THE GROWING MARKET for small and marginal field projects in remote areas requires innovative technology and unique solutions. The Argus AZ-10 combines these traits in a new subsea tree that is ideal for the operator who faces remote, marginal fields that require improved net present value (NPV) by accelerating production and lowering capital expenditure. In such fields, technology must focus on enabling hardware to bring the fields on with the ease of a plug-and-play system.p style="margin-bottom: 0cm;">THE GROWING MARKET for small and marginal field projects in remote areas requires innovative technology and unique solutions. The Argus AZ-10 combines these traits in a new subsea tree that is ideal for the operator who faces remote, marginal fields that require improved net present value (NPV) by accelerating production and lowering capital expenditure. In such fields, technology must focus on enabling hardware to bring the fields on with the ease of a plug-and-play system.
Argus Subsea has spent four years developing the AZ-10 subsea tree system. These years were spent in design and testing to hit specific technical and operational targets. The object was not just to release another subsea tree to market, but to bring enabling technology to bear on a series of complicated development issues, including:
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Optimize the operations cost and lower risk.
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Significantly reduce infrastructure requirements.
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Improve reliability of the subsea tree system over current industry offerings.
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Significantly cut equipment costs.
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Reduce third-party interfaces.
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Reduce third-party personnel and equipment.
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Significantly reduce operator engineering management of hardware interfaces.
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Lower project interface risk.
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Lower the overall project cost and schedule.
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Utilize standard oilfield components and methods.
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Improve NPV of the development.
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Corporate management focuses on capital and rate of return
When evaluating the viability of a project, oil industry executives are driven by two critical metrics: project cash requirements and NPV calculations. In simple terms, they authorize the project costs based on the revenue stream and schedule for first oil or gas.
Integrated and non-integrated oil and gas companies work from project profitability models involving NPV modeling. Execution of these basic metrics is essential to project profitability and funding. Keeping profit growth positive allows access to future capital. This is the model for large and small oil and gas companies alike. This principle drives major oil and gas companies to opt for larger reserves and pass over smaller fields, creating a niche for non-integrated companies that are interested in capitalizing on smaller fields.
Engineering teams focus on development
Engineering departments in oil companies are responsible for the design and execution of these requirements. These departments generally consist of drilling, production and facilities personnel. If the team is to properly execute within budget, then hardware and schedule are key drivers. Argus has developed a streamlined, simple, plug-and-play system that reduces risks, infrastructure, cost and schedule. This is generally where the picture became clouded in the past for the execution team. What equipment is available to meet targets set by management for the project to be sanctioned? In the past the options were few.
Argus designed the AZ-10 system to be deployed from any drilling rig in the market from second-generation through sixth-generation semi-submersibles or drill ships. Weight and size are critical issues in rig selection and availability. The AZ-10 subsea tree was designed to weigh 50 percent less when compared to a typical (HXT) horizontal subsea tree. This feature, in addition to a small envelope size, allows the AZ-10 to be picked up by port side cranes and moved with ease to the moon pool area. The size of the AZ-10 allows the tree to be run through the same moon pool as the BOP stack. This feature allows the team to select the lowest cost drilling rig option available to drill and complete the well. This eliminates the need for dynamic positioned boats with heave compensated winches for setting subsea trees. This is another step in optimizing processes and hardware to reduce cost and interface management.
With drilling rigs costs running from $225,000 per day for a second-generation rig to $600,000 per day for a sixth-generation, the rig’s efficient utilization is of the highest importance to project cost. The AZ-10 was developed to reduce infrastructure cost. The typical industry Horizontal X-mas Tree (HXT) requires 35 tools to install the system. If a project is in a remote area, this means an operator may have to handle 70 tools to have a back up set. The entire suite of tools required to install the Argus system is simply three tools. This means only six tools need be carried on the rig. This is a tremendous reduction in terms of cost and logistics requirements.
Logistics and infrastructure demands are a key item in remote areas, and the Argus Vertical X-mas Tree (VXT) is very accommodating of these demands. Industry HXT requires large personnel and third-party services. These services will cost millions of dollars and complicate logistics, contracts and HSE issues. The typical HXT and associated third-party services will require 60 to 70 people to complete the installation, while the Argus system will require only eight to 10 people.
The next step in assessing hardware is availability to complete the well, or multiple wells. The most economical solution, particularly in a single-well tieback scenario, is to drill and complete the well with a single rig mobilization. Generally, the selection for this hardware has resided within several large multi-national companies that supply the global needs for the multibillion-dollar offshore and subsea markets. In general, these manufacturers establish long-term, multi-year frame agreements. Like their integrated oil company customers, these manufacturers are focused on large fields using EPIC-contracting methods.
These steps have driven the typical delivery time for a subsea tree to between 20 and 22 months. This requires contracts to be let 18 months to two years ahead of completion schedules. This contracting philosophy has the potential to cause project delays or costly expenditures for operators developing marginal or relatively small projects. These projects generally take a backseat to the larger market forces and larger returns the major manufacturers have come to expect. What’s worse, all of these events increase the cycle time of the production of oil and gas.
If the well is drilled without the tree, the effects on NPV could move the project into an unprofitable arena, or the project’s first oil could be delayed 20 months or more. Recognizing this potential problem, the sourcing team might look for something that is readily available on the new or used tree market to make the schedule and the NPV number for project sanction. This can lead to a dead end (no available tree fits the bill) or a less-than-optimum tree architecture, tool requirements, and riser system availability, which impacts the ability to complete the well.
The Argus solution
The solution to this problem may lie in the hardware availability in the market. The Argus AZ-10 tree was designed by breaking down operations and selecting the optimum solution to increase savings. The Argus AZ-10 subsea system can improve drilling and completion cost by 35 percent on single well projects or by 25 percent on large projects in deepwater. At 45,000 lbs (full deepwater system), the Argus AZ-10 tree can be handled by second-generation rigs using cranes to move from the boat to the moon pool without special preparation. Tooling (six tools) allows both primary and back-up tools to be carried on the rig at one time. Low weight and small footprint size allows for a back-up tree system to be carried on the rig also.
The essential features of the AZ-10 tree are:
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A universal tubing hanger system that can be installed in any manufacturer’s wellhead system.
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No tubing spool or special crossovers required.
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Elimination of boat and Heave Compensated Landing System (HCLS) or HXT installation.
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Elimination of Safe Tree and Installation Workover Control System (IWOC) system for HXT.
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Concentric design tubing hanger eliminates BOP, tubing hanger and tree interfaces issues.
The hanger system incorporates a lock-and-seal system that can fit in any manufacturer’s wellhead. Sealing is accomplished through a sealing and mechanical lock system incorporated within the tubing hanger. The hanger system is designed to suspend practical tubing suspension loads and to resist pressure end loads of 10,000 psi. Tested in both Q-125 and P-110 casing confirms the lockdown capabilities in high chrome casing.
The AZ-10 VXT further simplifies the installation process by eliminating a number of steps, interfaces, and third-party services required for traditional horizontal and vertical trees systems. Many components of the tree have been simplified, and the design was developed with a focus on the future needs and requirements for trees in smaller field developments.
Meeting the changing subsea requirements
As subsea field development cost and schedules increase, simplicity of subsea hardware is going to become more important. Technology must address the needs of the customer: both the new technical challenges for deep and ultra-deep water, and the timing, installation and cost required to provide for the economic development of smaller fields.
In an ever-changing cost environment, it is incumbent on the industry to address the challenges of marginal offshore fields. If the industry does not provide a cost-effective way to produce these reserves, many will not be produced. When it comes to technology, sometimes the simple solution is the best. The Argus AZ-10 was designed to be the ideal, purpose-built solution for marginal field development in remote areas.
Carl Aubrey, Argus Subsea
