Subsea support activity is the best it has been since 2014, and it is poised for more growth according to recent analysis
In its analysis of results for Q2 2019, Norway’s Rystad Energy says almost all segments of the oilfield service sector showed gains, with the subsea market “on the rise”.
Rystad Energy calls subsea equipmen,t umbilicals, risers and flowlines (SURF) “the best-performing segments, with growth rates exceeding 10% on a yearly basis in the second quarter of 2019. This is the second quarter with positive year-on-year growth, following several years of decline, signaling improved market conditions. We expect 2019 to be the first year with subsea revenue growth since 2014.”
Rystad Energy partner & head of oilfield service research Audun M Martinsen says: “The subsea comeback is driven by an increase in offshore deepwater-sanctioned projects that have taken place in 2017-2019, and are now finally being delivered and installed. More specifically, it is driven by Brazil, Guyana and West Africa.”
Mr Martinsen adds: “Going forward, we see a continuous increasing demand from Brazil (from state-run Petrobras and international oil company field development), more stages of Liza development in Guyana, as well as more subsea tie-backs in Europe.”
Annual growth in the subsea market is forecast to reach 7% over the next five years, but only if the price of a barrel of oil is maintained in the range of US$60 to US$70.
“The market growth seems to continue to at least 2023 given oil prices around US$60 (for Brent crude oil),” says Mr Martinsen. At US$50, the market growth will be capped at 2021,” he cautions.
Rystad Energy analyst Henning Bjørvik says the subsea market will have “one of the highest growth rates within oilfield services,” but warns it is more “vulnerable to an oil price drop than the oilfield services market in general.” As much as 20% of subsea equipment and SURF spending would be at risk in such an instance, especially for greenfield projects.
Continuing the theme, Rystad Energy says 16 projects with subsea expenditure confirmed between 2019 and 2025 are at risk, 14 of which are subsea tie-back projects on the Norwegian Continental Shelf (NCS).One ongoing project on the NCS is the redevelopment of the Balder and Ringhorne field area in the North Sea. The Balder X Project will extend the life of the Jotun A floating production offloading and storage (FPSO) unit to 2045. The FPSO will be refurbished and relocated to the Balder license PL 001, the first production license on the NCS. If production proceeds according to the current estimates, the Balder X Project will give PL 001 a total lifespan of over 80 years.
To support the project, Norway-based independent E&P company Vår Energi AS has awarded a contract covering engineering, procurement, construction and installment (EPCI) of subsea systems to the consortium of Houston-based Baker Hughes, a GE company (BHGE) and Stavanger-based Ocean Installer AS. Much of the construction and engineering work will be supported by local suppliers. Ocean Installer AS utilises a variety of specialised, fit-for-purpose vessels under short-term and long-term charter to support its subsea work.
Under the contract the consortium companies will engineer, procure, construct and install new subsea production systems (SPS), umbilicals, risers and flowlines to the Jotun A FPSO. BHGE and Ocean Installer will also carry out decommissioning and cleaning up the seabed by removing redundant subsea systems and equipment from the Jotun field.
Ocean Installer chief executive Kevin Murphy said: “The Balder X project is the largest award in Ocean Installer’s history; it doubles our order backlog and allows us to be part of Vår Energi’s first major development in this region.”
Besides extending the life of the Jotun A FPSO, the Balder X project will generate significant subsea activities, extending the life of the Balder FPSO to 2030, drilling 15 new production wells in the Balder field area and 11 new production wells in the Ringhorne field area. Vår Energi is also planning to execute several exploration drilling campaigns, in addition to the extensive production drilling program.
BHGE Norway and Denmark director Tom Huuse, says: “Through our Subsea Connect approach, leveraging early engagement with our customer, we were able to optimise the development cost of this significant award.”
Vår Energi has reserves and resources of more than 1,250M barrels of oil equivalent (boe), reaching a daily production of 250,000 boe by 2023.
Vår Energi is jointly owned by Italy-based energy company Eni (69.6%) and Norway-based private equity investor HitecVision (30.4%).
Subsea activity in the Middle East
In Brazil, Total E&P do Brasil has contracted specialist offshore vessel owner and subsea engineering firm Subsea 7 to support the development of the Lapa North East field in 2,150 m water in the pre-salt Santos Basin.
Starting in Q4 2019, Subsea 7 will begin to transport, install and pre-commission 35 km of flexible pipelines and 20 km of umbilical, connecting five wells to the FPSO Cidade de Caraguatatuba.
Subsea activity is also climbing in the Middle East, where Subsea 7 has been awarded several contracts from Saudi Aramco and BP for subsea construction and installation work in Saudi Arabia and Azerbaijan.
Under a contract with Saudi Aramco, Subsea 7 will provide engineering, procurement, construction and installation (EPCI) work for Marjan Increment Projects - Package 2, offshore Saudi Arabia. Support for the contract will be provided by Subsea 7’s consortium partner L&T Hydrocarbon Engineering (LTHE), a subsidiary of India’s Larsen & Toubro.
Set for execution in 2021 and 2022, the consortium’s work scope consists of EPCI of new tie-in platforms, production deck manifolds, 217 km of rigid pipelines, 145 km of power cables, and a fibre-optic cable in the Marjan field in water depths of 45 to 52 m.
Saudi Aramco also awarded contracts to the consortium for EPCI work for eight new jackets to be installed in the Marjan and Zuluf fields, 10 jackets in the Safaniya and Zuluf fields (including a pipeline decommissioning scope) and a further 10 jackets in the Zuluf and Ribyan fields, with offshore execution in 2020.
Subsea 7’s pipelay and construction vessel Seven Champion is supporting the company’s projects in the Middle East. It was at anchor near Dubai on 2 October, according to marinetraffic.com. With a length of 142 m, beam of 40 m and dynamic positioning class 2 capable, Seven Champion is versatile, with the ability to conduct DP operations in 10 m of water, accommodate 470 and handle pipe-laying and pipe recovery.
In Azerbaijan, Subsea 7 was awarded two contracts by BP Exploration for the Azeri Central East (ACE) project in the Azeri-Chirag-Deepwater Gunashli (ACG) field in the Caspian Sea in water of 140 m.
The work scopes comprise engineering and fabrication of subsea structures, engineering, transport and installation of spools, the launching of a 16,200-t jacket and the float-over of an 18,500-t topside.
Under a consortium arrangement, BOS Shelf will be responsible for the fabrication, logistics and facilities support, while Subsea 7 will commence engineering for the contracts, with offshore execution in 2021 and 2022. BOS Shelf was formed by Star Gulf FZCO, part of the Saipem Group and the State Oil Company of Azerbaijan Republic (SOCAR).
Expanding digital capabilities
With international oil companies (IOCs) and renewable energy developers looking to keep a tight rein on offshore energy costs, collecting data and generating insightful analysis based on such data is critical. Recognising the increasing organisational value of digitalisation, Subsea 7 has bolstered its capabilities with the acquisition of Norway’s 4Subsea.
4Subsea will support Subsea 7 in delivering advanced digital solutions to customers within Life of Field and Field Development contracts and be a key contributor to the ongoing digital transformation of Subsea 7 business delivery.
Subsea 7 executive vice president alliances and strategy Stuart Fitzgerald, says the acquisition will allow Subsea 7 to expand its digital capability and offering: “4Subsea digital insights will create value for Subsea 7 in both our services provided to customers, and to improve efficiency within our own operations and delivery,” he says.
Mr Fitzgerald foresees 4Subsea providing digital solutions to energy operators, reducing operational risk, cost and providing actionable insights.
One of the first beneficiaries of 4Subsea’s digital solutions will be Subsea 7’s own fleet. Subsea 7 and 4Subsea will jointly work towards monitoring key operational data on Subsea 7 vessels, contributing to the digitalisation of its marine operations. With the use of advanced algorithms and artificial intelligence, 4Subsea will deliver key insights and decision support with digital twins, to optimise these activities.
Underwater drones will perform subsea service under pioneering contract
In a first for the offshore oil and gas industry, Norway energy company Equinor has signed a €40M (US$44M), 10-year subsea service contract with Italy’s Saipem to employ newly developed underwater drones to support drilling activities and subsea inspections and interventions in the Njord field development in the Norwegian Continental Shelf. The historic contract contains an option for an additional 10 years.
Saipem-Sonsub’s Underwater Intervention Drone (UID) Hydrone-R and the all-electric Work Class remotely operated vehicle (ROV) Hydrone-W will support the contract. Hydrone-R operations will start from Q1 2020, immediately following completion of the endurance tests currently underway, while Hydrone-W will be delivered in 2021.
The scope of work encompasses ROV and UID services to support drilling activities, plan of inspections and interventions on the Njord subsea assets, namely pipeline end manifolds (PLEMs), flowlines, umbilicals and riser bases. Control of Hydrone-R and Hydrone-W will be ensured from both the floating rig Njord-A and onshore via Sonsub’s proprietary remote-control protocols.
The Hydrone programme, executed entirely by Sonsub – Saipem’s business line for Life of Field, Underwater Technology and Subsea Processing – is a key workstream of Saipem’s Technology Development Plan associated with subsea robotics.
Calling it a “milestone” for the company, Saipem COO of E&C offshore division Francesco Racheli, said: “We are making the history of subsea robotics: our visionary Hydrone program, launched back in 2015, has proven to perfectly match Equinor’s challenging requirement.”
Added Mr Racheli: “The Hydrone program is the culmination of years of hard work and a perfect example of Saipem’s commitment to technology, constantly seeking solutions which intelligently combine HSE excellence, industry demand, innovation and operational efficiency.”