Alan Roberts of SeaCaptaur discusses the company’s storage, production and delivery system – technology which could help unlock the billions of barrels trapped in the world’s Small Pools.
“The new era of oil and gas sees less meetings in bars, and more in coffee shops,” quips Alan Roberts.
He is explaining the conversations which led to the creation of his latest venture – SeaCaptaur – and its unique storage, processing and delivery system: a combination of technologies designed to enable the economic development of small offshore oil deposits. Together with co-founder Max Begley, Roberts is hopeful that the innovation will play a major role in unlocking more than 1,000 of the world’s so-called Small Pools (which possibly hold some 2-3 billion barrels) that defy current development economics.
In a nutshell, the eponymous SeaCaptaur System uses an unmanned production spar buoy anchored by an articulated joint to a subsea storage tank. This is maintained by a small tanker, which may also service the facility when visiting to lift product. Small moving objects in the ocean present a range of issues with respect to access and DP vessel performance, which becomes the essence of many of the design elements. The majority of the world’s Small Pools range in size from 5-25 million barrels in water depths of less than 300m, which to date has been the modelling limit of the system.
The spar buoy dimensions are not scalable without an adverse impact on its hydrodynamics, so it is compelled to remain small, and therefore limited to 10,000 barrels of oil per day, but with significant scope for high water cut (at the expense of oil rate) by use of the subsea storage tank in the process circuit. The subsea tank, unlike the spar buoy, is scalable from 45,000 to 750,000 barrels of oil – the ultimate limit being the gantry clearance in the world’s large dry docks.
Most crucially, SeaCaptaur’s focus has been on reducing the unit technical cost (UTC) – both CAPEX and OPEX – with a target of 50% compared to conventional platforms or FPSOs. More pressing is the fact that “in today’s environment, that UTC will have to be around 50% of the prevailing oil price,” he adds. The system facilities’ cost-sharing between production locations up to 100 km apart and serialisation of developments has the ability to bring the UTC down to US$25 per barrel.
Buoys will be buoys
Over that coffee in 2012, conversation turned to ideas which might save the fortunes of a number of ASX (Australia) listed E&P juniors struggling to commercialise small resources with FPSO technologies. “Those ASX juniors only had a chance if they could develop at 50% CAPEX and OPEX of an ambitious FPSO,” Roberts explains. Moreover, that CAPEX would also have to include the cost of wells, subsea and pipeline infrastructure – typically around 40% of the project’s per-barrel cost – Roberts said their real objective was closer to a 70% cut in production facility costs.
One of Roberts’ previous roles was in project management for Australia’s Western Mining. In particular, he put together a concept for the company’s East Spar field – an idea never employed by Western Mining but later revisited in the 1990s by the field’s subsequent owner, Apache Energy. This formed the basis for the Apache East Spar, the first of its kind in the world. It seemed that coupling this blueprint with a subsea storage tank could be the solution to the FPSO problem, an idea which would spark the formation of SeaCaptaur.
While the spar buoy and tank design has been proposed previously for Small Pools developments, Begley and Roberts believe that their system overcomes the key challenges which have so far limited progress. However, the conflicting motion on the surface between the spar buoy and a vessel deploying a gangway made designing that system a little trickier. “The reason it didn’t work initially was that we couldn’t moderate the spar buoy motions in such a way that we could reliably deploy a gangway from a DP vessel,” Roberts says, essentially preventing any personnel from safely reaching the spar buoy to carry out installation, maintenance and the offloading of oil. It was here that SeaCaptaur turned to an innovation from the renewables industry.
“The gangways used by the offshore wind farm industry are the key to being able to put people safely on these buoys. These are basically a 14m-in, 21m-out gangway, which gives you a 7m range before you’re in trouble,” he explains. These wind farm systems have a significant wave height limit of 2.5m, which in the central North Sea represents a 95% mid-summer transferability, reducing to 40% mid-winter. Operating under such arrangements with the close-in reference target (the spar buoy) moving presents many challenges for the DP close-in reference systems, such as fan beam and USBL.
The tanker vessel can then deliver oil to locations up to 600 nautical miles (1,100 km) from the spar buoy, with the best outcome being a refinery, eliminating a third-party facility tariff through charge, and a lifting charge from that third-party facility, possibly a net saving up to US$15.0 per bbl.
The challenges of marketing small, possibly mixed, source crude lots have been discussed with a number of oil traders. Some view these with enthusiasm; others not so.
The buoy is monolithic to the subsea connection joint on the tank, which aids stability by limiting motion. “That also solves a range of other problems at the same time,” Roberts adds. “The underslung architecture required between an FPSO and the seabed is inside the spar buoy leg. It then becomes a plug and play interconnect”.
SeaCaptaur estimates an approximate ex-builder CAPEX for a 100m deep spar buoy of around US$75 million, with the “offshore installation time with a large DSV estimated to be 36 hours,” he explains.
Tanks and tugs
With the exception of the gangway, Roberts is quick to point out that very little in the SeaCaptaur system is new to the industry. Even the subsea tank design is relatively commonplace, although it has seen some additional innovation. The SeaCaptaur tank is designed to be a double-hulled, MARPOL-compliant tank, assuming with time that regulators will require subsea tanks to be built to that standard.
That lowers costs too. “The double hull allows the tank to be deployed and recovered using a heavy Anchor Handling Tug (AHT) rather than a derrick barge,” he adds. “A barge in the UK North Sea is about GBP1 million [US$1.3 million] per day, whereas an AHT is around GBP 95,000-100,000 [US$122,000-130,000] per day. It’s an order of magnitude difference.”
The ability to use an AHT also opens up a wider installation schedule. A limited number of installation vessels and a restricted weather window keeps operating costs (and project risk) high with similar projects (Roberts cites the tank installation duration at the Solan field, offshore West Shetland, as a cautionary tale). “We set the SeaCaptaur subsea tank basically as a deep-water mooring with manipulation of the buoyancy of the tank so that a vessel such as a Maersk L-class can use its winch… All we have to do is keep the tank’s submerged weight in the region of 300 tonnes and the vessel should have no problem getting it down,” he continues.
Moreover, the tank is reusable. Once its production life has ended, it can be recovered and dry-docked before being redeployed, all of which helps to lower the lifetime cost. Although none have yet been built for a full SeaCaptaur system, the company calculates the ex-builder CAPEX of a 65,000 bbl uninsulated tank to be+ approximately US$28 million.
Much of the rest of the system’s efficacy comes down to size, planning and placement. The notional operating limit of 300m substantially captures the world’s opportunity set. Small is the key to staying within budget. Any form of gas compression is not possible owing to confined space safety. Staying small is also the key to the thermal management of waxy and high pour point crudes. Emulsions are unwelcome, but manageable. The 10,000 bpd production limit has demonstrated itself in many case studies not to be an unfavourable upper bound, and a better economic outcome is achieved by limiting early production rates, and extending production life, rather that up-sizing.
The opportunity roll-out in a specific setting such as UKCS becomes “a mathematical theory issue”, Roberts notes. Although the most economical way to drain most pools would be with a single well, the latter’s performance risks drive the need for a second well, unfavourably affecting UTC. However, the SeaCaptaur system can be placed such as tie-backs to nearby (say 5 km) locations, which could also mitigate the single-well dependency risk. Each system would be capable of handling three tiebacks.
Roberts believes that a clustered approach makes much greater sense – a strategy highlighted by the UK’s Wood Report, and enforced by regulators in countries such as Malaysia. A recent study commissioned by NSRI and undertaken by undergraduates at Robert Gordon University is the first step in building the mathematical foundations of understanding the clusters conundrum and the Wood Report MER (Maximise Economic Recovery) objectives. Systems such as SeaCaptaur cannot be viewed as single-project, unitary deployment systems. Serialisation and clustering have to enter the lexicon of Small Pools to take new projects’ UTC from US$60 per bbl down to US$25 per bbl.
Clustering requires some innovation too, albeit at a policy level. Roberts believes that in most markets, the current business and regulatory model is unsuitable for the types of developments which are needed. “What’s going to have to happen is to aggregate a good field and four or five Small Pools, to mix the high hanging and low hanging fruit into economic opportunity sets. The grid map approach doesn’t work in the next phase; instead you put them together as a cluster or a set and offer them to the market.”
New forms of finance will also need consideration if these pools are to be tapped. “We need to look at the whole financing arrangement – we need to be able to lease these facilities, not capitalise them,” he says. “When we do the numbers it works for everyone: the operators make money and the government collects taxes; on a capitalised basis there are no winners.”
Fortunately, interest in Roberts and Begley’s technology has been promising. At present, the SeaCaptaur system is under assessment by INTECSEA, a process which will see the group “independently verify the proof of concept,” Roberts says. Between that verification, UK cluster analyses, meeting regulators and looking for companies willing to take on the technology, SeaCaptaur has plenty to contend with. In addition to all of that, the SeaCaptaur Team will soon be on the road fundraising to support the completion of the development phase plus the build and deployment of SC1.
Despite the industry’s conservative outlook, the concept has found favour with groups like ITF and the NSRI. With the right support, the SeaCaptaur system could well prove transformative for Small Pools worldwide. Begley and Roberts may have saved those E&P juniors after all.