Could Existing Subsea Wells Be A Substitute For New Well Drilling Amid Low Oil Prices? #sponsorcontent

By 9th December 2015 Industry News No Comments

This post is sponsored by Lloyd’s Register Energy.

Subsea well intervention is a particularly hot topic right now. While in the long-term, operators will need to invest in new offshore E&P to offset declining production, in the short- and medium-term low oil prices have operators reducing new drilling and scrambling to make existing well portfolios more profitable. Thus, enhancing production from existing subsea wells can act as substitute for new well drilling for operators looking to curb new investment.

Oilpro spoke with Ricky Eaton, SME Intervention for Lloyd’s Register Energy, who explains subsea well intervention in light of the current market downturn. A key takeaway for us was that while intervention can never replace new drilling, its importance is growing as more operators look for ways to meet production targets without drilling new wells.

A Growing Market

By 2017 the subsea well intervention market in the Gulf of Mexico could be a $13 billion business. Growth is also forecast for the North Sea market, given the uptick of decommissioning work in the region.

Some of the primary demand drivers for subsea intervention include conducting maintenance on existing wells when production has been interrupted to increase the extraction rate and increasing ultimate recovery. The decommissioning of idle iron also provides a steady and growing base for intervention services.

Photo: “Subsea Well Intervention,” Presentation by Casey Kavanaugh, Workover/Decommissioning Coordinator, October 14, 2014

Ricky Eaton said a big reason why subsea intervention is one of the few growth markets in O&G today is that production targets remain in place regardless of low prices. Tt’s much more feasible to do ultimate recovery on existing wells rather than bringing in a full blown operation to drill new wells.

And as the industry has moved further into deepwater in recent years, the number of subsea wells has risen accordingly. With this increase, the demand for intervention has also increased, because these wells need intervention work on the average after 5 years of production. This is mainly due to reduced pressure in wells, scaling in wells, increased water or sand production, and other factors.

Increased Regulatory Scrutiny

As the subsea well intervention market is currently one of the few growth areas in O&G and also high-risk if approached recklessly, it is “on the front-burner from a regulation standpoint,” Eaton says. Though BSEE has not yet released anything in a state of an NTL, regulators have made it clear to operators that if they are going to use an intervention BOP, they still require independent third party verification.

Each of the three types of well intervention- 1) decommissioning idle iron, 2) conducting maintenance on existing wells, and 3) increasing ultimate recovery are regulated by BSEE. As new technologies develop to meet production and recovery targets on smaller budgets because of market conditions, regulators are responding with more requirements.

Eaton pointed out that BSEE considers the intervention BOP as a rig-based BOP. However, the two BOPs differ significantly. From an operational standpoint, Eaton said, rig-based BOPs are all a similar design. However, intervention BOPs can be anywhere from a three-inch system to a seven-inch system. “They’re normally designed for the well that they’re working over in most cases.” In short, these well intervention units are any non-rig BOP subsea operation that uses riser or riserless technology to conduct well work.

Photo: “Subsea Well Intervention,” Presentation by Casey Kavanaugh, Workover/Decommissioning Coordinator, October 14, 2014

Regulations stipulate that these “units are being reviewed in accordance with the subsea BOP regulations as much as possible.” [Italics added] It is this qualifier, Eaton says, that makes “having the intervention knowledge to be able to distinguish what’s relevant and not relevant comes into play.”

Lloyds Register Energy specializes in such knowledge, and thus is a leading provider of the independent third party verification required by BSEE for operators.

Lloyd’s Is Not A Video Camera, But An Armed Guard

As revisiting existing subsea well inventories grows more important, and as increased regulatory scrutiny is being applied to this space, the demand for BSEE-required independent third part verification has likewise increased.

A third party must verify that the intervention unit is designed for the specific equipment on the rig and for the specific well design, and has not been compromised or damaged from previous services. It must also establish that the unit will operate in the condition in which it will be used. “This is what BSEE requires for operators to be able to open up the well…This is what drives Lloyd’s Register Energy on the BOP side as well…Targeting the intervention market with experts is one of our specialties,” Eaton said.

Lloyds Register Energy uses its technical expertise to produce a checklist for each piece of equipment. Eaton noted that while his expert team’s opinions are part of the verification process, Lloyds Register Energy, from a compatibility standpoint, stays within the CFRs (Code of Federal Regulations). “Our opinions are part of the process, but it’s not the show-stopper…We’re not going to let opinions hold up the process…We’re going to use a practical methodology to keep the projects running.”

“We’re not a video camera to watch things happen and report back…We’re more of an armed guard that takes a very proactive approach to keep things from happening that could cause downtime,” Eaton said.

This post is sponsored by Lloyd’s Register Energy. To learn more about Oilpro sponsored content, click here.