Role of Subsea Players In Deepwater DevelopmentWed, 01/22/2014 - 15:49
Q: What is your perspective on Mexico’s upcoming deepwater development?
A: When comparing these areas to others in terms of development models, there are real opportunities for PEMEX and the government to look at international best practices. There are going to be challenges as each field will pose different characteristics, and deepwater development is still being pioneered. It is up to the government, PEMEX and other operators to look at what the best options are for these fields and apply them. Usually the biggest challenge in deepwater fields is the flow process. For operations off the coasts of Nigeria or Angola, it is economically prohibitive to drill wells and install deepwater subsea infrastructure in a large number of locations. Instead, the common way to maximize production is to have a cluster of wells in one area to ensure good returns from a strong flow. Deepwater prospects will really make a big difference to Mexico’s production capacity. Once the deepwater comes on stream, it will bring the production levels back up due to the expected high production rates of these deepwater wells.
Q: Which technologies and expertise can the UK contribute to Mexico’s subsea market?
A: The subsea industry in the UK has evolved very quickly, leading to us being recognized as the global center of excellence in subsea engineering. The majority of these developments were in shallow water, where drilling was done straight down from platforms before directional drilling allowed more reach into other reservoirs. In other pockets, where mobile rigs were used, the wet tree was developed at a much higher rate and a lot of the tiebacks have been engineered and proven in UK waters. Out of the 5,000 subsea wells in the world, about 800 are in the Gulf of Mexico as compared to about 1,800 in British waters. This experience allowed deepwater production to be exploited since it was done with wet tree tiebacks as well as a lot of other equipment based on British technology.
Growth really boils down to access to a strong workforce and technology, and technology is evolving and changing so fast now that it is essential to find options that are both innovative and reliable. At water depths of 2,000 or 3,000m, it is not easy to intervene or solve problems directly. Deepwater is similar to outer space, where if you put a satellite up into orbit, you cannot simply send someone to fix it or change a fuse. With subsea equipment you have to build in redundancy, resilience, and quality, because you do not want to have to go and fix something. This is why it is so important to look at the available proven technologies to obtain the best results. Some of these reservoirs are quite complex, including heavy oil with high gas and water content. There is some great technology around the world which has helped overcome these challenges, so taking those best practices and putting them together should provide a very good model for Mexico’s deepwater reservoirs.
Q: What overall role will Mexico play in your members’ portfolio?
A: Since Mexico has not yet been operating in deepwater, the country has not been a high priority. As deepwater development takes off, it will open up oportunities for British technology companies to really come into play. Mexico’s move into deeper waters will be aided by international operators, manufacturers, and other companies along the supply chain.
There are four global subsea hubs which have access to technology and development capabilities. The Gulf of Mexico is an important area, driven by activity on the US side, but adding deepwater operations in Mexico would help this area grow significantly. Rio de Janeiro, Brazil, is another important subsea hub because of the extensive deepwater opportunities. The entire North Sea hub, extending from the UK, Norway, and France down to West Africa is another significant operating hub. Going further east, the other hub we work with is Malaysia and Singapore. The Malaysian government is really focusing on developing its oil and gas center as a subsea hub. We are seeing significant investment from manufacturing companies, since it is an attractive place to service the surrounding area including Japan, Vietnam, Papua New Guinea, Indonesia, and Australia. These are the four main subsea hubs that we recognize, and we would like to see Mexico becoming part of the Gulf of Mexico hub in order to capitalize on these opportunities and grow internationally.
Q: What do you expect to be the critical success factors for the future development of subsea technology?
A: The global recovery rate for onshore wells is around 40%, but this falls by 25% for subsea wells. This leaves many opportunities for the development of well intervention technology to increase recovery. Globally, we are still leaving more in the reservoirs than we are taking out, so we must develop the technology to extract these resources. When an operator decides that it has obtained all economically viable production, governments could intervene with fiscal stimulation or tax relief to enable the extraction of another 10% of the reserves. This would allow technology to be developed, so it is evident that governments can take action to stimulate more production. At the end of the day, if further production is not feasible, operators will move on to the next field development. As a result, we are seeing many mid-size operators applying cost-effective production solutions and innovative technologies to these mature fields in order to get additional production from a given reservoir. Conversely, larger companies will probably head to challenging deepwater environments where the risks and rewards are significantly higher. Mexico can help to push the boundaries in terms of harnessing the latest technologies. At the same time, a deep analysis is needed to understand which technologies are successful and which are not. Learning from past mistakes is an important part of technological evolution, and Mexico should make sure it follows this path.