Shell Norske and Diamond Offshore prove their subsea completion skill

Implications: In the August 11, 2008 issue of the Oil & Gas Journal, an unusual 2006 oil well recompletion event was reviewed by Diamond Offshore Drilling Inc. Their semi submersible, the Ocean Vanguard was reequipped to perform recompletion services in the Draugen oil field in the Norwegian North Sea. Although completely unaccustomed to subsea completion work, the drilling crew overcame the many problems and completed the job ahead of Shell’s schedule. Two Christmas trees were pulled, the tubing was replaced and seabed-based water injection and treatment equipment was installed. Included in the project were FMC, Kvaerner, Vestbase, Halliburton, Schlumberger, Seadrill, Oceaneering, Expro, Odfjell, Fugro and Smith Red Baron. A notable success was the repositioning of a turned Christmas tree by FMC working night and day for weeks.  Collum Smyth of Shell Norske noted that the drilling crew demonstrated adaptability to make a safe, successful job. The Vanguard is now a proven completion rig.

Analysis:  Difficult and always complicated offshore operations are routinely accomplished today on schedule. Drilling units like the Diamond Vanguard in the summer of 2006 would have commanded a day rate of around $385,000. The daily cost of the various services required bring that up near the $500,000/day mark. The job, as noted in the review, scheduled for 73 days, was completed in 60. Thirty million dollars just to change out two Christmas trees, install new tubing and reequip the wells for water injection. All of that just to restore a mere 22,000 bbl/day of crude oil production. In the summer of 2006, the price of crude oil would have been about $70/bbl so the recompletion resulted in a cash flow of $1.5 million/day. That is a payout of the recompletion in 20 days. Clearly it was well worth the planning, coordination and effort required. Most of the time, complex offshore operations go smoothly and the job is a success. The work is dangerous. Once in a while, something goes wrong and when this happens, the cost can be in the millions. If it is a blowout or a fire, the cost can be in the hundred of millions. Fortunately the crews are extremely well-trained to cope with emergencies when coping with high pressure wells. And today’s blowout prevention equipment is, to all extents and purposes, foolproof. But the summary of the operation reveals one of the reasons for today’s expensive crude oil.