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THEASGARD DEVELOPMENT

LE DEVELOPPEMENT D’/kGARD

H. Carlsen, O. Huus, O. Mosbergvik Statoil,

ABSTRACT

The ~sgard Development has opened a new area of the Norwegian Continental Shelf for direct export of natural gas to the European Continent. The development comprises a new gas and oil field unit, 1400 km of 42” pipeline and additional processing facilities for the export gas. Offshore production installations at ~sgard are based entirely on floaters and subsea systems. The rich gas from the field is being processed in a new plant at the excisting gas terminal at Ki?irsto in Norway. This paper presents a general perspective of the overall development. Project management, technical complexities and technologies are highlighted and illustrates why the ~sgard development chain must be regarded as a unique industrial undertaking.

RESUME

L’exploitation d’~sgard a ouvert la partie nerd du plateau continental norvegien a l’exportation de gaz naturel vers Ie continent europeen. Ce developpement inclut un nouveau gisement de petrole et de gaz, un gazoduc de 42 pouces (environ 107 cm) de diametre et de 1400 km de long, ainsi que des installations supplementaires de traitement du gaz en vue de son exportation. Les installations de production offshore d’~sgard sent entierement basees sur des structures flottantes et des systbmes sous-marins. Le gaz particulierement riche qui provient du champ est traite clans Ies nouvelles installations du terminal de K&st@, en Norvege. Le present document offre une perspective globaie du developpement. La gestion du projet, la complexity des problemes techniques, ainsi que Ies solutions technologiques y sent mises en relief et illustrent Ies raisons pour Iesquelles Ie developpement du champ d’~sgard doit ~tre considere comme une entreprise industrielle exceptionnelle. DISCLAIMER

Portions of this document may be illegible in electronic image products. Images are produced from the best available original document. 1. BACKGROUND AND OBJECTIVES

The ~sgard field development in the Norwegian Sea opens for export of natural gas from a new northerly part of the Norwegian Continental Shelf to Central Europe. The new 42” diameter pipeline system which starts at ~sgard has a total length of about 1400 km and reaches Dornum in Germany via K&st@ in Norway (Figure 1).

Figure 1. Location of field and transport lines

The development of ~sgard was pursued on the basis of two important circumstances on the Norwegian offshore scene in the mid 1990’s.

1. There was a push to increase the Norwegian gas export to the European gas market. 2. There was a general concensus in Norway that the cost and time to develop offshore fields could be reduced substantially. This was called the NORSOK initiative, which was the Norwegian respons to the similar and already ongoing CRINE initiative on the British side.

Another factor driving the development, involved a business development process in the ~gard area which brought forward a unitized development concept involving 3 different fields in 4 different concession areas.

The three ~sgard fields (Midgard, Smimbukk and Smarbukk S@r)were discovered in the period 1981- 85 by Saga and Statoil. Early attempts to develop the discoveries individually could not show acceptable return on investments. A successful development concept was finally established when the Iicencees agreed to unitize the three different fields under the common name of /4sgard. The agreement followed comprehensive efforts to optimise the development concept for the ~sgard Unit. The final concept gave an early oil production, followed by a period of joint gas and oil production and a final period of gas production only.

Application to develop ~sgard was filed to Norwegian authorities in December 1995. The chosen field installation concept was entirely based on floaters and diverless subsea systems. This final development concept gave increased total recoverable resources and resulted in satisfactory return on investments.

An application to develop the necessaty gas export system from the field to the European Continent was issued in parallel with the field development application. The export concept was based on .C

pipeline transport of rich gas from the field to a processing plant onshore at either or K&sta. The existing gas terminal at K&sta was later chosen as the site to treat the rich ~sgard gas. The export of ~sgard sales gas to the continental market required a new large diameter pipeline (Europipe II ) out from K&sta.

Total costs for the ~sgard development are about 65x 109 NOK (8,3x109 USD), of which offshore installations including wells amount to about 39x109 NOK (5x109 USD). The development represents a significant industrial undertaking in terms of commercial approach and CAPEX as well as technology and project complexity.

The main objective for Statoil as operator of the ~sgard development was to find a viable production scheme that would give an acceptable return on investments. The scheme also opened for better future possibilities to produce gas and oil in this region.

2. DEVELOPMENT CHALLENGES

Developing a new field area and export infrastructures in the case of ~sgard implie facing a series of challenges. This include managing size and different, dynamic parts of the project, overcoming technical difficulties as well as qualifying new technologies.

~sgard is located on the Halten Terrace, about 200 km offshore north-west of Mid Norway. Water depth ranges between 240 and 310 meters. The region is important to fisheries and bird life. Distance to the gas market is substantial and the route inludes deep waters relative to large diameter pipelines.

On the technical side the challenges involves 3 different fields with 10 different reservoirs containing both gas (Midgard), gas and oil (Sm@rbukk) and oil (Sm@rbukk S@r). Reservoirs conditions include large depths, high temperature and pressure, corrosive fluids and tight formations.

On the management side the ~sgard development comprises seven different project organisations covering the following areas - The field gas centre including condensate storage - The oil production ship - Subsea production systems - Reservoir management, drilling and well completions. The &+gard Transport pipeline - The processing of rich gas at K&st@ - The Europipe II pipeline from K4rsta to Dornum

The NORSOK initiative covered of a range of improvement areas including simplified procedures and standards and a stronger teamwork approach between operators and contractors. A new petroleum act paved the way for a process which aimed for more parallell activities, less documentation and simpler relinquishment of acreage.

~sgard was the first major Norwegian field development that fully implemented the result of the NORSOK initiative into the development plan. 3. THE PRODUCTION CHAIN FROM FIELD TO MARKET

3.1 General production strategy

The general production strategy is based on an interaction between the various installations and reservoirs to ensure an overall high recovery and utilization of the available gas and oil resources (Figure 2).

Oil Production +-- r Gas Export -L” *

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Sm.atwkk Sar Smwbukk

Figure 2. Production and drainage strategy

The early oil production runs for about one and a half year while gas is being reinfected. When the gas production centre is linked up to the export system in the autumn-of year 2000, gas production will gradually build up and eventually be the dominating production.

Production and processing of gas and oil on the Gas Centre will yield condensates to be stored on a nearby tanker and then exported via shuttle tankers. The rich gas is transported through pipeline to the terminal at Kt%sta. At K&st@ LPG’s and naphta are extracted in a new plant on the terminal and the lean gas exported through pipeline to Dornum.

The ~sgard Unit has a production prospect of about 113x1 O GSm3 oil and condensate, 212x1 09 Sm3 gas plus additional volumes of NGL’s and nafta over a 30 years period.

3.2 Subsurface and wells

The hydrocarbon formations are located in sandstones of Jurassic age. Reservoirs conditions varies with respect to structures, formations and fluids and requires advanced skills within reservoir management as well as drilling and well operations.

Midgard has the simplest reservoir. It is relatively shallow and the reservoir quality is generally good. The lean gas condensate probably belongs to one single pressure system, allowing for a relatively straightforward drainage strategy.

Sm@rbukk S@rand especially Smarbukk have more complex reservoirs. Complexities include poor to very poor reservoir quality, multiple reservoirs separated by stratigraphic barriers, and resetvoir compartments with barriers to fluid flow. These features put great demands on reservoir description . .

and modelling activities and subsequent optimisation of drainage strategies. Furthermore, high reservoir temperatures and pressures makes drilling and well operations challenging.

The wells on Midgard will be slanted and completed with graveI packs, while the wells on Sm@rbukk have S-shaped or slanted design and are being completed by ordinary perforation without sand control. On Sm@rbukk S@rhorizontal oil producers and injectors have been successfully drilled by geo- steering and completed with slotted liners. Drilling and well operations have been areas of high focus in the project phase prior to production start-up, and a considerable learning curve has been gained since start of the operations.

Some reservoir data and various typical well designs are illustrated in Figure 3.

Figure 3. Varities of well shapes and reservoir properties.

3.3 Field producing installations and technologies

The field installations consist of an oil producing ship, FPSO (~sgard A), a semisubmercible gas processing centre (kgard B) with an associated condensate storage ship (~sgard C) and a subsea production system. The floating installations are close to being operational complete when arriving at the field.

Installations are of world record size of their kind.

An outline of the field development concept is shown in Figure 4. I I Figure 4. Floating and subsea installations

3.3.1. Gas Centre

The Gas Centre, ~sgard B, displaces about 82000 tons and has a gas processing capacity of about 13x1 O 9 Sm3 pr. year.

Overall processing design has been optimimised for energy efficiency and low environmental impact. This includes application of new technologies allowing condensate to be stabilized at higher pressure thus significantly reducing the power needs. Waste heat recovery from the 5 gasturbines corresponds to more than 100xI OGW. Heat integration utilises the energy potentials in hot and cold flows corresponding to an energy production of 45 xl OGW.

The above solutions typically reduce carbondioxide emissions by 700.000 tons per year.

3.3.2 Oil production

Oil production capacity onboard the FPSO is about 32.000 Sm 3 per day (200.000 bbl/d). The ship has a turret and swivel arrangement where the turret is anchored to the seafloor and the flexible risers and other production strings are connected directly to it. The production swivel mounted on the turret allows the ship to weathervane enabling continuous production.

The operational requirements on ~sgard concerning volumes, temperatures, pressures and number of functions take this swivel a significant step beyond previous designs in size and complexity.

Export of oil from the FPSO to transport tankers is performed by means of submerged turret loading.

3.3.3 Subsea and risers

The subsea production concept offers freedom to place wells. The concept facilitates early drilling and completion and hence provides reservoir data in the early development phase.

52 wells are being completed subsea and collected at 17 standardized subsea templates. Multi phase metering and flow control units are mounted subsea on each template.

About 300 km of infield pipelines are required to connect the templates to the field processing facilities

and different hydrate formation control methods are being applied. A new 13 ‘?40 chrome steel quality has been qualified for use in the infield pipelines. Flexible risers have been developed to meet new requirements related to temperatures, pressures and physical sizes. This development implied extensive testing and modifications of critical parts in the systems.

3.4 Gas export installations

The gas export system comprises the ~sgard Transport pipeline, the K&st@ process facilities and the Europipe II pipeline. The system has a carrying capacity of more than 60xI O GSm3 per day. The two pipelines are both fitted with T-joints to facilitate future connections.

3.4.1 kgard Transport

The ~sgard Transport pipeline includes an Export Riser Base (ERB) , an offshore 42” pipeline, a landfall pipeline section, and an onshore pipeline including pig receiving facilities at the K&st@ Gas Terminal ( Figure 5).

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h\ Karst@ ~11~ I.Y I i Landfall%ive satin IG1.w ~y I j. 2s” ERB Landfall Tunnel 1 km I Onshore pipeline.% 42” Offshore pipeline 684.1 km Fjordcrossings 21.6 km I

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Figure 5. ~sgard Transport with tie -in points and Export Riser Base

The route for the pipeline passes depths down to approximately 370 meters and also crosses some land and fiord areas in close vicinity to excisting industrial and municipal settlements and activities. A new tetherless submarine vehicle was applied for the detailed mapping of the deep and rugged parts of the seafloor in preparing for the laying operation. Passing the rocky and steep parts of the Norwegian coastline was accomplished by a 1000 m long tunnel. The line lies at more than 300 meter depth for more than half of its length.

The ~sgard Transport pipeline is operated in dense phase with a maximum design pressureof212 barg. The pigging system make use of a new expandable pig which is launched in a 28 line prior to entering the main 42 “ pipeline.

Connecting the offshore 42 “line to the floating gas centre represents one of the critical parts in the ~sgard development concept. Since little relevant experience was available during the early planning phase, a significant effort was invested to arrive at acceptable designs of both the ERB and the pigging system. The final ERB concept includes flexible risers through the waterleg, the ERB structure with 28’ subsea pig launching facilities and 500 meter of 28” pipeline connected directly to the 42” pipeline. .,,0

Pigging is by means of a new expandable, multidiameter technology. The tool constructed for the job works in principle like an umbrella and is capable of handling both 28 and 42 inches of pipe diameters. It is considered that this type of tool has a large potential in future deep water developments.

3.4.2 The Ki%rst@Process

Expansion of the gas processing facilities at K&st@ includes two new NGL extraction trains, a fractionation train to recover propane and butane and an ethane recovery plant. The expansion also required new storage and jetty facilties as well as new gas export compressors ( Figure 6).

Figure 6. ~sgard Gas Processing at K&st@

The initial gas processing concept in 1995 had been based on hvo alternative landing locations and a preliminary scope. Following the choice of K2rst@ as the preferred landing site during summer of 1996, the development scope and capacity was increased.

The revised and updated project execution plan was approved in March 1998 with a total gas processing capacity at K&sta of about 18x109 Sm3 per year. This in turn gave a total production capacity for LPG, naphta and condensate of about 10xl OGtons per year. Total project costs amount to about 10,3X109NOK(1,3x109 USD)

3.4.3 Europipe II

Europipe II provides export capacity for the ~sgard sales gas and adds significantly to the overall Norwegian gas export transportation infrastructure.

Preparation of the Europipe II landfall through the mud flats in Germany was started in ‘1994 as part of the project. A separate 40” landfall pipeline was then laid in the new landfall tunnel.

Europipe II has since been constructed in accordance ‘with a new design principle which allows for two different pressure regimes being applied. The principle take advantage of the fact that the downstream end of such long continuous offshore lines can be designed for a lower pressure compared to the upstream part. This has allowed for an “upstream” Europipe II design of 42” and 191 barg compared to 40 and 163 barg for the already excisting landfall part of the line. The result is a total capacity increase of about 30 %.

Recieving facilities at Dornum include fiscal metering, and the line continues into a low pressure system (80-85 barg) leading to Emden and Etzel. 4. kGARD AS PART OF “THE NORWEGIAN GAS MACHINE”

The ~sgard development extends the “Norwegian Gas Machine” to the north by about 700 km into the Haltenbanken area of the Norwegian Sea and expands export capacities of sales gas to the European Continent through a new trunkline.

This extension to the north has opened for exploitation of a substantial new reserve base in the region.

Statoii operated gas export pipelines include , Zeepipe, Norfra and Europipe I and are supervised from the pipeline operations centre at Bygnes west of Kt%st@. The pipelines are being regularly inspected on the inside and outside. Inside inspection pigs can now successfully travel more than 800 km in one go.

Together with Norsk Hydro, Statoil has for more than a decade been developing and managing an underwater repair system for pipelines on the Norwegian Continental Shelf. In the ~sgard project this system has been developed further into a diverless system. The system has been tested and applied in normal tie-in operations. Its primary role is to function as a contingency repair system.

~sgard is being operated from Stj@rdal and Kristiansund. The operating organisation will count about 300 people, of which about 200 will be offshore. Offshore positions are organised in autonomous teams where each individual carries a wider base of skills than in a more traditional organisation. Standardized, cost effective “state of the art” plant information systems will contribute to effective and safe operations.

The new pipeline infrastructure which has been developed as part of ~sgard, supports and strengthens the existing net of gas pipelines.This include higher capacities as well as increased reliability and flexibility by means of shared production and processing capabilities. For the gas customers this means a more reliable supply of gas.

The marketplace is now in a process of change as a consequence of the EU gas directive. This will lead to a market which is more open, dynamic and has more players. Statoil is prepared to develop its role further in accordance with this new market situation.

As outlined above ~sgard is adding a new dimension to the excisting “Norwegian Gas Machine”. in the Iongterm perspective, ~sgard needs to rely on a fairly wide spectre of competence and skills to run and develop this machine further. This in turn requires support through R&D activities and additional investments in order to stay in the frontline, be competitive and manage risks.

5. SUMMARY AND CONCLUSIONS

Planning and executing the ~sgard development represented a major challenge of carrying through parallell actictivities during times of uncertain reservoir information as well as qualifying new and critical technologies.

The unitisation of ~sgard and harmonization of the project underway as new drilling and reservoir information became available, has provided synergy potentials that made the whole concept both technically and commercially acceptable. ~sgard is the largest and most complicated development on the Norwegian Continental Shelf so far The project development phase is approaching its conclusion. Did we manage to develop ~sgard in accordance with plans and objectives?

Oil Production from #wgard started May 19th. 1999. At time of writing we are still in an early production buildup phase and producing as planned between 20.000 and 30.000 Sm3 per day. Production capacity from the wells is building up as planned, Europipe II was officially opened for operations on schedule, October 1st. 1999. The line is initially transporting gas from the Troll and Sleipner areas. ~sgard Transport finished laying the main line late autumn 1999. The additional gas handling and processing facilities at K-&st@are being completed on schedule and the entire gas export system is on schedule to be completed for startup October 1st., 2000.

The ~sgard development is proceeding as planned with high activities on the ~sgard B platform and on the field.

At present we see that ~sgard has significantly reduced costs for installed capacities compared with early 1990’s numbers on the Norwegian Continental Shelf. This achievement has been reached jointly with our industry partners and suppliers through the NORSOK initiative. Ambitions of cost reduction and control at the start of the project have however not been achieved.

~sgard has applied advanced technologies and contributed to move the technology frontier in a way which will be beneficial to future offshore developments.

The development is in the process to give its owners a satisfactory return on their investments. Expected production life of ~sgard is about 30 years. With a design life of 50 years for the Gas Centre and available spare capacities and flexibilities to produce and export additional gas and oil, ~sgard represents substantial business opportunities for the future.

In an overall perspective the ~sgard development marks a major and unprecedented industrial achievement in our waters. The development opens for direct export of natural gas from a new northern part of the Norwegian Continental Shelf to the market in Central Europe.

Throughout this development we have had the pleasure to cooperate and draw on valuble expertice from our partners. Our partners and their respective ownerships (approximate %) are listed Table 1.

The Iicence holders/owners (Y.) Asgard Asgard Europipe II Field Transport Norsk Hydro as. 2,60 2,60 4,72 Fortum 7,00 5,00 3,66 Mobil Exploration Norway Inc. 7,35 7,35 1,18 Total Norge a.s 7,65 7,65 5,90 Norsk Agip a.s 7,90 7,90 2,40 Saga Petroleum asa** 7,00 9,00 10,63 Statoil a.s and SDFI * 60,50 60,50 60,01 ( SDFI=60) Esso 7,68 Elf 0,01 Shell 1,18 Norske Conoco a.s 2,66

Table 1. Partners and ownerships

* Statoil is operator for field and transport systems. SDFI = State direct financial interest ** Saga has been assisting Statoil on the field development project

The gas process development project at the K&sto gas terminal constitutes the above 3 groups of investors as well as and Etanor D.A.