AC AND DC UPS SOLUTIONS FOR OFFSHORE OIL AND GAS ENGINEERING APPLICATIONS
Powering the Future Tom Cropper, Editor Delivering a reliable uninterrupted power supply is crucial to both the safety and profitability of the offshore industry
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Total said it still believed they could make a positive financial return. For that to happen, though, production rates need to be excellent and costs need to be kept to a minimum
EBRUARY 2016, and, in a long overdue fillip for the British offshore gas industry, a major new gas plant begins operations in the Shetlands. Developed by French company Total, this multi-billion-pound project promises to deliver gas for two million homes in the UK and tap the lucrative deep water reserves west of the Shetlands. It’s a project which perfectly illustrates both the opportunities and uncertainties which lie in the offshore oil and gas industry. Total’s project is the largest construction development in the UK since the 2012 Olympics. It cost more than £3.5bn and will process 500 metric tons of gas per day. It opens up a lucrative area which experts predict contains around a fifth of the UK’s remaining offshore oil1 and gas reserves and represents hope for an industry which has struggled in recent years. However, like many other deep water projects, it faces a question – can it be profitable in the current climate? Gas prices, as well as oil, have experienced a traumatic couple of years. Brent Crude currently stands at $34 per barrel, while gas prices came close to record lows2. Predictions of a recovery have consistently proved wide of the mark and, although there is some good news, with talk of an output freeze coming from OPEC, there are fresh fears of continued oversupply thanks to the re-entry of Iran into the oil market – as well as continued high production levels from US Shale. The obvious question is whether deep water exploration remains viable, especially given recent poor exploration and production rates. Speaking about the Shetland facility, Total said it still believed they could make a positive financial return. For that to happen, though, production rates need to be excellent and costs need to be kept to a minimum. The same is true of other deep water projects coming online around the world. These were planned and developed in a time of significantly higher oil prices. Much of
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the capital has already been invested and, while they can still make a return, they must operate in a much tighter environment than their parent companies ever envisaged.
Safety Concerns According to many, these facts are enough to imperil the industry. Speaking to Energy Desk, Robert Bea, head of the Deepwater Horizon Study Group, who testified at BP’s Deepwater Horizon trial, said the low price environment increased the risk of more oversights. “Experience has demonstrated that ‘cost cutting’ can result in undesirable reductions in the protections that are needed to be ‘safe’,” he told the site. “In general, the companies do not have a valid and validated way to quantify ‘safe’… it is ‘up to the operator’ to determine what is ‘safe’. It is analogous to driving a car without a speedometer and being told and required to ‘drive safely’3.” Bea was talking to Energy Desk at a time when the oil price stood at approximately $60. Since then, of course, oil prices have taken another steep dive losing a further 50% of value. If companies were concerned about cost cutting in 2015, it’s an even bigger issue in 2016!
Power Issues Both the price and safety concerns draw significantly on the way in which an oil and gas rig is powered. With so many systems on board a rig reliant on constant power supplies, the consequences of a power failure could be severe. Unfortunately for the industry, power outages are more common than it would like to admit. In December 2014, Marathon was forced to evacuate all non-essential personnel from the Brae Alpha platform in the North Sea4. A year earlier, Statoil had been forced to close production from its Visund Platform after it experienced power outages5. Statoil also experienced a gas leak at its Oseberg field centre caused by a power outage6.