with Martin Tiffen, Managing Director, Total E&P Norge
Since the Frigg field was decomissioned, Total E&P NORGE spent several years as only a partner in its portfolio of licenses. What was the thinking behind moving back into the operator role?
Since production from the Frigg field ceased in 2004, our production operations in Norway were limited to two subsea fields called Skrine and Byggve.
In 2010 we drilled two wells, one an appraisal well on the Martin Linge license and the other an exploration well on the Skirne license, on a target know as Atla. Both these wells were successful, and as a consequence we were able to send in PDO (plan for development and operation) for both fields.
For Atla the development plan was relatively straightforward, a subsea tieback to existing facilities, However as it was of relatively modest size, the project economics depended on being able to get it onsteam quickly and on budget.
We were able to bring Atla on-stream just two years after discovery, and so. Atla can be labelled a genuine fast-track development.
In the case of Martin Linge, the presence of hydrocarbons had been known about since the mid/late 1970s. However the field was difficult to image seismically and there were large questionmarks around the resources that could be produced per well. We solved this puzzle through a combination of modern seismic techniques and drilling the 2010 appraisal well with a 10 day production test. The well was ‘converted’ into a PDO, which was approved in 2012. This time the development concept is a conventional jacket plus topsides, to come onstream end 2016. So in a way I like to think that we ‘fast tracked’ from the last well to the PDO, even if the field itself had been discovered several decades previously.
Statoil has a large portfolio of fast-track developments, which makes it worthwhile to create common methodologies. Total E&P Norge has the same rationale of bringing fields on-stream faster but on a more ‘one-off’ basis.
We are actually using our fast-track methodology from the UK as an inspiration for our work here on Atla. Our partnership with Statoil on some of its fast-track project also allows us to share experience.
All countries would like to bring fields on-stream fast. Is there anything special in the Norwegian context which enables fast-track developments?
In addition to the pure technical choices, relationships matter . In addition to the operator, partners and the government authorities have to agree on the development. Fortunately in Norway, these relationships are long established and it is not too complicated to reach alignment among the various stakeholders.
It is also imperative to have a service industry capable of supporting a development within the time-frames. There is a highly developed service industry familiar with the relatively standardised building blocks for a development project. The service industry in Norway is therefore another key enabler of fast-track programs.
The third factor is the issue of dealing with gas production, where you may need to agree on sales and other commercial arrangements. Norway has access to a very well developed European gas market where you can monetize gas in a simple way. The industry in Norway is also set up to allow sharing of existing infrastructure.
Taken together, and with drive from our teams, we are in an environment that is conductive to going rapidly.
Given the extent of activity on the NCS today and the strain this places on the service sector to generate throughput, what is the danger of this slowing down fast-track developments?
The growth of investment in Norway is contributing to the health of the service industry and this is necessary for the successful devleopment of projects. In the past there have been concerns about service companies not having enough work and no longer being able to provide a service. Thankfully we are a long way from that situation today.
The demand-side pressure on the supplier market simply means that oil companies need to take a little care to anticipate the availabilty of resources and let that guide supplier relationships, standardization practices, framework contracts etc. It is still perfectly possible to get things done and avoid bottlenecks in this era of heightened activty.
Total E&P Norge is works with many contractors and suppliers both in Norway and overseas. We are able to work with many exsiting relationships to meet our objectives. Anticipation and forethought are key to avoiding bottlenecks in the supply chain.
What arere the lessons learnt from the Atla development?
One of the main lessons was that sometimes you need to be a little courageous and order equipment out of sequence. You will sometimes have to commit to fabricating a project specific part before the complete picture is in place. For standard products like Christmas trees you can probably use the part on another project further down the line so there is less risk in making an early commitment. However, if you commit to something like an umbilical, 7.3 km in length, you are making a project specific commitment. on Atla we had to book the manufacturing space for this umbilical before all the elements we would normally like were in place.
This requires partners and authorities to help you navigate through the system. As long as you are clear that you have a commercial project, this can be achieved without undue risk.
What were the elements that you brought from your experience from Atla to Martin Linge?
Again setting the overall framework in terms of planning and schedule, in the context of PDO along with our partners. In the case of Martin Linge, we made an early commitment to a drilling rig from Maersk, because we need to start in the summer of 2014. We worked to limit this commitment until we had all of the approvals in place.
If we had waited until everything was approved, then we would have had a great project on paper but would not have been able to drill the well in the timeframe required. There are other operators in very similar positions also adopting this strategy. Of course until the government finalizes approvals, we cannot fully commit to large engineering or fabrication contracts. In the end the important factor is that everyone understands how the system works and in Norway that appears to be the case.
Martin Linge will be powered from shore. Is this about respecting environmental commitments or does it actually make economic sense? In Norway, as part of the application and development process, you are required to study the alternative of power from shore. When we did we found that recent advances in technology made this option a possibility.
The cable is 160 km in length, running from Kolsnes to the Martin Linge field and carries 50 megawatts of power. Only a few years ago, transferring high voltage electricity from onshore to offshore platforms would have requried converting from AC to DC and then back to AC on the platform. The AC/DC converter weithed over a thousand tones.
Today with modern power management systems, we can transfer power in AC and thus simply connect up the platform to the grid. The current record for AC power transmission is 110km and so as far as I am aware the Martin Linge power-from-shore project will hold the new world record for AC power transmission to a platform.
When you assess the economics of this investment, there is an increased capital cost to run the cable from shore as opposed to having power generation offshore. However, this investment should reward us with higher uptimes offshore with less offshore maintenance, the company will not have to pay CO2 taxes or other emissions taxes, the work environment will also be better for our employees on the platform and the gas that would have been burnt can instead be monetized as sales gas. When you take all of these factors into account it appears to be a sound economic decision.
Of course, we are proud of the fact that we have set up a low environmental footprint. However, we arrived at the decision through a conventional process of economic assessment.
Many companies shared with us their ability to transfer practices and ideas from Norway to other international markets. How significantly does Norway contribute to your international production techniques and paradigms?
Aberdeen and Stavanger and the North Sea in general have had a common pool of skills, labour, organizations, and contractors. This has been the case for several decades. Those synergies are so obvious that many times we forget to question them.
Regarding Total as a group, one of our specialities has been deepwater developments off the coast of West Africa. Norwegian based contractors and suppliers play a crucial role in these projects. Whether Norwegian owned like Aker Solutions or foreign-owned like FMC Technologies or Schlumberger (Framo Engineering) Norway provides an extremely strong set of technology suppliers, with whom we carry out a lot of international work.
Employees cycling through Total’s offices in Norway are also important in spreading our Norwegian practices to other offices. And this works both ways, where we can apply technology used in West Africa to our Norwegian operations. For instance, we are planning to use an oil treatment process from West Africa in Norway.
Will we see Total assuming more of a role in operatorships in the coming years?
I see this as a very positive trend for the company and specifically in Norway our priority is to deliver the Martin Linge project within the timeframe we have set our selves for production by 2016. We also need to build the organization and systems to operate Martin Linge in the best way possible for the coming years. This represents a stimulating and positive challenge for the entire organization.
Naturally the company’s transition into operator mode will not detract from our huge engagement as a partner in many fields operated by companies like Statoil and ConocoPhilips. Total is present on a substantial portion of the fields in Norway. Currently around two thirds of our production comes from Statoil operated fields and one third from ConocoPhilips operated fields. The share a few years down the line will involve around 20% percent coming from our own operatorship, and this is more balanced.
Huge investments were made in Ekofisk last year and you have maintained interests in Snøhvit but pulled out of the Gassled pipeline group. How do you see Norway’s and Total’s role as a provider of equity hydrocarbons?
Fields like Troll, Ekofisk, Snøhvit and Oseberg are long-term fields, which require a continuous investment effort to recover all their resources. Given their life span they remain economically viable and interesting for us. With some other assets, as part of the Total group, we are seeking to be more active in terms of portfolio management. . This was the case in Norway where we sold out of Valhall and Gassled along with several other players.
In terms of our Group activity, LNG is a key component. For Total Snøhvit represents roughly one cargo of LNG per monthand this should continue well beyond 2030 considering the reserves present on the field.
Total Norway is today as active as ever and we want to be recognized as a reliable operator here, capable of creating value for Norway and our company. To be recognised, you first of all have to deliver. For the past few years Total has been a sleeping giant in Norway but we are wide awake and in addition to the Martin Linge development described above, aim to participate in every exploration round offered by the government across the North, Norwegian and Barents Seas.