BP has a portfolio of 14 mature assets worldwide that are being accorded special attention in order to get the best out of them. They are a mixed bag and five or so are located on the UK Continental Shelf, including at this time, the veteran Magnus field and the CRINE era ETAP complex.
Aberdeen-based Enrique Sandoval is playing a pivotal role in making this happen. Colombian by birth, he studied at the Universidad de Los Andes, followed by Liverpool University, and was then polished by MIT at the Sloan School of Management.
His first job with BP was in Angola and it was as a “challenge graduate” that Sandoval visited the company’s Cusiana/Cupuagua assets in Colombia.
“We were also invited to go and see a very old field that had been in operation since the 1930s,” he told Energy.
“The manager told us that the original design life had been 30 years, so it should have been finished in 1960. But there we were in 1997 and the field was still going strong with a water injection project.
“New technologies had emerged and therefore this community, this region was still producing and there was still much more life to this field that should have shut down by the 1960s.”
Sandoval said that Colombia had been written off as a net producer in those days, with predictions that the country would become a net importer by 2003.
“Basically the oil was thought to be running out. Yet, here we are in 2013 and Colombia is producing more than 1million barrels per day; exploration continues to grow; but most importantly, the country continues to produce old oilfields successfully.
“This is relevant to why I’m in Aberdeen . . . to produce old oilfields.
“Back in 2011, I took a call from Trevor Garlick (North Sea VP) who said he believed the company could extend the lives of offshore facilities; however, there was a need to arrest production decline and he thought I could help.”
Sandoval said he had been in and out of Aberdeen since the early 2000s.
“In those days production was king. It was all about driving performance management to the extreme.
“We now have a more balanced view. The emphasis is about investing for the long term. It’s not just going for the cash.”
He accepted the Garlick invitation, travelled to Aberdeen from Angola and began to analyse BP’s UK installations portfolio.
The venerable Magnus asset located in the East Shetland Basin was among the first to emerge as a candidate, despite its age . . . 30 years of production and counting.
The platform had basically lived out its design life, and here was BP looking for an extra 20 years from the structure, not just because of the oil still present but its strategic importance to BP’s West of Shetland extended oil recovery gas transportation system.
“It’s an amazing piece of engineering in the sense that no expense was spared when it was built,” said Sandoval.
“It was built to last and constructed to standards and specifications that will enable us to do what we’re doing now . . . extending the Magnus asset’s productive life.
“There’s still a giant field underneath the platform. We need to keep it delivering. But how do we do that?
“We could go and give it a big work-blast and paint everything and leave it as a very shiny and beautiful platform again. But that will cost a lot of money at a time when what is needed is an asset that will generate more cash.”
The basic challenge was how to straighten out both Magnus production and Magnus infrastructure integrity . . . two totally different challenges . . . without busting the proverbial bank and protecting the asset’s appeal as a brownfield investment opportunity, even after 30 years. Achieving “business value” would be critical; so too keeping risk at an acceptable level.
Sandoval made it plain that juggling the various Magnus balls was not going to be easy.
“It’s not only about painting the platform and removing the risk, we need to generate cash,” he said. “But how do we do that?
“We found that the drilling had to be stopped to enable maintenance of the drilling equipment, which is fine in itself, except that it basically precluded our being able to bring additional production capacity onstream.”
Drilling new wells to find additional production is a vital part of the Magnus future, so what was the Sandoval solution?
“The proposition that I brought to the table was, we could still squeeze one further well (before platform overhaul next year), so let’s drill the MP57 well to bring on an additional 5,000bpd production to deliver enough cash to pay for our intervention.
“Then, in a structured, systematic way, we tackle the corrosion issues on the platform, and at the end of that stage, we can allow the drilling to come back as early as possible. So we enable the long-term as well.
“That became a very interesting business proposition. It wasn’t the biggest, the most attractive from a cash generation perspective. But it was the most advanced in terms of getting all functions aligned.
“We are now working towards starting an intervention programme next January. It is called the Magus Renewal Project.
“We will bring in a floatel . . . the COSL Rival . . . and we’re going to man up the platform to basically conduct an intervention, putting in around 500,000 man-hours of thorough maintenance over a period of 12 months while keeping production live.
“This is important because of the West of Shetland EOR link to St Fergus.
“We did consider alternatives such as shutting the platform down completely, shutting down everything but the EOR function and so-on. Through analysis we found a way for the platform to stay onstream, yet still be able to do all the work.”
“We’re starting on Valentine’s day. We did all the marine assessment stuff and found that it would be possible to make an early start. Magnus is a relatively sheltered platform. The earlier the start the greater advantage we will be able to take of the summer period.”
So far, the field has yielded 900million barrels of oil; the objective is to squeeze out another 100million or so, thus graduating Magnus into the “elephant” fields club. And the cost? About $500million.
Sandoval is also working on how to bring the ETAP (Eastern Trough Area Project) in the Central North Sea back into tip-top condition, both in terms of structural integrity and production performance. And the cost would also be about $500million.
This is a very different animal to massively built, modular Magnus as ETAP is a 1990s, CRINE (Cost Reduction for the New Era) project when the emphasis was on lean engineering to drive down capital costs, sometimes at the expense of production performance and maintainability.
According to Sandoval, the story of ETAP is one of massive potential, but delivery of the hydrocarbons prize has been compromised by production plant efficiency issues and an “inability to execute work due to priority on fabric maintenance”.
“In the new world of BP, prioritising the safety is a must. But that has come with some consequences . . . that the cash generating work doesn’t fit anymore,” he revealed.
“Basically you have to spend all of your time like the Forth Bridge, painting and repairing; and you don’t have enough beds to do reliability maintenance and well workovers too.
“As a consequence, the efficiency of the wells at ETAP has declined; plant efficiency has also dropped, though it has improved this year.
“The way I see it and tell it to the guys in the team is that ETAP is like the Forth Bridge; it has become so busy with painters that the trains can no longer get through.
“So we need to find a different way of painting it so that the trains can go through again. And that’s what we’re doing.”
Sandoval said that, like Magnus, he is advocating bringing in an accommodation vessel and having a really concentrated blast at fabric maintenance while also creating the people capacity for the cash-generating work.
“By making a conscious choice in which we say, we are going to go and fix all the fabric in 2015 and 2016, therefore we can generate some space to do reliability maintenance work that has already pushed plant efficiency back up from the 60-70% level to the 90% range this year.
“We’re not doing anything wild by driving the wells harder. All one is doing is making sure that the plant out there is actually doing what it is supposed to do. We will get the time and space to do the fabric maintenance in 2015. So that’s what we’re doing.”
The asset’s production wells need particular attention.
“ETAP has some very complex wells and it comprises a cluster of fields like Machar and Mungo; but we have to remember that we’re operating the fields for everyone who holds an interest in the asset.
“This has been an interesting part of the ETAP renewal case . . . bringing partners, particularly ExxonMobil and Shell, along. I’m glad to say that they are supportive of this intervention campaign. They see that, by focusing on reliability we can get the plant to work right.”
Sandoval stressed that it was important to get all relevant parties engaged with deep rehabilitations like Magnus and ETAP. Aside from Schiehallion/Quad 204 where massive renewals are under way, he hopes that other fields will get the big makeover.
“We are already looking at Clair phase one; maybe even Bruce, provided the political issues associated with that field are resolved. Then what do we do with Andrew?
“I think it’s important that we engage the city of Aberdeen in renewal as a whole. I’ve had conversations with other operators and this is something that’s happening across the North Sea industry as platforms get older.
“I’m confident, based on my experience in my own country that the North Sea is ideal and where we have a mature oil basin, mature supply chain and mature engineering community. In fact, we need the participation of all the supply chain in this.”
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