The high costs surrounding deepwater developments and the low price of oil are a challenging combination for operators and service companies today.
Considering transportation, services, qualifications, permitting, and infrastructure costs, capital-expenditure costs for deepwater developments are much higher than they are for onshore developments. Similarly, operating in remote locations, where risk must be low and safety and preparedness must be high, operating-expenditure costs are also much higher for deepwater projects than they are for those onshore.
Industry has recognized that, even at USD 100/bbl, the costs of some deepwater developments were not sustainable, and, when it comes to USD 30/bbl oil, it is obvious that the operator cannot justify this capital and operating cost.
During the first decade of the 2000s, escalating oil and gas prices were the rising tide that lifted all boats. It essentially bailed out many floundering projects, masked poor project performance, and bred profligacy and complacency.
In addition, operators were able to justify designing operations that were more flexible and could respond to a greater number of scenarios. However, this resulted in complex designs, which involved more engineering and greater costs.
However, in the current cost environment, the operator must now work with the service companies to discuss what acceptable specifications are. If deepwater operations are to survive going forward, the luxury of unnecessary customization of facilities and individual company specifications of components must cease; industry needs to develop a more-cost-effective “good enough” mind set.
By simplifying, standardizing, and industrializing deepwater technologies, 25–30% reductions in lead time and costs are possible, but there are limits to how much this can save.
The resources we are developing no longer come from massive fields, which limits the economic and cost-saving potentials. Second, the industry cannot create a commodity industry like the automotive industry.
These issues may be overcome with the willingness of the deepwater industry to continue investing in technology developments, and, in particular, technology and constant innovation are what will bring us acceptable economic profitability, which will allow us to continue deepwater development.
This Month's Technical Papers
Advancing Deepwater Kick Detection
Riser-System Design in Water Depths Greater Than 3000 m
Subsea Production Optimization in Field BC-10 Offshore Brazil
Recommended Additional Reading
SPE/IADC 168048 New Applications of Cementing Valve Technology for Gulf of Mexico Deepwater Operations by Jim McNicol, Archer Oiltools
OTC 25802 Deep Offshore Gas Fields: A New Challenge for the Industry by E. Gyllenhammar, Aker Solutions, et al.
OTC 25868 Lucius and Hadrian South Projects: Development Overview by M. Lamey, Anadarko, et al.
OTC 25896 Developing Megaprojects Simultaneously: The Brazilian Presalt Case by Flavio Gonçalves Reis Vianna Filho, Petrobras, et al.
Morten Iversen, SPE, graduated from the University of Stavanger in 1981 and has worked throughout the world for different operators and for several service companies. He works for BG in the Karachaganak Petroleum Operating (KPO) development in Kazakhstan as the Well Integrity Section head responsible for well integrity for all wells within the KPO development. Iversen holds several patents, including a patent for a tubing-conveyed perforating-shot detection system and a deepwater-blowout-preventer system for riserless light well intervention (RLWI). He has worked on implementing the RLWI technology from its infancy in the late 1980s and later as a global subsea adviser for Welltec, optimizing the use of RLWI technology to increase well recovery in subsea wells. Iversen serves on the JPT Editorial Committee and can be reached at ivermi@kpo.kz.
