West of Shetland success: Lancaster
Government estimates put the remaining oil on the UK Continental Shelf (UKCS) at possibly 25billion barrels. That enormous amount of oil is clearly of strategic national importance in terms of securing energy supply.
Chief executive officer of independent oil and gas operator, Hurricane, Dr Robert Trice, said: “It requires innovation and creativity to locate and retrieve the remaining oil and it needs great teamwork between like-minded organisations invoking the pioneering spirit of the earliest days of UK oil exploration and discovery.”
Early in 2012, Hurricane appointed project management specialists EPC Offshore to develop a robust “reference case” for a facilities concept to develop Hurricane’s Lancaster discovery. Dr Trice adds: “With EPC we have forged a solid and productive working relationship to make the most of these remaining UK assets and to help Aberdeen maintain its position as one of the most important oil cities in the world.”
When Hurricane was created in 2005, it was with the vision and purpose to find oil in fractured basement reservoirs – a first for this approach in the UK. Fractured basement reservoirs are typically composed of granite, the rock type that has strong historical association with the “Silver City”. The oil is not found in the rock itself, but in the faults and fractures between.
o Discovery
In 2009, after careful planning and with a great deal of help from the Aberdeen oil service industry, Hurricane drilled through a number of faults and fractures on its Lancaster prospect, West of Shetland, discovering light oil.
It was one of the biggest discoveries that year in the UKCS and Hurricane’s subsequent Competent Persons Report (CPR) indicated that Lancaster could contain over 200million barrels of recoverable oil. Given that the average UK discovery in 2009 and 2010 was 20million to 23million barrels, Hurricane had made a discovery that is potentially of a scale to be a strategic resource for the UK.
“It was an exciting moment for Hurricane to find oil in a new type of play on the UKCS,” says Robert Trice.
A further 200million barrels of 2C Contingent Resources was identified in the CPR on another nearby Hurricane asset, Whirlwind. With Hurricane’s two successful discoveries there is definitely something to go after in this new UK oil play.
o Expertise
It was clear even in the initial phase that EPC’s expertise and pragmatic approach blended well with Hurricane’s team and ethos. EPC’s chief executive, Keith Wallace, said: “Hurricane’s strengths lie in deploying its specialist skills, experience and commitment to locate, evaluate and develop new resource potential. Ours lie in helping to meet the development challenges that arise: in applying our project management expertise to shape and deliver the most effective solution, and help to transform potential into revenue producing assets. We thrive on these challenges. At EPC, we look to develop bespoke solutions that deliver optimum results.”
o Integration
To help ensure that Hurricane and EPC were fully integrated, EPC set up a team in Hurricane’s office in Eashing, Surrey. The Aberdeen offices of both companies were also integrated into the whole process. The EPC team of a study manager, development engineer, process engineer, technical safety engineer and planner/estimator, all working to EPC’s pragmatic, project management-led approach to concept selection, moved into Eashing in March.
Communications links including state-of-the-art video conferencing were set up between the Eashing office and both companies’ Aberdeen offices.
EPC’s first stage was to establish a firm basis for concept selection. Central to this was to understand the important objectives for the development, both in terms of technical criteria and also the commercial and business drivers for Hurricane, underpinning the selection process.
Keith Wallace said: “The possibility of significant upside in a development of Lancaster may only be proven by established production history and so it was clear that a phased development approach would be best to enable the upside to be proven before committing a bigger investment in development.”
o Decide early
It’s important to make as many key decisions as possible as early as possible.
These are decisions that can be made independently from the larger concept selection itself and in the Lancaster development that included consideration of methods to lift the oil taking into account its properties, how to process any water produced and the drilling strategy for subsea trees.
“This approach avoids carrying multiple sub-options as the overall field development concepts are evaluated,” said Keith Wallace.
Development of a Statement of Requirements and performance of some basic flow assurance to identify any practical constraints then allowed all viable field development options to be identified. An option short-listing exercise was then performed based on the agreed objectives, selection criteria and business drivers. The Hurricane sub-surface team and other functions worked closely with the EPC team, all working together to meet the agreed objectives.
o Shortlist
The next stage was to short-list the options for the overall concept. These were developed technically and commercially to allow detailed evaluation and their comparative economics to be assessed. EPC and Hurricane recognise the importance of understanding risks to the development options and articulating those risks and their potential impact on the development economics. To see preferences of all the options, a comparison exercise was carried out that enabled the technical ranking of the development options. This means that all the options can be compared on a like-for-like basis and that helps the decision-makers see the wood from the trees. It also means that options can be discarded quickly and the team’s focus brought to bear on realistic, pragmatic solutions.
o Selection
“The closely integrated way of working that has been developed between Hurricane and EPC has proved to be a winning formula, said Robert Trice.
Keith Wallace added: “Final preparations are being made for the concept selection workshop in which the combined project team will take part and the final development concept will be selected by the end of the year.”
Hurricane is a new generation oil company specialising in exploration and development of hydrocarbons from fractured basement reservoirs. The company was founded in 2005 with offices in Aberdeen and Surrey and employs a small number of specialists, priding itself on being technically led and technically driven. Hurricane now has 450million barrels of 2C Contingent Resources on acreage it controls 100%. Hurricane also has further prospects on structures for future drilling close its recent discoveries.
EPC Offshore combines the experience of its management team with a process-driven approach to define, control and deliver oil and gas projects. It has established a track record for turning development opportunities into commercially successful projects.