SPE-177729-MS

Improving Mega Project Economics Through the Use of Early Production

James A. Volker and Adam J. Bond, Zakum Development Company

Copyright 2015, Society of Petroleum Engineers

This paper was prepared for presentation at the Abu Dhabi International Petroleum Exhibition and Conference held in Abu Dhabi, UAE, 9 12 November 2015.
This paper was selected for presentation by an SPE program committee following review of information contained in an abstract submitted by the author(s). Contents
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Abstract
A key aspect of the Project under discussion is the use of minimal Initial Production Facilities to achieve
significant early production from each of the four (4) pre-constructed artificial islands. The Initial
Production Facilities leverage the utilization of the spare processing capacity on the existing adjacent
satellite platforms to allow production from each of the islands to occur during the 4 year period between
when the first wells are completed until completion and start-up of the Permanent Production Facilities.
The Initial Production Facilities associated with each artificial island comprise (1) the on-island
Facilities that consist of wellhead flowlines, production and test headers, basic hydraulic wellhead control
panels, a chemical injection skid, a hydrocarbon drain tank package, and a temporary equipment room
containing distribution panels and the basic control system, (2) a riser platform containing a pig launcher,
(3) a short subsea pipeline that connects the island to the existing adjacent satellite platform, and (4) the
minor brownfield tie-ins on the existing adjacent satellite platform. The riser platform, short subsea
pipeline, and the minor brownfield tie-ins will remain as part of the long term Permanent Production
Facilities, while the on-island Initial Production Facilities are for use only during the Initial Production
Phase of the Project and will be de-commissioned.
It is anticipated that the Initial Production Facilities will be in production for 4 years and during that
period will achieve production from more than 60 total wells on the four (4) islands. A sequenced design
and start-up approach has been utilized to align with the drilling program and to provide maximum
flexibility in the final installed Initial Production Facilities at an optimum cost for each island. Wells will
continue to be progressively tied into the Initial Production Facilities on each island for the life of the
Facility until it is decommissioned following the start-up of the Permanent Production Facilities.
The key challenges for the Initial Production scope were (1) the high degree of simultaneous
operations, (2) design and installation of the Initial Production Facilities to minimize interference with
ongoing drilling operations and construction of Permanent Production Facilities, and (3) achieving safe
operability while minimizing capital expenditure to maintain a low cost economic model that makes sense
for an Initial Production Facility that will only be in operation for a short period of time.
Use of the Initial Production Facilities enhances the overall Project economics and also provides a
valuable mitigation for any schedule delays that may be incurred in completion of the Permanent
Production Facilities.

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Introduction
The Project under discussion is located about 80 km offshore in the Persian Gulf and is comprised of 4
artificial islands. The objective of the Initial Production Phase of the Project is to provide early and
sustained production from wells drilled on the Islands as soon as they are available, thereby achieving
advanced revenue generation and improved project economics while the Permanent Production Facilities
are under construction. The expenditure required for the Initial Production Facilities will be recovered
significantly earlier than completion of the Permanent Production Facilities, making this phased development strategy an attractive economic model.
Initial start-up was achieved from the first island in November 2014 followed by initial start-up of the
second island in April 2015. This is the first phase of the Companys plan to increase production by
approximately forty percent from the field. The Project is segmented into the Initial Production Phase and
Permanent Production Build-up Phases. The Initial Production Phase will continue until completion of the
initial Permanent Production Build-up Phase in 2018.
The Project achieved start-up of Initial Production within 4 years of conceptual design in 2010 and a
minimum of four years prior to completion of the Permanent Production Facilities, thereby achieving the
goal of capturing the benefits of the Initial Production strategy.

Presentation of Benefits and Challenges

The Initial Production strategy evolved and was optimized from conceptual design through front-end
engineering and then detailed design, resulting in the fit-for-purpose Initial Production Facilities for the
first three islands. Given the short operating duration of the Initial Production Facilities, cost efficiency
was the key driver in decision making. As an example, as part of a cost optimization effort the standard
piping material specification for the Initial Production Facilities was relaxed due to the reduced corrosion
effects during the short operating life-span of the Initial Production Facilities. In addition, to ensure
implementation of only the most cost effective fit-for-purpose Facilities, the early operating experience
from the first island has been used to further simplify the design of the Initial Production Facilities on the
fourth island.
Achieving the execution schedule for the Initial Production Facilities to allow start-up to be achieved
as early as possible in the drilling program, to maximize the duration of the Initial Production Phase, was
a key driver and challenge for the Project. Without effectively managing the execution schedule to achieve
start-up on each island as planned the economics of the Initial Production Phase become considerably
challenged.
The Project Management Team took a structured approach and implemented several key initiatives on
the Project to allow efficient execution of the work, while also maintaining world-class safety performance. This structured approach has been instrumental in managing the key Project interfaces associated
with the ongoing drilling program, space limitations inherent on an island, multiple Contractor interfaces,
logistics challenges, and simultaneous operations.
The following key initiatives encompass all stakeholders in the organization and allowed early
identification of key issues that were then elevated to Senior Management that allowed timely decision
making to occur at both Company and Shareholder levels:
1. Project Management Team, Drilling Management Team, and Operations Engagement
a. Issuing of internal Interface Agreements (within Company) defining the roles and responsibilities of each Company Department, Division, and Contract.
b. Safety recognition program.
c. Operations early involvement from the conceptualization of the Project through to start-up.
2. Contractor Engagement

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a. Company and Contractors Sponsors Monthly Progress and Safety Review Meeting.
b. Quarterly Contractor Safety Leadership Workshop.
c. Quality Leadership initiatives for enhanced management commitment and reinforced continuous improvement.
d. Extensive Quality Surveillance Program.
3. Shareholder Engagement
a. Periodic Independent Shareholders and Cold Eye Reviews.
b. Shareholder direct participation in Workshops and Critical Reviews.
c. Shareholder alignment through early Executive Committee meetings prior to Board Meetings
and approval of award recommendations.
The Initial Production Facilities on each island have been designed to avoid interference with the
drilling program and construction phase of the Permanent Production Facilities. Piping headers as well as
basic lighting, instrumentation, and controls to allow sustainably safe operation are all designed to fit
within a small dimensional envelope in such a way that the drilling rig can maneuver over the Facilities
to re-position to new drilling locations free of clashes with the Initial Production Facilities. This will also
allow for easy dismantling of the Facilities without production interruption following start-up of the
Permanent Production Facilities. It was a significant design challenge to arrange all components of the
Facilities within the defined envelope, but achieving this allowed for increased production and ultimately,
approval of a more economically feasible project.
Coordination with the Drilling Group was integral during the design of the facility to ensure the
emphasis on safety in design was applied while also assisting in minimum downtime of the Facilities. As
part of the Simultaneous Operations on the islands, the Initial Production Facilities scope is designed,
installed, and commissioned in such a way that the drilling sequence of the wells requires no shutdown
for the hook-up of a new well to commence production. Continuous coordination meetings were held with
the Drilling Group along with a structured approach to design freezes to the Initial Production Facilities
engineering to allow drilling the maximum flexibility in planning and initial drilling on each island while
also ensuring that fabrication and construction of the Initial Production Facilities could commence without
impacts to the schedule.
Production has commenced from the Initial Production Facilities on the first and second islands in
November 2014 and April 2015, respectively. The current rate is approximately 40,000 BOPD from 8
wells on the first island and approximately 25,000 BOPD from 5 wells on the second island. Initial
production start-up on the third island is forecast in 4Q 2015 and in 4Q 2016 for the fourth island, while
Project completion for the Permanent Production Build-up Phase is forecast in 2Q 2018 with the
Permanent Production Facilities. A progressive start-up approach is being utilized to allow wells to be
produced as soon as possible following drilling completion.
The Initial Production Facilities follow a low cost, keep-it-simple philosophy. Given that the Facilities
are only intended for short term operation it requires mainly attended operation, using manual valves, with
the exception of the shutdown valves. On the first three islands the Facilities also share test headers and
multi-phase flowmeters. The fourth island was added after the initial three islands were designed and
experience learned from these islands was used to achieve greater efficiencies in the design and operations
by removing the test header and temporary equipment room altogether.
In addition to generating revenue with minimized investment, the Initial Production Facilities also
provide a valuable mitigation for any schedule delays that may be incurred with regard to completion of
the Permanent Production Facilities due to the fact that all drilled wells can still produce through the Initial
Production Facilities up until the planned start-up of the Permanent Production Facilities.
Start-up of production from the first and second islands occurred shortly after the first two wells were
completed on each island, allowing for the minimum design flow requirements for the Initial Production

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Facilities. Subsequent wells are being progressively hooked-up to the Initial Production Facilities
immediately following drilling completion. Project teams have minimized the duration following drilling
completion to production flow by pre-installing all major components, except for the closing spool to the
wellhead. All commissioning activities are completed prior to the final hook-up. Well Operations and
Project Construction Teams complete their activities in parallel to the extent possible to reduce the
hook-up duration following drilling completion. This approach has proved successful in quickly producing wells as they become available. Wells continue to be hooked up in an expeditious manner and the third
island will start-up immediately following the completion of the first well.
One of the key challenges during the Initial Production Phase is the high degree of simultaneous
operations that occurs during construction, and even more so after start-up on each island. Prior to initial
start-up on each island the detailed coordination of work activities requires construction activities to
efficiently progress in conjunction with drilling operations, while minimizing the risk to personnel.
Following start-up, construction and commissioning activities associated with future well tie-ins occur in
conjunction with ongoing drilling operations adjacent to producing Facilities and alongside ongoing well
operations and Permanent Production Facilities construction. This proved to be a substantial challenge
considering the close 6 meter on-island well spacing and numerous drilling locations per island and is
managed and controlled by implementing detailed simultaneous operations guidelines and procedures
containing rigorous Work Management and permitting requirements. Finally, strict and ever-changing
area ownership and work management principles have been applied allowing for Project, Drilling, or
Operations ownership depending on the phase of the Project in any given area. Hard barriers are erected
prior to start-up and areas adjacent to the live Production Facilities are under controlled access by
Operations as the Area Authority. Work performed outside this controlled access area remains under the
stewardship and permitting control of either Drilling or Project. This allows the party best suited to the
environment to control the work and safe working procedures.

Conclusion
The strategy to include an Initial Production Phase in the overall Project development scheme has been
successfully achieved in a cost effective manner by leveraging the spare processing capacity on the
existing satellite platforms in conjunction with installation of minimal new Initial Production Facilities on
each of the four (4) pre-constructed artificial islands and short interconnecting pipelines. Tightly
controlled, cost driven, design and operating criteria, ensured that the completed Initial Production
Facilities were fit-for-purpose for the short 4 year operating life. The structured approach to managing the
simultaneous operations and key interfaces helped to deliver the execution certainty required to safely
achieve completion of the Initial Production Facilities on the first three islands within the same timeframe
as completion of the initial wells required for start-up, thereby maximizing the duration of the Initial
Production Phase and maintaining the attractive Project economics. Successful implementation of the
Initial Production Phase also provides a valuable mitigation for any schedule delays that may be incurred
with regard to completion of the Permanent Production Facilities.