Innovation and pioneering spirit
are concepts which quickly spring to mind whichever way you consider
the Captain field development. One of a new generation of heavy
crudes to be produced from the North Sea, Captain's success
has only been made possible by turning conventional thinking completely
on its head.
At an SPE dinner meeting last month
in London, Captain field development manager Shah Etebar explained
how a field discovered in 1977 moved from being an unattractive
prospect to the top of Texaco's North Sea portfolio by
the triple drivers of new technology, a reorganisation of the
project team and a fresh approach to the development strategy.
It was clear from the outset that
economical extraction of the viscous (88 cp), heavy (20°API),
low GOR (130 scf/bbl) crude oil from a shallow reservoir (3000
ft) in unconsolidated sand and with a large areal extent (10 km
x 4 km) would present a big challenge. The lack of existing infrastructure
in the vicinity of Captain's location in block 13/22a,
some 80 miles north east of Aberdeen, was a further drawback.
Said Shah: "Using conventional
methods we would have needed in excess of 300 wells drilled from
over ten drilling centres. The low crude mobility allows for water
break through during the early stages of production, thereby reducing
overall oil recovery and increasing the requirement for water
handling, and the stable emulsions formed necessitate site specific
separation facilities. In addition, the relatively high naphthenic
acid content (2.5 mg KOH/g) of the oil presented a marketing issue
at the time to refiners without the appropriate process facilities
in place."
It is not surprising therefore that
there was a 12-year gap between the discovery of Captain and drilling
of the first appraisal well. From there the project progressed
more positively. Following the formation of the Captain team in
1992, a ten well appraisal programme was completed in 1993, including
extended well tests, in parallel with topsides definition engineering.
In December 1994 the development contract was awarded, project
sanction was achieved and detailed engineering started. In January
1995, the UK government sanctioned field development and first
oil is due in December this year. A second area of the field is
planned to be brought on stream by the end of the century.
Peak production of 60,000 barrels
a day is expected to be maintained for the first seven years of
Captain's estimated 20-year life. This production rate
could potentially be increased to 100,000 barrels a day. Recoverable
reserves are estimated to be in excess of 300 million barrels.
So how did Texaco turn Captain around?
A Texaco North Sea UK company upstream
reorganisation during 1992 implemented sweeping changes in the
way projects were to be developed. Multi-discipline teams in a
new "asset development" structure were charged with
the task of bringing existing assets into commercial reality as
quickly as possible while adding significant value to the company.
The small, hand-picked, multi-skilled
Captain team was designated as a business unit with the authority
and responsibility for making its own decisions. The team comprised
only seven people: senior reservoir engineer, reservoir engineer,
geologist, geophysicist, facilities engineer, process engineer
and a prospect manager.
The first task of the Captain team
was to formulate a field development strategy knowing that conventional
thinking and methods would yield unsatisfactory results.
The team determined that the Captain
field could be developed if 6000 ft long horizontal wells could
be drilled and completed in the shallow unconsolidated reservoir.
This way, the number of wells and drilling centres could be reduced
significantly. A parallel appraisal and engineering programme
was devised to put this strategy into action and it reduced the
development cycle time by around two years.
In April 1993 a 6000 ft horizontal
section well was successfully drilled and completed from the John
Shaw semi-submersible rig and tested for a period of 90 days.
Production rates in excess of 11,000 bopd were achieved through
a purpose-built processing system and exported to an adjacent
tanker. A further nine appraisal wells provided vital information
to help determine the boundary of the reservoir and the quantity
of oil in place.
"Although Captain was recognised
as a difficult reservoir and data collection and analysis acknowledged
as essential to mitigate risk, the sense of urgency in moving
forward and achieving business results was always present,"
Shah said.
In parallel with the reservoir appraisal
programme, Texaco embarked on an unconventional contractor selection
process. As a basis for contractor selection and eventual production,
a staged development was planned in order to minimise initial
capital investment. This was because of the requirement for at
least two drilling centres to develop and produce all currently
proven hydrocarbons. The initial development area covers the western
sector of the Captain field and will contain all processing and
export facilities.
These facilities consist of a wellhead
platform connected by subsea pipelines to a floating production,
storage and offloading (FPSO) vessel with 550,000 barrels'
capacity, from which export quality crude will be offloaded by
shuttle tanker for shipment to international markets.
Seven horizontal wells have been
pre-drilled through a template with a semi-submersible rig and
will be tied back prior to final hook-up and commissioning of
the production facilities on the FPSO. There will be five production
wells, one water source well and one water injector. Full plateau
production will be possible from the outset, thus improving the
project economics. Electric submersible pumps are being used to
optimise production.
From the beginning, the Captain team
adopted an "alliance" style approach to the contract
for the facilities, which was designed to align the aims of the
contractor with those of Texaco. Instead of requesting bids based
upon a single development scenario, Texaco invited contractors
to propose schemes based simply on a functional specification.
The contracting strategy was based
on the following premises:
"The three short-listed contractors
were asked to undertake certain funded layout and design studies
with the aim of firming up all parts of their proposals,"
Shah noted. The proposal submitted by ABB Lummus Global, Coflexip
Stena, Astano and UiE was the one finally selected. ABB was responsible
for the design, procurement and project management; Coflexip Stena
for the offshore installation and hook-up; Astano in Spain for
the FPSO; and UiE for the fabrication of the wellhead protection
platform.
The goals of the contractors were
aligned with Texaco's by the principle of shared risk and
reward through a "target price" mechanism. The target
price itself comprises three main elements:
All the costs were declared at the
bid stage and were clarified and agreed with Texaco. When the
project is completed below the target price, the joint venture
partners and Texaco will share the savings and the joint venture
will also keep the fixed profit amount. If the project is completed
at the target price, the joint venture will retain the fixed profit
element only. Should the final price exceed the target price,
then the excess cost is shared on the same percentage basis between
the joint venture and Texaco. This situation is limited by a fixed
amount, the total of which is termed the "cap price",
after which Texaco will pay 100 per cent of the costs incurred
without profit accruing to the joint venture.
The value of the difference between
the target and cap prices is set such that the majority of the
fixed profit element is lost by the joint venture partners if
they reach the cap price. There is also a risk and reward scheme
for meeting the schedule completion date. Added Shah: "There
is, therefore, alignment between all members of the project since
all have an incentive to minimise expenditure in all areas and
bring the field on stream as early as possible. This philosophy
has allowed Texaco to use a very small team (never over 40) to
manage the Captain project as compared to a typical large offshore
development team."
Summing up, Shah reflected that despite
difficult circumstances it has been possible to bring the Captain
field to the brink of production through an innovative approach
to field development, utilising individual excellence and expertise,
sound management, dedication, openness, effective communication,
team work and good cost control and financial reporting.
The experiences gained working on
Captain and the lessons learned are already being applied successfully
to other Texaco - and indeed industry - projects
around the world.
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