Subsea processing is poised to grow into an important new business sector because it can substantially reduce offshore platform expenditures and in some cases, eliminate the need for platforms completely, according to a joint study by energy analysts Douglas-Westwood and technology specialists OTM Consulting.

North American offshore subsea processing is expected to reach $224 million over the 2003-2012 period, and will be one of the four global regions that will account for 80% of the forecasted capital expenditures in the study’s mid-range estimate. Western Europe will be the leading regional market, with projected spending of $480 million, followed by Africa and Latin America.

“Subsea processing is a true ‘game changer technology, in that by separating or pressure-boosting well fluids on the seabed it has the potential to massively reduce expenditure on offshore platforms,” said Chris Dudgeon, OTM managing director. “If operators’ performance expectations are met, then over the next decade, global expenditure on subsea processing could total $1.6 billion.”

The study found that “logical extension” for some situations would make it possible to remove the requirement for platforms completely. It “also presents exciting new opportunities for enhancing production and recoverable reserves.”

Subsea processing was first experimentally deployed more than 20 years ago offshore, but in the past few years, major oil and gas companies have begun to seriously collaborate with suppliers to develop systems, said analysts. In the Gulf of Mexico (GOM), several producers have upped their spending on subsea technology, including ATP Oil & Gas Corp., which is using the systems in its Mississippi Canyon and Gomez fields (see NGI, Sept. 8).

A joint subsea natural gas development by Pioneer Natural Resources, in GOM’s Canyon Express and the Falcon Field, is currently the deepest gas play in the world in terms of water depth (see NGI, Sept. 8). And Shell Offshore’s NaKika Project in the GOM includes six subsea satellite fields in water depths as deep as 7,600 feet (see NGI, Feb. 17).

“There seems to be a more structured, long-term approach now under way rather than the previous ‘one off’ approaches used before,” said Dudgeon. He noted that the “most surprising aspect of our study is a complete reversal of operator opinion. Three years ago, only 10% of operators interviewed had plans to install subsea processing, but in our new survey 90% expressed a view that they would like to install over the next five years.” Now, he said, there is a “narrower interpretation of the benefits.”

Two years ago, he said, it was considered a cure-all for a wide range of challenges such as deepwater, long tiebacks and restricted topsides. “Now, it’s mainly being considered for reducing platform topsides. Operators have developed a realistic approach to where they want to use it, and this means that suppliers can begin to make the right sort of equipment.”

The first generation of subsea processing concepts are being reinterpreted and developed into new products, installed subsea pumps are performing well and reliably and in the last few years there has been a global uptake of subsea processing.

Ian Ball, Royal Dutch/Shell Group’s subsea systems development adviser, said a key trend he sees is the use of the technology not just to perform discrete tasks but also to enhance and accelerate production and reduce overall costs. He said subsea processing “adds global value by enhancing production through reduced wellhead back pressure and enabling ultra deepwater production and longer subsea offsets.”

Using a base-case scenario, Douglas-Westwood market analyst Steve Robertson forecasts that global capital spending (capex) from now to 2012 will be just under $1.6 billion and involve a total of 86 seabed boosting systems and 28 separation systems. “Our high and low oil price scenarios result in capex projections for the sector over the same 10-year period of $3.5 billion and $552 million respectively.”

For more information on the full 150-page “Subsea Processing Game changer Report,” visit the Aberdeen, Scotland web site of Douglas-Westwood at www.dw-1.com.

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