MINIMUM OFFSHORE STRUCTURES COST LESS, POSE HIGHER RISK

NOVEL STRUCTURES

For most marginal fields, especially short-lived gas fields in water depths up to 250 ft and in areas with developed infrastructure, the optimum risk-consequence balance is usually somewhere in between the two scenarios described previously. That is, commitment to construct the platform is made

Only after a successful well log, and the structural system selected is one that can be constructed inexpensively and quickly, such as a "minimum structure."

Industry has recently developed and continues to improve upon some novel multiwell structures that assist in optimizing the compromises described previously. These structures are commonly referred to as minimum structures, and comprise variations on freestanding caissons, braced caissons, guyed caissons, and tripods.

The hallmarks of minimum structures are:

• They can be constructed quickly and inexpensively.

• They can be partially installed by the drilling rig and workboat without need for a derrick barge.

• Most use the well's drive pipe as an integral part of the structure.

• They are less reliable structurally than typical four-pile platforms.

• They tend to be more compliant (have greater deck motions) than four-piles.

• Their planning, design, and installation typically demand close

  construction-drilling collaboration.

• They are usually "fast tracked," that is, design is often incomplete when fabrication commences.

• They are much more impacted by human errors than four-piles.

Examples of these structures are shown in Fig. 1 (5014 bytes). Their details are described elsewhere.3

RISKS

When using these minimum structures, it is important for the operator to recognize, qualitatively if not quantitatively, how much more risk is involved by going with a minimum structure than has been generally accepted by industry in the past by using standard four-pile structure technology.

Fig. 2 (19949 bytes) illustrates the approximate likelihood of platform loss-vs.-installed cost. The estimated failure probabilities are total risks, comprising risk from storm overload and risk of catastrophic failure from "operational" errors, such as fires, explosions, blowouts and ship collisions.

These estimated failure probabilities and loss consequences are the subjective opinions of the author.

Operational risks comprise the lesser part of the total risk to minimum structures but most (about two thirds) of the total risk in the case of four-piles. This is because of the much larger storm overload failure probabilities associated with minimum structures.

Installed costs are structural only, exclusive of facilities or pipeline costs. The costs for each system obviously overlap but are shown in Fig. 2 (19949 bytes) as separate bars for simplicity.

As an example, in 100 ft of water, a braced well protector caisson costs about $1 million installed instead of about $2 million for a four-pile well protector. However, the braced caisson has roughly five times more probability of catastrophic failure compared to the four pile.

FAILURE PROBABILITY

Failure probabilities are computed from probability distributions of the ultimate strength of the structure and the anticipated storm and equipment loadings, as well as the uncertainties (coefficients of variation) in strength and loading distributions.

Reported failure probabilities are derived using uncertainties that include only aleatory-type uncertainties (those caused by natural or inherent randomness, called Type I uncertainties). Computed failure probabilities do not include uncertainties that are epistemic (caused by analytical or professional uncertainties) nor those caused by human or organizational error.4

As with all endeavors, the probability of failure should be commensurate with the consequences of failure. Higher failure consequences dictate taking lower risks. No endeavor is risk free (Risk = Probability of failure X consequences of failure). Fig. 3 (21551 bytes) illustrates this in past offshore construction practices across the full economic consequence spectrum of offshore structural systems.4

Highlighted in Fig. 3 (21551 bytes) are estimated annual total failure probabilities and failure cost consequences for typical new four-pile platforms compared to the class of minimum structures.

Loss consequence costs include those from "disorderly" well and plat form abandonments, litigation costs, and environmental cleanup costs Sunk costs and revenue loss are complicated by tax write-off issues and are not included. Work is presently under way to more objectively quantify these subjective risk and consequence estimates.5 The failure probability/consequence zone shown in Fig. 3 (21551 bytes) for minimum structures is as deep as it is because of the variety of structures involved, with their large spread in associated failure probabilities.

There is, therefore, up to an order of magnitude difference in failure probabilities between four piles and minimum structures, depending on the type of minimum system selected. When such factors as serviceability (functional suitability), durability (freedom from unanticipated maintenance costs), and life-cycle compatibility are included 2 the failure probability differences are even greater.

However, with the cost consequence range for the four pile being much greater because of its versatility, note how conservative the use of four-pile technology is at the low end of its cost consequence range. Such conservatism is costly and unnecessary.

TIMING

Fig. 4 (63453 bytes) shows how minimum structures greatly accelerate the time to first production. For example, with a guyed caisson and refurbished equipment it takes only 4 months to start up from a successful first well log in a three-well program. A four pile with new equipment would instead take 13 months.

These times include structure and pipeline installations and facilities hookup, testing, and commissioning. Of course, refurbished equipment could be used with the four pile, but there is no point in having either the structure or the facilities ready early if the other is going to be late.

In short, by using minimum structures, offshore real estate comes at half the price, in half the time, and with 2-10 times the risk.

JUSTIFYING SELECTION

Minimum structures are therefore well-suited in the right application which is low-consequence developments; typically unmanned remote operations, gas production, minimal production facilities, short field life, and a water-drive reservoir. That is, tiler selection is justified from both economic and risk-taking standpoints.

In fast-track projects, whatever structural system is selected, the facility (both structure and equipment) must be planned, designed, fabricated, procured, installed, and brought online as quickly as possible. The efficiency of this process is driven by bow the project players are organized, which contractors are selected, and how the construction contracts are structured.

PROJECT ORGANIZATION

A successful project organization comes from a strong customer-client culture between construction and its in-house clients. This includes having a few experienced players involved and the trust of management to empower these few.

Construction's role in the operator's overall "idea to produced barrel" development process is one of specialty support. Construction personnel must recognize that clients have to be satisfied. Construction is a necessary nuisance. Profit margins would improve greatly if offshore reserves could be developed without expensive platforms.

Construction's clients are line asset team production engineers, drilling engineers, and production superintendents. They ultimately decide how their teams 11 money is to be spent, and by whom.

Construction recommends and implements on approval. The team production and drilling engineers, even the less experienced ones, ask common sense questions and expect logical answers. These clients then defer and delegate the construction support work.

For efficient project implementation, in addition to clear customer-client relationships, the number of inhouse project people involved should be kept to a minimum. Fewer players means easier communication, fewer misunderstandings, and a greater ability to implement changes and improvements. This is especially important in shallow water fast-track projects, where construction is under way with design incomplete, and the drilling rig assists with installation.

By necessity, these few players must be experienced. Much credit goes to an operator's management that is willing to allow such a small organization and to empower the few individuals with

significant project authority and responsibility. The down side of such an organization is that management has much of its human resource eggs in fewer baskets and the construction group must depend heavily on the wisdom of its project contractors, particularly the engineering contractors.

Fig. 5 (39750 bytes) illustrates Unocal Corp.'s Gulf of Mexico project construction organization. One or two people are responsible for contracting a significant fraction of asset-team annual funding (over $25 million in 1994) on a wide range of construction and maintenance projects. With management permission and in-house client delegation, they must be capable of doing this work. This is only possible with the "right" outsourced support.

RIGHT OUTSOURCING

A compact construction group is only capable of successfully implementing a large number of projects by outsourcing everything but the project's planning and site supervision (basically design criteria, contracting, and on-site supervision) to capable contractors who require little or no hand holding, and who are experienced at, and suited to, performing the work at hand. Therefore, selecting the right contractors is paramount to project success, hence "right" outsourcing.

These construction contractors and their reporting relationships in Unocal's project organization are shown in Fig. 5 (39750 bytes). The engineering contractor plays a key role. He must be an extension of the operator's construction group and act on its behalf on numerous nonenginecring tasks, such as bid and permit package preparation, scheduling, and procurement.

Because of time constraints, the operator's construction group relies heavily oil his wisdom, that is, his seasoned, experienced opinions on the conceptual level, as well as his ability to efficiently work out the details.

The most desirable attribute of fabrication and installation contractors is that they deal fairly with "extras" caused by changes in or expansion of the work scope, which tend to come with the territory of fast-track construction. Some contractors are much easier to work with on this issue than others. This plays a part in bid evaluations.

The onshore quality assurance team, comprised of a few, experienced contract personnel, plays an important role in the fabrication yard by ensuring compliance with operator specifications on material quality, dimensional tolerances, weld quality, and correct coating application. They also run interference for the operator's construction group on the numerous quality issues that arise and keep the construction group appraised early of potential problems that might impact the schedule.

The quality assurance team reduces the impact caused by human errors. The likelihood and impact of human errors are much greater in all phases of fast-track construction (design, fabrication, and installation), especially with minimum structures.

PROJECT CONTACTING

The contract is the last element for a successful project. That is, contracts should allow the in-house construction group to spend as little time as possible on managing the day-to-day developments on any one project, while allowing the contractor maximum control and flexibility in the project's management and implementation.

The main objectives, whatever the contract vehicle, are to keep the work scope clear and to keep changes from bid to project completion to a minimum. This is more difficult with fast-track projects, where detailed design is often incomplete when fabrication starts.

Using "tried and true" structural systems (any of the systems illustrated here) in applications which well suit the system selected can help prevent changes. The onus is again on the operator/contract designer team to freeze the scope and to catch errors and oversights, preferably prior to bidding, and especially prior to fabrication.

FULL TURNKEY

A full design/fabrication/installation turnkey contract maximizes time use of the operator's construction group, and gives maximum control to the contractor. Deliverables and pricing can be clearly established. The significant interfacing required between designer, fabricator, and installation contractor become transparent to the operator's construction group.

Unfortunately, only one contractor in the Gulf of Mexico can currently provide this single source, one-stop shopping service. Other contractors can assemble ad-hoc project alliances between designer, fabricator, and installer, but at a price that is usually hard to justify, no matter how time constrained the operator's construction group might be.

Besides a lack of available "full service" contractors, the design-to-install contract requires that the civil and facilities work scopes are clear and simple, that all design data are available early (including geotechnical criteria), and that the work is scheduled outside the winter months.

PARTIAL TURNKEY

A more common set of contract arrangements is engineering performed on a time and materials basis with separate lump-sum, single-price turnkey contracts for fabrication and installation. These assume that installation is performed outside the winter months of November through April.

This set of contract arrangements is optimum from the standpoint of cost and shared risks, but it places more time demands on the construction group. Constraining designers to lump-sum contracts tends to be shortsighted because this is where a maximum amount of wisdom and a minimum of uncaught errors is required.

RISK/REWARD

In risk/reward-type contracts the cost and time goals are agreed upon at project start, and the contractor (usually the fabricator) is rewarded for improving on these goals, or penalized for not meeting them.

These contracts are more suited to large projects, not the high volume, high speed, low-cost projects associated with marginal field development.

OTHER CONTRACTS

There are two other contract-related ways of reducing costs of marginal field structures: installing both the pipelines and structure with the same construction spread, and "piggy backing" construction with less time-critical salvage work.

Lump-sum combination bids may or may not be attractive. These lightweight structures can be set with much smaller cranes. Lift weights are usually less than about 70 tons and hook-height requirements are less than about 100 ft, which are capabilities commonly found on pipelay barges.

By combining pipelay and structure installation work, there are evident savings in mobilization costs and the benefits of working with one contractor on one schedule. However, in the Gulf of Mexico there are numerous specialty contractors with equipment spreads tailor-made for either pipelay or structural work.

Unocal has found that two prices from separate contractors are generally less than one price from a single contractor to do the combined work. Further, operators and contractors organizationally tend to split pipelay and structure responsibilities so that communication nice coordination of combined work is more difficult.

With operators organized into numerous location-specific teams, the integration of each team's salvage Work across the Gulf is more difficult. Cost savings from this integration can be substantial, for both salvage and new construction work. These savings are achieved through effective planning and work packaging.6

PROJECT EXAMPLES

The following are examples of "minimum structures" installed by Unocal in the Gulf of Mexico. Minimum structures are a minority of the multileg platforms recently installed by Unocal. The majority were four-pile platforms, and one platform was a six pile. Platforms currently under design are primarily four piles.

For simplicity, the costs discussed below are structural only, exclusive of pipeline and facilities costs. Structure costs for these developments are usually about three quarters of the total "hardware" cost for facilities, structure, and pipelines.

Cost and time improvements from minimum structure technology are discussed below, but associated risks are not. The reader is referred to the system-dependent failure probability estimates shown in Figs. 2 (19949 bytes) and 3 (21551 bytes).

GUYED CAISSON

The VR328 A structure is a guyed caisson, three-slot platform in 215 ft of water on a short-lived gas field with a production train processing about 20 MMcfd. The structure, installed in the winter of 1993 for about $2.7 million, uses refurbished production equipment. The comparable cost of a four-pile platform is about $4.5 million installed.

The use of this system avoided the release of a contracted drilling rig, which was used to install the caisson in one float-in piece adjacent to the first well. The other two wells were drilled, the rig released, the guying system installed, and the deck set. Production start-up began in February 1994, 14 weeks after rig departure.

Using a comparable four-pile platform, a new 300-ft class rig would have had to be contracted and the well mudline suspended. Start-up would have been delayed by about 5 months. Including rig mobilization and well tieback costs, four-pile technology would have cost about $6 million.

Salvage costs when the field depletes in about 1 year should be less than $1 million, or about half the cost of salvaging a four pile.

This application probably defines the edge of this technology for the Gulf of Mexico. There have been problems with the compliance of this system because positioning equipment failures in midwinter caused misplacement of the pin piles. This has led to life-cycle costs for this guyed system that are approaching the capital cost of a tripod structure.

For future designs, improvements identified include reducing the importance of pile placement and the use of a combination termination/boatlanding grouted single-piece sleeve.

To provide some reinforcement and redundancy to the structure because of the addition of a 380-hp compressor, a 60-ft grouted reinforcing sleeve inside the caisson around the water-line area was installed.

Compression is needed because the reservoir is volumetric, and not water-driven as initially presumed. The cost of this remediation that includes the removal of some dehydration equipment and the installation and hookup of the compressor was about $600,000.

FREE-STANDING CAISSONS

Deep, high-pressure wells in less than 80 ft of water in the Gulf of Mexico can be safely protected by anything from a free-standing well protector caisson to a four pile, depending on equipment requirements, the number and cost of the wells, and the structural design criteria used.

Past industry practice has been to set four piles in most of these applications. However, if equipment requirements are minimal and only one to three wells are required, a caisson can serve the purpose, particularly if the caisson's strength design and fatigue analysis are conservative. Such conservatism in a caisson is generally not that costly, as in the case or VR26 No. 52.

The VR26 No. 52 free-standing caisson was installed over a gas well in 25 If of water for $350,000. Start-up was 3 weeks after caisson installation by the rig. A comparable four pile would have cost about $1.1 million, and start-up would have been delayed by some 8 weeks.

In the case of ST53 No. 6, there was a spare caisson available from a dry-hole (the typical buoyed location's dry-hole exposure, excluding the cost of the well), which was suitably modified for reuse. The free-standing caisson platform was installed in 60 ft of water for $580,000.

The deck was installed 10 days after the caisson was driven. Start-up commenced 40 days after the rig left the site. A comparable four pile would have cost about $1.5 million. Start-up would have been delayed by about 2.5 months.

TRIPODS

A tripod well protector was installed on Blocks SS253 F and SS268 D. For SS253 F in 165 ft of water, the asset team was confident enough in the reserves to preinstall the structure prior to spud for a dry-hole cost of $2.7 million, exclusive of the well cost.

The structure was fast-tracked with a single-price, design-fabrication-installation turnkey contract. It was designed, fabricated, outfitted, and installed in 4 months. Three successful wells were drilled through the structure. The first well started production 6 days after being completed.

The installed tripod structure cost $2.0 million. A comparable four pile would have cost about $2.85 million. If a four-pile structure had been set after the first well was drilled, its installed cost, including rig remobilization costs and costs for well tieback operations, would have been about $5 million. Relative to the schedule achieved, start-up would have been delayed by about 5 months using four-pile technology.

In the case of SS268 D in 190 ft of water, the play was more exploratory. At the time the first well was successfully logged, $135,000 had been spent on engineering and a soil boring, material had been sourced, and a one-price, design-fabrication-installation turnkey contract was conditionally awarded.

The six-slot structure was installed 4 months later for $2.5 million, about 2 months faster and for about $1 million less than a comparable four-pile platform.

BRACED CAISSONS

A five-well development program is under development in the SS268 field at three different locations; single wells at N and M and a three-well program at L in one-rig mobilization in 100 ft of water. A three-slot "Guardian" braced caisson well protector platform (Fig. 1 (50114 bytes)) is under construction for the N location, and a six-slot, four-pile well protector platform is under construction for L. A three-slot "Mantis" structure (Fig. 1 (50114 bytes)) is being designed for M, pending a successful well log.

As of July, separate lump-sum contracts have been awarded to fabricate and install the N braced caisson platform for $815,000 and the L four-pile platform for $1.7 million.

The price to install the N structure and pipelines with one spread in one mobilization was 20% higher than splitting the work into separate packages. The L structure will be preinstalled prior to spudding the L wells at the front end of a previously awarded salvage package, thereby reducing its cost by some $80,000.

IMPROVEMENTS

Improvements to minimum structure concepts need to come from feedback after use, especially on such issues as installation difficulties, fatigue inspections, and motion behavior in moderate storms. Contract designers should be intimately involved with their installations. In-house construction groups should relay feedback from field operators to contract designers.

No vehicle readily exists for industry users of this minimum structure technology to share candid feedback and experiences, with a view to improving designs and developing new cost saving ideas. Perhaps a joint industry project along the lines of the work in Reference 5 might serve the purpose.

One issue is to better understand the effects of deck motions on human and equipment productivity by calibration of structural models to recorded motions during storms. Excessive deck motions are often an important design consideration for these more compliant structures, from both structural and operational standpoints, and especially for those located in deeper waters.

BUILDING BLOCKS

A means to provide long-term support to a single well in about 150+ ft of water without mudline suspension would be desirable. Free-standing caissons become uneconomic and excessively compliant in these water depths.

This could be solved if designer/fabricator alliances would commit to supplying prefabricated "building blocks" of their structures on short-term notice. In that way at these water depths, in the short time between a good well log and the rig quitting the site (typically 10 days to 2 weeks), the rig could construct part of the structure's permanent support frame from these prefabricated building blocks that will support the above-surface well and tree. This would result in zero dry-hole cash exposure.

NEW STORM CRITERIA

New (lower) storm criteria for designing "low consequence" structures are presently being developed by API.1 New platforms, from a remote single-well caisson in 10 ft of water to a manned multiwell drilling and production platform in 1,000 ft of water, have so far been designed basically to the same safety level using the same 100 year return period storm criteria and associated stress allowables.

The intent now is to relate design criteria (or safety level) to failure consequences, in a similar manner to that discussed previously. When published, these criteria should result in a better distribution of resources, financial and otherwise, for both new construction and the assessment of existing platforms.

DEEPER WATER

The extension of minimum structure technology to deeper water is likely, especially tripod technology.7 However, lighter tickets in deeper water mean higher risks and greater failure consequences. This is a risk/consequence balance going in the wrong direction.

Operators must be aware of the risk differences, as discussed here for shallow waters, between the lightweight, low-redundancy structures being proposed, and the more massive redundant structures used in past deepwater developments.

REUSE

Reuse of these minimum structures is less likely in the Gulf of Mexico because of the variability of water depth and soil conditions.

Reuse is more likely internationally in some maturing plays with less variable conditions such as the Gulf of Thailand, where minimum structures could be recycled numerous times (installed, salvaged, and reinstalled) on different, short-lived reservoirs at significant cost and time savings.