Analysis: Workovers and well intervention
How standardisation is helping the leasing model to grow by James Young, CTO, JDR Cable Systems
The long-term effects of the recent prolonged trough in oil prices are yet to be fully established. But there are certain trends that have emerged as a response to the changed financial climate that look set to remain with us as and when today’s healthier prices potentially return to their pre-2014 levels.
One of these is a growing interest in a rental business model for key equipment from long-established original equipment manufacturers. Of course, interest in the rental market is not new: and certain operators have built their business on leasing rather than purchasing equipment. But more and more operators are exploring rental options in preference to outright purchase of, for example, new intervention workover control systems (IWOCS).
The standard economic argument for specialisation of labour applies: it enables operators and service companies to focus their money, their time, their attention and their engineering resources on improving well-control or intervention packages. Meanwhile, experienced manufacturers continue to focus on their core competencies and direct their resources and engineering staff to the control equipment and systems. What’s more, those manufacturers continually improve both product and deployment, as they apply their experience from projects of all kinds around the world, and then make that collective wisdom available throughout their rental fleet.
There are plenty of obvious examples where the rental model clearly reduces risk. Firms developing multiple fields in deeper and more complex waters require advanced high pressure, high temperature and highly collapse-resistance IWOCS. Renting those systems from expert suppliers and assigning the costs to the operational expenditure ledger significantly lowers the risk profile of investing in hard-to-access and yet-to-be-proven fields.
There’s also the question of total life-of-field costs associated with owning an asset that has to be maintained over its lifetime or put in long-term storage to be preserved for future use. What’s more, acquiring approval to transfer assets from one project to another from what is often a number of owning partners can be challenging – and that’s before obtaining the internal fund transfers needed to make good with the asset-owning partners.
These are the general arguments that have fed the growth in the global rental-and-services market. However, when it comes to the intervention and work-over space, and the rental demand for IWOCS and related equipment, perhaps the most compelling argument is that of timing.
In a market focused on maximising or even restarting production on wells that have experienced difficulty, demand is not forecast eight to ten months in advance as it is in the traditional completions space. With insufficient time to spec, manufacture, deliver and deploy a whole new umbilical system, equipment that can be quickly reconfigured and delivered is the obvious answer.
That is the theory behind the growth in the rental model that we are seeing around the world. However, if that theory is to really deliver on its promised advantages, then there are two key factors that must be taken into account. The first, and most obvious, is the technology that goes into a rental fleet of IWOCS and the second is the quality of the people delivering them.
Obviously there are certain design features that are determined by circumstance and which limit their suitability for multiple, multi-region deployment. The length of an umbilical will be determined by water depth. Equally, available vessel size and restrictions on reelers are key factors of umbilical and IWOCS design. It would be foolish to suggest that a vessel and attendant equipment intended for the 10,000 feet depths of the Mexican Gulf could be sent to the Arabian Gulf and some of its much shallower waters.
Deployment methods for IWOCS will also be determined by location: for example, some are specifically designed to be current resistant, so that loop currents or strong straight-line currents do not inhibit an operators’ ability to move forward with interventions or plug and abandonments.
But these restrictions notwithstanding, for the multi-use rental market, where cost-effectiveness and rapid deployment are critical drivers, control systems have to be built with hydraulic and electrical versatility in mind from the outset. If they are to be configured to meet operators’ needs in a matter of weeks or run multiple hardware manufacturers’ equipment, versatility must be a key part of the design’s DNA.
Rather than looking at multi-regional system designs to meet these demands, equipment manufacturers are looking at component designs and establishing which can be standardised for all geographies and operating conditions, and which are specific to a particular region or water conditions.
For example, an umbilical termination assembly (UTA) based on a modular design can be run either with a mud mat so it can deploy a pendulum, or without one. That modular UTA can therefore be run anywhere in the world with multiple different deployment styles, and allows quick and easy reconfiguration for new well types or tree types. Similarly, as-built hydraulic schematics can also be tailored or reconfigured before being dispatched to site: in this case, the reconfiguration is dependent on the specific hydraulic and electrical circuits running a given piece of equipment.
Finding these and other commonalities helps equipment manufacturers re-deploy their rental fleet in multiple regions.
The second factor is the nature of the company providing the equipment. Consider again the example of the hydraulic schematics. Consisting primarily of standardised components and design, they still require some configuring in the manufacturing plant to meet the precise requirements of the user.
To meet the tight deadlines and avoid costly errors, the rental supplier must have exceptional engineering talent available to carry out the necessary specifications.
In the search for commonalities and consequent efficiencies, suppliers still have to be able to understand the regional nuances, the small differences that ensure rental equipment is fit for purpose even when it was not originally specified and built for that particular purpose. This means that operators have to choose their suppliers with extreme care.
The understanding of what can be standardised and commoditised and what requires configuration, as well as which parts of the world have the capability to share equipment, and which can’t, requires a supplier that possesses wide global experience and a truly international footprint.
Personnel also have to be as agile and versatile as the equipment they are providing. The rental model depends on technicians who are cross skilled in many different forms of hydraulic and electrical expertise, in different areas and who can therefore make sound decisions in the field.
For years now operators have relied on global manufacturers to provide top-quality, robust, hard-to-break equipment. But as they get used to leasing the same top-quality, robust, hard-to break equipment without any compromise to the integrity of their wells, or any loss of service and support, some of those operators may now become permanent converts to the obvious benefits of rental.