American Oil and Gas Reporter - June 2019 - 117

SpecialReport: Offshore & Subsea Update

Modularity Key To New Subsea Model
By Graham Gillies
and John Kerr
HOUSTON-Investments in offshore
projects have been slowly, but convincingly, rising as operators effectively have
driven down the so-called break-even
price on offshore field developments by
simplifying and scaling down project designs and standardizing equipment.
Contractors also are learning to prosper
offshore, offering services and equipment
designed to optimize production, facilitate
proactive maintenance and extend field
life. This "life-of-field" (LOF) approach
represents a significant departure from
traditional offshore project management
models and ensures operators better returns
on their investments and protection from
inevitable-and sometimes drastic-commodity price fluctuations.
Traditionally, the upstream oil industry
has been transactional, reacting to price
and activity cycles by making unsustainable changes in how the various sectors
of the industry interact. For the past 20
years, the industry has had to live from
one cycle to the next, during which geopolitical changes in the global economy
strongly have influenced oil prices for
relatively short times. Events, such as an
oversupply of oil, typically impacted
prices for 6-12 months and caused operators to reduce offshore drilling and
project development until oil supply and
demand rebalanced.
However, when oil prices began collapsing in late 2014, it signaled a total
industry "reset," rather than the start of
another short-term cycle, particularly for
the offshore sector. The low prices (and
corresponding low activity levels) were
"lower for longer," meaning the cost of
maintaining oil and gas infrastructure
had to adjust because of the changing
geopolitical environment and the rapid
growth in U.S. shale oil and gas production, which had upended global markets.
To be successful in this new environment, the upstream industry had to learn
to deliver projects at a break-even price
that was 30 percent lower than it was before the price collapse. To achieve these
goals, service companies and operators
were forced to revisit the fundamental
execution models and technologies that
made projects viable. All sectors of the
industry had to change how they interacted

with the supply chain and work in a
much more collaborative and integrated
manner. Moreover, new business models
had to ensure a sustainable and optimized
financial outcome for everyone involved,
positively impact world economies and
jobs, and create a secure energy supply.
The LOF concept was developed to
help operators achieve all these objectives.
It not only introduces a new way of managing
offshore projects, but a new way of thinking
about and working cooperatively with
service contractors and equipment suppliers.
By adopting this approach, operators can
improve efficiency, reduce costs, increase
ultimate recoveries, optimize health, safety
and environmental performance, and drive
greater value to the bottom line throughout
an offshore asset's full life cycle.
Four Pillars
From the service and equipment supplier's perspective, the LOF system is
built on four basic pillars:
· Connect and partner early with the
operator to better understand and optimize
the total cost of ownership (TOTEX);
· Deliver integrated technology from
the subsea to the surface that meets the
project's specific LOF technical requirements;

· Provide flexible commercial partnerships and collaboration to deliver the
project economics; and
· Utilize digitally enabled technology
to allow real-time data management, diagnostics and full life cycle field management.
Early engagement and collaboration
with the operator changes the project development process from one that is based
on transactional engagement delivering
individual products that aim to resolve
narrow short-term goals, to one that
creates operator-service company partnerships to assess how field conditions
change with time from the point of a
project's initial inception all the way to
field abandonment. Besides implementing
collaborative workflows, the approach is
driven by the need to design standardized,
yet flexible and fit-for-purpose technologies that can be simply and inexpensively
adapted over time to fit changing well
and reservoir conditions as a field ages.
To design offshore projects based on
an LOF/TOTEX approach, the industry
must examine the longstanding rulesbased logic and behaviors that have driven
its approach to technology design. Questioning traditional beliefs and changing
basic design assumptions allow engineers

Modular and reconfigurable
subsea equipment is designed
to reduce total ownership
costs and maximize flexibility
over the life of a field by allowing operators to quickly and
inexpensively change primary
components such as trees as
frequently as every two years
if necessary as production
profiles and reservoir pressures change.

JUNE 2019 117
American Oil and Gas Reporter - June 2019

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