15 February 2014, News Wires – Technology is an enabler for safe and sustainable operations in the Arctic, which presents challenges in terms of deeper waters, longer distances and environmentally sensitive areas, Konstantinos Makygiannis, senior development and operations engineer with KUFPEC, told attendees this week at the Arctic Technology Conference in Houston.
Technological advances that can make Arctic oil and gas production possible include subsea developments, power from shore, pipeline repair systems, as well as oil spill technology and technology that will enable the industry to meet health safety and environmental goals. Technology will serve as an enabler for Petoro AS to achieve its long term goals of exploration and production of the Barents Sea.
Companies operating in the Arctic must take into account not only the ice and extreme swings in temperatures, but the remoteness of some areas. To achieve these targets, companies must understand the reservoir and risks in order to achieve production targets and comply with regulatory standards. The industry not only needs business cases for qualifying technology, but new cooperation models, Makygiannis noted.
Intelligent production systems (IPS) will be critical in helping companies gather information and control a well, but enabling companies to make decisions for asset management, said Darrin Willhauer, global product line director with Baker Hughes Inc. IPS can allow companies to optimize drilling and workovers, minimize the number of wells, allow access to multiple reservoirs, better efficiency through remote monitoring. IPS systems can provide the “right data to the right person to make the right decision” while minimizing personnel exposure to the Arctic environment, Willhauer said.
Some options that can be utilized include all-electric completions to minimize the number of control lines, making up assemblies ahead of time, and developing the next generation of splices.
Companies also face challenges in borehole stability in the Arctic due to permafrost. To address this issue, wellbore integrity monitoring systems, fiber-based strain monitoring systems, distributed temperature and acoustic sensing and Arctic-based cements can be utilized. To improve resiliency, mudline packers to provide redundant casing seal can be implemented. And to cope with the extreme changes in temperature, component testing should be conducted at the surface versus downhole and ruggedized electronics employed for sub-zero conditions.
ARCTIC PROJECTS MUST BE TECHNICALLY AND COMMERCIALLY FEASIBLE
While the Arctic is full of promising provinces for oil and gas, Arctic projects not only need to be technically feasible, but commercially feasible as well, said Catherine Jahre-Nilsen, Arctic portfolio and technology manager for Statoil’s Arctic unit. While Statoil is accessing Arctic areas as they open up, it doesn’t mean that the company will drill these prospects in the short-term unless a business case can be made for moving forward. Given the time to gather information and then moving forward with drilling, Arctic projects “must create value at the end of the day” and be competitive with other projects in Statoil’s portfolio.
“We work to educate management on what can be done to make Arctic projects commercially feasible, such as whether we should be a partner versus an operator” on a project, Jahre-Nilsen noted, adding that the company wants to use its money wisely. Even areas such as the Barents Sea and offshore eastern Canada still present challenging situations, even if they’re ice conditions are less exciting compared with other areas.
Companies operating in the Arctic must find ways to address the technical, political and commercial aspects of exploration and production projects. While technology is critical to finding solutions, it’s not the only answer.
“It’s not as simple as developing a technology to bring drilling costs down, it’s about partners and the portfolio.”
Statoil views the Arctic as a “multi-speed” region, with different areas posing different challenges, said Jahre-Nilsen during the panel presentation. Arctic regions have opened up largely due to national ambitions, not because of the ice melt that is occurring. Over the past five years, the most attractive Arctic acreage for oil and gas exploration and development has been accessed.
However, potential Arctic exploration areas such as the Chukchi and Beaufort Seas may be technically feasible, but their distance from markets, the time to mobilize rigs in and out for drilling, and the limited open water season, present challenges. Other factors such as ice and ecology also can drive up costs. Floating drilling will be a killer for many projects commercially, meaning that exploration of some Arctic areas with world-class resources won’t work yet.
The oil and gas industry must not only overcome the lack of infrastructure, but the political will – which can slow down projects and increase costs – to establish a framework for Arctic exploration and production. These factors essentially eat into the value of exploration in places such as the Chukchi.
Canada’s Arctic region also presents a challenge for exploration due to its remoteness from infrastructure. The waters offshore Greenland and the Barents Sea are “nicely located” for exploration and production, but ice and environmental concerns also must be overcome. The technical challenges of Russia’s “highly prospective” Arctic region can be overcome, but will come with a large price tag, Jahre-Nilsen noted.
“This area is pushing the limits in terms of technology and what is commercially viable and what stakeholders are used to.”
She believes that Russia can move ahead quickly and make a good commercial case for Arctic exploration. However, it’s important for the industry to work carefully in the Arctic Jahre-Nilsen noted, adding that the Arctic oil and gas industry is at a pivotal point in time. To address these issues, the industry must use science and stakeholder acceptance to move projects forward. The industry should also look to cooperation and partnership for subsurface risk and costs as well as unity on stakeholder issues.
“The world is really watching,” Jahre-Nilsen.
– Karen Boman, Rigzone
