[10 Things That May Affect the Future of Subsea Production][Hubie Fix, Life Cycle Engineering]

1. Subsea Hardware Spending and Production Depth Expected to Increase

According to Douglas Westwood’s latest estimates, Subsea hardware spending in 2014-18 is forecast to nearly double the size of installed subsea infrastructure.

• Established Deepwater regions in Brazil, West Africa and the US Gulf of Mexico• Newly discovered offshore gas provinces in East Africa and the Eastern Mediterranean

• >1000m Water Depths• Provide additional markets which will lead to positively impacting IRM (Inspection, Repair &

Maintenance) expenditure• Subsea hardware capex expected to total US$117 billion between 2014 and 2018 (80% growth).

1. Subsea Hardware Spending and Production Depth Expected to IncreaseROVs (Remotely Operated Vehicles) are expected to gain market share over the coming five-year period.

• ROV Inspections• Replacement Tasks• Cutting Operations• Cleaning Operations• Hatch Operations on Subsea Structures and Valves• Subsea Equipment Troubleshooting

1. Subsea Hardware Spending and Production Depth Expected to Increase

AUVs (Autonomous Underwater Vehicles) are also expected to gain market share over the coming five-year period.Life-of-Field Inspection Surveys are currently in the early stages of commercial development with an expected increase in demand for the future.

• High-Resolution, High-Speed Seafloor Surveys & Mapping

• Geophysical Site Inspections• Pipeline Route Planning• Pipeline & Subsea Structure

Inspection• Hydrography

2. Baby-Boomer Generation RetirementRoughly 50% of the working population in the oil & gas industry will be eligible for retirement in 2015. (Current average retirement age is 62)

• Employee Training• Subsea Operational Standards & Knowledge Retention

2. Baby-Boomer Generation RetirementEmployee succession planning to mitigate work force & knowledge loss.

3. Subsea Condition-Based Maintenance & Monitoring

Rig Uptim

ePerformanc

e

Maximize Asset Availability & Subsea Production• Proactive approach to Preventative Maintenance

3. Subsea Condition-Based Maintenance & MonitoringCondition Performance Monitoring• Data Trending & Downtime Mitigation

• Rig Asset Integrity Dashboards• Equipment Alerts & Problem Diagnosis

4. IADC Well Control Training & Accrediting

ComprehensiveWell Control

Culture

Fundamental & Supervisory Levels

Team Problem Solving & Decision

Making

IADC STANDARDIZED WELL CONTROL ACCREDITATION

5. The EnvironmentThe U.S. Oil and Gas sector ranked second in emissions to power plants• Releasing 225 million metric tons of carbon dioxide equivalent in 2011. More than a third of that came from methane, the main constituent of natural gas, and a far more potent global warming gas than carbon dioxide.

5. The EnvironmentThe U.S. Environmental Protection Agency Clean Power Plan to issue final Greenhouse Gas Emissions in August 2015.

GOAL •Cut carbon emissions from the power sector by 30% from 2005 levels

METHODS •New rules on greenhouse gas emissions•Final regulations on the gas and oil sectors estimated to be released in 2016

IMPACT •Increased spending for underground pipelines for Clean CO2 Power Plants•Possible increased demand for alternative energy and fuel additives (ethanol)

5. The EnvironmentThermohaline Circulation (The Ocean Conveyor Belt)• Has an impact the Earth’s climate• Deepwater Temperatures, Densities and Salinity

5. The EnvironmentThermohaline Circulation• 2014-2015 shows extraordinary record cold pool of water south of Greenland • Risk for generating significant disruptions to atmospheric winds and related

weather.

6. Offshore vs. Shale ProductionOver the last 10 years, offshore investments have increased from ~ US$150 billion in 2005 to ~ US$360 billion in 2014.With the help of horizontal hydraulic fracturing becoming proven and economical. Shale investments increased from almost zero to ~ US$160 billion in 2014.

6. Offshore vs. Shale ProductionOffshore production remained largely unchanged at 27 million barrels of oil equivalent per day.Shale production increased from less than 100 thousand barrels oil equivalent per day in 2006, to an estimated 7.5 MMboe/d in 2015. The reactiveness of the production to the investments is largely a factor of the project life cycle.

6. Offshore vs. Shale ProductionOver the last five years, shale has experienced extraordinary development, showing much higher production growth than offshore. Shale reduces activity the quickest when prices dropped but will also be the fastest to recover once oil prices increase.The shale industry may now be a close predictor for how offshore oil and gas companies will react and operate to market conditions.

7. Methane Hydrates

• “Fire Ice”• Natural Gas• Harsh Environments• Technical Challenges• Production Growth

7. Methane HydratesThe Fukushima Incident of March 11, 2011 led to Japan’s entire nuclear industry to be shut down, resulting in Japan’s gradual shift back to fossil fuels for power generation.Without nuclear energy, Japan’s domestic energy resources could only meet less than 9 percent of the nation’s energy requirement. On an annual basis, LNG imports cost the country nearly $700 billion.

7. Methane HydratesIn March 2013, by lowering a methane hydrate reservoir’s pressure, a Japanese drilling ship of the Japan Oil, Gas & Metals National Corporation (JOGMEC) successfully extracted methane hydrates from the seabed off Central Japan (Nankai Trough).During 6 days it produced 120,000 cubic meters in total, i.e. 20,000 cubic meters a day of natural gas.Estimates indicate that the reserves of methane hydrate correspond to a 100-year supply of natural gas for Japan, making it an important potential source of energy.

8. Unmanned PlatformsMaersk Oil’s unmanned platform Tyra Southeast-B finished construction mid-2014 and started production March 2015.

• Current production 2600boepd• Planned to drill 8-12 horizontal wells • Total delivery

– 20 million barrels of oil– 70 billion standard cubic feet of

gas.• Currently used in shallow waters• Technology advances may move

further and further deep water.

9. Offshore RegulationsISO 55000: International Standard for Asset Management (January 2014)• Overview of Asset Management • Principles and Terminology• Expected Benefits Ten Things to Know about ISO 55000 – the International Standard for Asset Management• By Mike Poland, CMRP, Life Cycle Engineering

Extending the public comment period on the Notice of Proposed Rulemaking for “Oil and Gas and Sulphur Operations on the Outer Continental Shelf – Blowout Preventer Systems and Well Control,” which was published in the Federal Register on April 17, 2015 (80 FR 21504)• Proposed rule would focus, at this time, on blowout preventer requirements,

including incorporation of industry standards and revision of existing regulations.• Reforms in the areas of well design, well control, casing, cementing, real-time

well monitoring, and subsea containment.

• Arctic-specific standards for oil and gas drilling in the remote region.• Draft leasing plan, pencils in one possible sale of mid- and south Atlantic

acreage but rules out auctions in the Pacific Ocean and in eastern Gulf waters.

10. Iran Oil & Gas Sanctions Lifted• Iran hasn't been able to sell oil to the United

States since 1995. Most major Western countries imposed sanctions within the last five years aimed at curbing Iran's nuclear program.

• On July 14, 2015 Iran and a group of six nations led by the United States reached an agreement limiting Tehran’s nuclear ability for more than a decade in return for lifting international oil and financial sanctions.

• Iran could add as much as 500,000 barrels of oil per day to worldwide markets by the end of this year.

• Once we get past Labor Day, we should see gas falling by 10 to 15 cents a month," said Tom Kloza, chief oil analyst with the Oil Price Information Service. "By December a lot of places are going to see gasoline at $2 or less."

References1. Loffman, Matt. “Subsea infrastructure – growing and moving deeper” (2015, January 1). Retrieved from

http://www.oedigital.com/regions/item/7876-subsea-infrastructure-growing-and-moving-deeper 2. Riffkin, Rebecca. “Average U.S. Retirement Age Rises to 62” (2014, April 28). Retrieved from

http://www.gallup.com/poll/168707/average-retirement-age-rises.aspx 3. Cheney, Paul. “Oilpro.com: Oil & Gas Social Network Launched to Bridge Industry Generation Gap” (2013, October 7).

Retrieved from http://www.bizzuka.com/company-blog/oilprocom-oil--gas-social-network-launched-to-bridge-industry-generation-gap

4. Anderson & Rasmussen “Condition and Performance Monitoring of Subsea Production Systems” Retrieved from http://www.spe.org/jpt/article/5190-young-technology-showcase-14/

5. Retrieved from http://www.iadc.org/wellcap/ 6. Retrieved from http://www.iadc.org/wp-content/uploads/2015/06/2014-ISP-Reporting-Guidelines.pdf 7. Walton, Robert. “EPA signals final Clean Power Plan rule due in August” (2015, May 27) Retrieved from

http://www.utilitydive.com/news/epa-signals-final-clean-power-plan-rule-due-in-august/399793/ 8. Retrieved from

https://robertscribbler.wordpress.com/2015/03/23/world-ocean-heartbeat-fading-nasty-signs-north-atlantic-thermohaline-circulation-is-weakening/

9. Nysveen, Per Magnus and Wei, Leslie “Offshore vs. Shale, which will prevail long-term“ (2015, April 9) Retrieved from http://www.ogfj.com/articles/print/volume-12/issue-4/features/offshore-vs-shale.html

10. Retrieved from http://oilprice.com/Energy/Natural-Gas/Methane-Hydrates-Larger-Energy-Opportunity-Than-Shale.html 11. Retrieved from http://www.jogmec.go.jp/english/oil/technology_015.html 12.Retrieved from

http://www.maerskoil.com/media/newsroom/pages/firstproductionfromnewplatforminthedanishnorthsea.aspx 13. Isidore, Chris. “$2 gas will be back after Iran nuclear deal” (2015, July 14). Retrieved from

http://money.cnn.com/2015/07/14/news/economy/2-gas-iran-nuclear-deal/

[10 Factors That May Affect the Future of Subsea Production][Hubie Fix, Life Cycle Engineering]

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