Embracing the deep

Technological advances associated with the thrust into deep and ultradeep  waters have had the side effect of improving long-term project economics in waters of any depth around the world. Modular subsea production systems, intelligent well and pipeline technologies and an array of other innovative engineering and consulting services - all from Norway - have helped offshore producers expand their operating margins and weather the market volatility of recent years. 

Most of the companies featured in this publication are technology companies, whether they offer specific products and services or vast conceptual frameworks. Some are independent research institutions. The basis of their international appeal is knowledge - a knowledge born of three decades of enterprise in their home waters, and only slightly less time in the service of globe-straddling industry giants. They are part of the reason that oceans today are theoretically developable out to 4,000 m in depth. They have conquered iceberg zones and hurricane zones. And they are why many of Planet Earth's environmentally sensitive areas can now be explored and developed in good conscience.

 

In Norwegian waters, the twin motors for excellence are Statoil, the partially privatized Norwegian state oil company, and Norsk Hydro, its mostly private rival.

 

Statoil is responsible for more than 35 percent of crude oil production on the Norwegian continental shelf and currently has no less than six domestic offshore projects under development and scheduled to come on stream in the next two years. Statoil also undertakes operations in two dozen other countries, from South America to Asia.

 

Subsea leader

Since its inception in 1972, Statoil has pushed incessantly for technological innovation. It engineered and deployed such bold development solutions as the sprawling Åsgard installation, which combines a turreted, 258-m production ship for oil and gas condensate with a semisub platform for gas. Its output - boosted by gas reinjection - is derived from more than 50 wells dispersed over an area larger than the five boroughs of New York City. One record-breaking three-dimensional well wends its way almost 7 km to a reservoir 4 km below the surface. The last kilometre of the run is fully horizontal. The floating production/subsea development was costly but worth it, both in terms of operational margins and the expertise banked by everyone involved. Statoil is now a subsea technology leader, with the number of its underwater wellheads approaching 200 - a figure that exceeds the total for every offshore nation except Brazil and Norway itself.

 

Statoil was also recognized recently at the annual European Coiled Tubing and Well Intervention Round Table as the best in the industry in the field of well intervention for its progress in developing techniques to extend field life and increase recovery rates.

 

Its most ambitious undertaking to date is the USD 6.3 billion Snow White gas and condensate development in the Barents Sea. The hydrocarbons there will be lifted to subsea production systems and dispatched untreated through 160 km of subsubsea pipeline, emerging finally at a gas liquefaction plant on land - one of the most daring configurations the industry has seen.

 

The project is the first in Europe dedicated to the export of liquefied natural gas (LNG). Its installations will materialize in stages to exploit three Barents Sea discoveries - Albatross, Askeladd and Snow White -using 22 subsea wells in about 320 metres of water.

 

Snow White is planned to come on stream in 2006, with production estimated to last two decades or more. Technological features of note include:

 

-          the largest subsea production array to be remotely operated from a land facility

-          the longest subsea pipeline transporting unprocessed products to land

-         injection equipment for carbon dioxide sequestration beneath the seabed, an environmental measure first applied on an industrial scale in Statoil's Sleipner field in the North Sea  

 

Many of the goods and services for this visionary project will be supplied by Norwegian companies whose mantra has been that of "value creation" - a theme reiterated earlier this year by Statoil President and CEO Olav Fjell. In a speech made to Norwegian suppliers, he said that no stone should be left unturned in the search for future-oriented, value-maximizing operational solutions.

 

Angola’s gain

Norsk Hydro, for its part, is responsible for 1.3 million barrels a day of production in a dozen Norwegian fields. It has won recognition for its embrace of high technology – including a subsea separation and injection system it developed with ABB – to extract valuable layers of oil awkwardly positioned beneath the Troll gas field. The company’s newest challenge at home is the development of Ormen Lange, the second-largest natural gas field on the Norwegian shelf, located in an area of complex rock formations in water about 1,000 m deep.

 

On the exploration side, in 2002 Norsk Hydro spent more money hunting for oil and gas in distant corners of the world than at home. Among its long-term partners are companies in Angola, Canada, Trinidad, Iran, Libya, the Gulf of Mexico and Russia.

 

In Angola, Norsk Hydro has combined its position as a partner in offshore oil fields with a commitment to educate young Angolans in petroleum engineering. Paying attention to the needs of local populations is a typically Norwegian way of doing business. Statoil is another strong proponent of local ties, as are many of Norway’s large contracting companies.      

 

Both Norwegian oil companies have set their sights on cooperating with Russian energy companies to develop petroleum projects in the Barents Sea, where the harsh climate, deep water and sensitive Arctic environment should make the Norwegians feel right at home. Promising discoveries have been made in both the Norwegian and Russian sectors, and more exploration will follow assuming that environmental concerns are met.

 

From Russia with Love

Such activity was high on the agenda when Russian President Vladimir Putin recently visited Norwegian Prime Minister Kjell Magne Bondevik in Oslo. Mr. Putin said he was pleased by the prospect of close cooperation in the Barents, and he jokingly assured reporters that a ticklish disagreement between the two countries (over where to draw the boundary separating their economic zones) would be resolved amicably before he and the Norwegian leader reached retirement age.

 

Russia is of course a cherished neighbor. But Norwegian engineering and supply companies have positioned themselves to compete in such far-flung deepwater arenas as West Africa, Brazil and the US Gulf of Mexico. 

 

In the Gulf, after extensive environmental and safety reviews, the US Minerals Management Service (MMS) recently approved the use of floating production, storage and offloading units (FPSOs). The FPSO development option is one that Norwegians know well, having pioneered it in the late 1980s and early 1990s. With their long maritime tradition and a head-start on the subsea technology that FPSOs depend on, Norwegian contractors are well positioned to expand their presence in the Gulf.

 

Deepwater plays in the Gulf could by themselves meet US consumption needs for several decades, according to some studies. International Maritime Associates (IMA), a US-based consultancy, reported that 25 percent or more of those deepwater prospects are likely to be exploited by FPSOs or FPSOs deployed in tandem with dry-tree units.

 

There and elsewhere, Norwegian technology powerhouses like Aker Kværner and FMC Kongsberg are set for continued growth. In 2001, the latter delivered its landmark modular subsea production system, HOST 2500, to TotalFinaElf’s Girassol field off Angola. The HOST 2500 is designed for deployment in waters up to 2,500 metres deep.

 

R & D indeed

Institutions like Bergen-based Christian Michelsen Research (CMR) and Marintek, the Norwegian Marine Technology Research Institute, provide the Petri dishes where innovative technology is cultivated.

 

CMR’s activities range from technological research and prototype production to commercialization undertaken in collaboration with its clients and its three subsidiaries, Protech, GexCon and Inside Reality, all of which are owned by the Christian Michelsen Institute and the University of Bergen.

 

MARINTEK, a subsidiary of SINTEF, the largest independent research institute in Norway, undertakes marine technology research and development for offshore structures, marine vehicles, systems and machinery together with logistics and technical operations. The organization uses its modern indoor ocean basin combined with advanced numerical simulations to help determine the integrity of such structures as platforms, risers and pipelines.

 

Among the activities undertaken by Tromso-based Akvaplan-niva are environmental impact risk assessments for offshore drilling, pipelines, and decommissioning. The company has designed domestic guidelines for offshore monitoring.

 

When singing the praises of technological achievements in Norway’s offshore industry, it’s easy to overlook the nuts-and-bolts companies whose products keep the oil flowing. A few of them are:

 

-          Arendal-based Advanced Production and Loading (APL), which has developed a wide range of turret mooring products. Its submerged turret loading (STL) system represents the state of the art in offshore loading technology.

-         Bergen’s Rørhandel, founded in 1933 and active in the offshore industry for 23 years, is a leading supplier of pipes, fittings, flanges and high-pressure pipe connectors and valves. Ten of its 43 domestic branches specialize in offshore and shipbuilding materials, while international expansion extends to the Middle East and Far East markets.

-          Det Norske Veritas (DNV), established in 1864, mainly to serve Norway’s shipping industry, provides classification, certification and consulting services to the offshore industry from its 300 offices in 100 countries.

-          Providing financial muscle for the export of Norwegian goods and services is Eksportfinans, the export credit agency, which raises competitive funds as a result of its strong foothold in international capital markets. Financing is based on guarantees from GIEK, the Guarantee Institute for Export Credits, and/or prime Norwegian and international banks.

 

Each in its own way, the several dozen companies profiled in this magazine are helping to boost the profitability of the oil and gas industry. Each page reveals a different industrial niche and an expert to fill it. 

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