Integrated Field Development Planning and Economics Project

PETENG 4022

Skua Field
Development Plan Report

Group C
(Skewer Oil Pty Ltd.)

Adam Row (1104296)

Fourth Year Bachelor of Engineering (Petroleum)

Australian School of Petroleum

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 Table of Contents
Executive Summary.......................................................................................................3
Introduction...................................................................................................................4
Objectives......................................................................................................................5
Production Engineering.................................................................................................5
Facilities........................................................................................................................8
Conclusions and recommendations................................................................................11
References.....................................................................................................................12

List of Tables and Figures

Figure 1 Skua Field Location......................................................................................4
Figure 2 Map of Skua Field.........................................................................................5
Figure 3 Production Profile for Varying Water Cut.....................................................7
Figure 4 Water Cut vs. Oil Rate..................................................................................7
Figure 5 Average Annual Number of Tropical Cyclones............................................9
Figure 6 FPSO Anchors, Mooring, Flowline and Umbilical Setup.............................10
Figure 7 General FPSO and Shuttle Tanker Setup......................................................11

Table 1 Results of Liquid Rate for Varying Tubing Size.............................................6

Table 2 Oil rate for Skua-3 With Varying Water Cut ..................................................7
Table 3 FPSO Specifications......................................................................................9

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Executive Summary
The Skua Field Development Plan was derived from a multi-disciplinary team that
investigated the optimum development strategy for the Skua field. The main objectives of the
team were too put forth a development plan that would safely maximise the value of the Skua
asset with minimum risk and as quickly as possible.

It was determined from studies that the Skua Field had an oil originally in place (OOIP) of
approximately 46.65MMstb, and reserves ranging between 19-32MMstb, with a most likely
of 27.6MMstb. Gas cap blowdown was determined to be the optimum development strategy
given the small gas cap present at Skua. A strong aquifer drive is present at Skua which
accounted for an estimated recovery factor ranging from 44-62%, with a most likely of
53.4%. The Skua field is estimated to produce for 8 years with maximum production of
approximately 19Mstb/day.

A number of possible process facilities were considered for the development of Skua. Cost,
environmental considerations, and location were taken into account when considering
possible production facilities. It was decided that acquiring a leased floating production
storage and offloading (FPSO) vessel was the most optimum production facility for Skua.
Economic analysis showed that leasing an FPSO gave the least risk for the greatest benefit.

The proposed development plan requires the re-entry of existing wells Skua-3 and Skua-4,
and the drilling of two new wells Skua-7 and Skua-8. Skua-7 is to be drilled in the south-west
of the field, west of Skua-3 which will intersect both oil and gas zones on a crestal high. The
initial function of this well will be to act as the primary well to blow down the gas cap, which
was estimated to take 3 months. After this Skua-7 will be used as an oil producer. Skua-8 is to
be drilled in between Skua-3 and Skua-4.

The development of Skua will be fast with the delivery of first oil in as little as twenty
months. Bench marking was conducted for the development and it was found that Skua
compares relatively well to other FPSO developments with respect to schedule and costs.

The proposed development has a net present value (NPV) of AUS$462MM using a 10%
discount rate and taking into account development, operating and abandonment costs. The
expected payout for capital expenditure is estimated to be 9 months using the leased FPSO
option, with an internal rate of return (IRR) of 90.6%.

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Introduction
The Skua field is located within the Timor Sea, figure 1, which is approximately 240km of the
north coast of Western Australia, at a water depth of 83meters. The Skua Field can be found in
the Vulcan Sub-basin of the larger Browse Basin and was discovered in November of 1985.
The formation consists of a large oil accumulation overlain by a small gas cap. The lithology
of the reservoir is interbedded sandstones and shales. Skua is situated close to Jaibiru and
Challis fields, with no existing infrastructure available nearby.

Figure 1 Skua Field Location

A total of six wells have been drilled in and around the Skua formation. Of the six
wells Skua-1, 2, 5, and 6 have been plugged and abandoned, with Skua -3 and 4 being
cased and suspended. Field development requires the re-entry of Skua -3 and 4, with
additional drilling of Skua 7 and 8, as indicated on figure 2.

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 Skua - 5

Skua - 6

Skua - 4

Skua - 3

Skua - 2

Figure 2 Map of Skua Field Derived from 2-D Seismic, with Existing and Proposed Wells
Shown

The personal contribution by myself for Group C, was to help with part of the production
engineering side of the development and also facilitys, for implementation into the field
development plan.

Objectives
The objectives of production engineering were to find the optimum tubing size for Skua-7 and
8, based on well test data from Skua 3. In addition to this sensitivities were also performed
on water cut to determine the water cut when the Skua filed would become uneconomical,
and gas oil ratio.

Objectives for the facilities were to find the optimum facility design to develop the Skua
Field, which took into account cost, water depth, location and environmental conditions.

Production Engineering
Prosper was employed to determine several parameters effecting production profiling. Based
on test data from Skua 3, production profiles were determined for tubing size, gas oil ratio,
and water cut. The assumption was made that a simular productivity index would be found in
Skua 7 and Skua 8, as to that of Skua 3. Thus Skua 3 data was used to determine the
optimum tubing size for both Skua 7 and Skua 8.

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Tubing ranging from 2 inch (ID) to 5.5 inch (ID) was considered. To meet the proposed
production rate it was determined that a tubing size of 4.5inch (ID) and 5inch (ID) would be
sufficient. The results of which can be seen in table 1. Although the 5 inch tubing gave a
higher production rate the 4.5 inch tubing was sufficient to meet the production rate and given
that the 4.5 inch tubing would be cheaper than that of the 5 inch, the 4.5 inch was chosen to
be the optimum for Skua 7 and Skua-8.

Table 1 Results of Liquid Rate for Varying Tubing Size

Sensitivities were performed on gas oil ratio to study the effects an increasing gas oil ratio
would have on production. A gas oil ratio varying between 500-2200scf/stb was considered. It
was determined that there would be little effect on production rates for increasing gas oil
ratios.

Sensitivities were also performed on the water cut to determine the economic limit. This was
based on test data from testing conducted on Skua 3. The economic limit was determined to
be 2700stb/day of oil by the economics department. Thus for the 4 wells an oil rate of
675stb/day per well would be required. Figure 1 displays the resulting production profiles for
Skua-3 with varying water cut. Table 1 shows the resulting oil rates for various water cuts. As
the rate of 675stb/day of oil lies between a water cut of 70-80%, figure 4 was employed to
determine the economic water cut, this was found to be 78%. Hence a field wide water cut of
78% would be the economic limit for the Skua field.

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Figure 3 Production Profile for Varying Water Cut

Table 2 - Oil rate for Skua 3 With Varying Water Cut

Figure 4 Water Cut vs. Oil Rate

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Facilities
A number of options for facilities to develop the Skua Field were considered. This included
fixed platforms, pipelines to shore or other infrastructure, production platforms such as a
tension leg platform (TLP), and FPSOs. A pipeline to shore was eliminated given the
remoteness of the Skua Field. The possibility of a pipeline and tie-in to existing infrastructure
at nearby fields of Jabiru and Challis/Cassini was also eliminated given that the distance to
these fields was approximately 75km, thus the costs of pipeline would be too great. Hence it
was determined that Skua would require its own production facility. Out of the production
facilities considered an FPSO was determined to be the most suitable with respect to cost,
water depth, location and environment.

Cost was one of the main driving factors for selection of the production facility. Three options
of FPSO were considered, purchasing a new FPSO, converting a tanker to a FPSO, or leasing
a FPSO. Economics were run on all three options by the economics department and it was
determined that although both a new FPSO and conversion would have a lower cost in the
long run, the exposure of the company was too great with such capital expenditure, therefore
leasing an FPSO was decided as the safest option as the exposure of the company was much
less. The option of using a FPSO was also suitable for the amount of reserves at Skua, the
small number of wells, and the short field life.

A number of environmental considerations were taken into account when choosing the FPSO
and mooring. As Skua is located in the tropics, cyclones are frequent in this area, as indicated
on figure 5. The prevailing wind was also taken into account for the location of the FPSO
relative to the Skua reservoir. As the prevailing winds are from the south to the north the
FPSO was determined to be placed to the North of the formation as this would result in
minimal damage to flowlines and umbilicals if the anchoring of the FPSO failed.

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 Figure 5 Average Annual Number of Tropical Cyclones (Sourced Bureau of
Meteorology)

Two nearby facility analogies existed where FPSOs were used as the production facilities.
These fields being Jabiru and Challis/Cassini. The mooring for the FPSO was decided to be
simular to that of the Jabiru FPSO, where a disconnectable riser turret would be utilised with
six primary anchors (B.dHautefeuille et al., 1986). The FPSO would also require propulsion
such that in a cyclone the FPSO will be capable of disconnecting from the riser turret and
moving out of harms way, as the FPSO is not cyclone proof.

The general specifications and configuration of the FPSO would be as follows. The FPSO
would require a storage capacity of 750Mbbls, with capability of processing 50Mbbls of
liquid per day. A three-stage separator would be used to separate out gas, oil and water. Water
would be treated by a water treatment plant and discharged overboard. The discharged water
would meet strict environmental regulations and be less than 30 ppm in hydrocarbon
concentration. The flare tower would be located as far away from the living quarters, control
rooms and the helipad for safety reasons. With the flare tower being capable of handling the
volumes of gas to be flared.

FPSO specs
Oil Storage Capacity 750 Mstb
Liquid Processing Capability 50 Mstb/day
Gas Processing Capability 14 MMscf/day
Gas Injection Capability 9 MMscf/day
Table 3 FPSO Specifications

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Gas handling is a major concern, with the excess gas requiring flaring provided that
permission from the Australian Government can be sought. Some of the gas will be diverted
to a gas fired electricity generator to power the FPSO. A natural gas liquids plant would also
be required on the FPSO to remove liquids from the gas, so that the liquids could be spiked
back into the crude. This would leave only the lighter components to be flared and increase
liquid recovery. The removal of gas liquids would also be advantageous in obtain permission
for flaring of the gas from the Australian Government. Gas lift is not required for early field
life but an FPSO with capability for gas lifting at a later date was considered to be beneficial,
general capabilitys for gas lifting are 9MMscf/day, like what is seen at Jabiru and
Challis/Cassini. Gas lifting would be advantageous for later in the reservoir life when water
cut increases.

A total of four 6-inch flowlines would be run between the wells and the FPSO. Together with
umbilicals for well control. The total length of flowline and umbilical was determined to be
8km. As a safety requirement the minimum distance between the wells and FPSO would be
1.5km, with the flowlines in a catenary arrangement. This distance would allow for
movement of the flowlines and minimise the chance of equipment being damaged from
movement. The layout of the FPSO, anchors, umbilicals and flowlines can be seen in figure 6.

Figure 6 FPSO Anchors, Mooring, Flowline and Umbilical Setup

A shuttle tanker would be required for pickup of oil approximal once a month. This oil would
then be taken and sold to nearby refineries. The monthly production of crude oil would be

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approximately 600Mstb, as the storage capacity of the FPSO is 750Mbbls, this would leave
approximately 150Mbbls additional storage capacity per month on the FPSO encase of delays
with the shuttle tanker. The general configuration of an FPSO and shuttle tanker can be seen
in figure 7.

Figure 7 General FPSO and Shuttle Tanker Setup (sourced, Behrenbruch, P. et al, 1993)

The well entry frequency for the reservoir was made as low as possible by using robust well
completions to avoid expensive drill ship workovers. Horizontal subsea trees were chosen
over vertical subsea trees to make any possible workovers in the future quicker, given that
horizontal trees allow access to the wellbore for workovers. The wellhead selection would
need to cater for a water depth of 83meters and temperature of approximately 96 oC.

Conclusions and Recommendations

Conclusions for the Skua field can be drawn for both production engineering and facilities.

With respect to production engineering, a tubing size of 4.5 inch (ID) is the optimum size for
both Skua 7 and Skua 8. Sensitivities performed on water cut determined that the
economic limit for water cut would be approximately 78% for the entire field. It was also
determined that gas oil ratio had minimal effect on production rate.

The optimum production facility was determined to be a FPSO with propulsion and a
disconnectable mooring. The FPSO setup would include a turret riser with six anchors, four
flow lines and umbilicals. The FPSO was chosen with considerations to cost, environment,

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water depth and location. Economic analysis showed that leasing an FPSO gave the least risk
for the greatest benefit, hence leasing is the optimum option. A natural gas liquids plant will
dry produced gas with the liquids being spiked back into the crude. Hence increased recovery
will be obtained with a decrease in the amount of gas to be flared. Flaring of the gas is still
pending government approval, however given the small gas cap and only light hydrocarbons
to be flared, it is believed that approval will be granted. Produced water will be treated and
disposed of overboard. The FPSO will be placed north of the field to reduce potential hazards
of anchoring damaging flowlines and umbilicals if the anchoring should fail. Horizontal trees
were chosen due to easier wellbore entry. A monthly production of 600Mstb of oil is predicted
with a shuttle tanker collection of the produced crude oil monthly.

References
Behrenbruch, P., and Mason, L. 1993. Optimal Oilfield Development of Fields With a Small
Gas Cap and Strong Aquifer. SPE 25353. Presented at the 1993 SPE Asia Pacific Oil and Gas
Conference and Exhibition, Singapore.

Bureau of Meteorology, http://www.bom.gov.au, accessed 19 October 2007.

DHautefeuille, B., and Remery, G., 1966. Latest Development in Tanker-Based FPSO
Systems. SPE 14083, Presented at the 1966 SPE International Meeting on Petroleum
Engineering, Beijing, China.

Shaw, M., Fowles, J., Abernethy, S., and Hamp, R., 1998. Laminaria/Corallina- An
Intergrated Field Development Planning Approach. SPE 50154. Presented at the 1998 SPE
Asia Pacific Oil and Gas Conference and Exhibition, Perth, Australia.

Smith, N., Hamp, R., and Maloney, M., 1998. Design Optimisation of Laminaria/ Corallina
Fields Subsea Facilities, SPE 50095, Presented at the 1998 SPE Asia Pacific Oil and Gas
Conference and Exhibition, Perth, Australia.

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