the biopolymer from manufacturing locations onshore to the wells. Research is still continuing in this area of reservoir production optimisation and several options including manufacturing the biopolymer in a powder form for offshore use is being examined. Challenges to the Optimisation Process The facilities upgrade procedure presented by Wintershall was challenged with respect to the fact that during the planned upgrades to Brage production platform, no mention was made of process simplification, considering that the initial process design catered for maximum production rates of 120,000 bopd whereas projected rates stood at a maximum of 20,000 bopd. Feedback given was that Wintershall’s focus fell within two categories: 1. Maximise Production 2. Increase control over cost With respect to cost control, priority was said to be given to the review and revision of maintenance systems aboard the Brage production platform, and alternate measures pertaining to the process may be considered at a later stage. Future Development Plans With respect to future development plans, Wintershall expressed interest in partnering with companies that would add value to their assets and help contribute to the enhancement of expertise between operators.
  8. 8. PAGE 8Offshore Network Limited, Registered in England and Wales, Company Registered Number 8702032 Offshore Network Ltd. is an independent business intelligence & conference provider catering specifically to the offshore oil & gas industry. We exist to facilitate a safe and efficient future for the exploration and production of oil & gas around the globe. We do this by uniting the most influential figures in the industry to challenge the status quo and share cutting edge innovations. This all happens at our industry leading conferences and through our original content. If you would like to contribute to this discussion or are interested in taking part in a future Q&A or article, please contact Offshore Network (www.offsnet.com) today: info@offsnet.com UK Telephone: (0)203 411 9937 US Telephone: 713-5706-576 Join the Offshore Engineering Group on LinkedIn Follow Offshore Network on Twitter OFFSHORE NETWORK WOULD LOVE TO HEAR FROM YOU… http://productioneu.offsnetevents.com/keynote-presentations-from-opo-2014.html ACCESS BOTH OF THESE PRESENTATIONS ONLINE AT: - we’d be really interested to get your thoughts.

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