Subsea Industry: Drilling on the Floor of the Arctic Ocean
Offshore Arctic drilling can be done. Just not the way we thought it could
Consider the idea of an industrial Atlantis teeming with activity on the floor of the Arctic Ocean. What science fiction novelists have long dreamed, energy engineers are now trying to bring to reality. Norway-based Statoil has visions for a complete subsea factory by 2020 – an oil and gas production facility that is built entirely on the sea floor. The drilling and processing would take place underwater, with the product piped to shore for shipment. This would make it possible for the company to recover resources from colder, deeper and more remote fields, and it’s the way the industry is headed.
If there’s one area of the Canadian Arctic that’s going to be developed soon, it’s the Beaufort Sea. Located offshore of the Northwest Territories, there are $2 billion in offshore licenses for the area committed by BP, Esso, Chevron and others. If these commitments aren’t met, the companies will each forfeit millions. The community in Tuktoyaktuk is preparing for development, branding itself as the “base for the Beaufort,” and is developing a training program through Aurora College so locals can work in the industry.
And there are benefits to Arctic drilling beyond the abundant reserves. Doug Matthews, a Calgary-based energy consultant, points out that operators in the Arctic wouldn’t be dependent on pipelines to get products to market, unlike those in landlocked Alberta, who are currently facing significant price discounts because of this very issue. “If you can produce something in the Beaufort, you can essentially just put it on a tanker and send it anywhere in the world. So you have that advantage in terms of access to market,” he says. The trick, though, when talking about the Arctic, is getting the oil out of the ground safely and efficiently.
On New Year’s Eve 2012, after a violent winter storm off the coast of Alaska, Royal Dutch Shell’s prized Kulluk offshore oil rig, a 19,000-ton floating drill platform, was slammed against the rocks on Sitkalidak Island. Over the next month, more than 750 personnel were involved in the recovery of the $290-million rig, and the rescue operation led to Shell’s decision to suspend its Arctic program indefinitely. The inability to tap its Arctic resources is a major problem for a company like Shell. A 2009 U.S. Geological Survey estimated that 30 per cent, or 1,670 trillion cubic feet, of the world’s undiscovered natural gas and 13 per cent, or 90 billion barrels, of oil are located in the Arctic.
The Kulluk incident illustrates the problem that oil companies, who are increasingly looking to tap into Arctic resources, face: how can you possibly drill for oil in an environment that is harsh and unpredictable without putting people and equipment at risk? A complex subsea factory could solve a lot of the operating problems inherent in Arctic exploration.
Outside of North America, energy companies have been using subsea technology for decades. In the 1980s, Statoil was using subsea wells on the Norwegian continental shelf, and much of the technology it or other companies would need to equip a subsea factory already exists. In fact, Statoil built the world’s first subsea separation, boosting and injection system in its Tordis field in Norway’s North Sea in 2007. Now they’re working on one of the next steps: subsea compression.
Without a compression system, production from deepwater wells drops substantially. Typically, offshore compression systems are mounted on rigs above the surface of the water, but the closer the compression system is to the field, the better recovery, and that’s what Statoil is working to achieve. At the company’s Asgard field, also in the North Sea, a sea-floor compression system, which the company says will be completed by 2015, will increase its recovery from the ice-free Mikkel and Midgard reservoirs in the Asgard field by 280 million barrels of oil equivalent.
But if successful, this technology will have implications for future Arctic exploration in ice-covered areas as well. Statoil’s team leader in Arctic non-technical risk assessment, Erik Haaland, says the company will begin testing these subsea compression units under Arctic ice sheaves after the project in the Mikkel and Midgard reservoirs are complete. The company hopes that the entire sea-floor factory system could be used in Arctic environments. In fact, that’s where it’s most needed.
Houston-based FMC Technologies Inc. has expertise in offshore oil exploration, and a subsea factory – or a “platform-less future,” as they call it – is a vision the company shares with Statoil. “Platforms are great in a lot of cases and they’ve been essential to get us where we are now, but increasingly as you get further offshore, we’re trying to move some of these processes off the platform,” says company spokesperson Patrick Kimball.
The problem with platforms is they’re expensive to build – and even more expensive to maintain. Companies need to fly or boat personnel back and forth to platforms, and the platforms themselves must be nearly self-sufficient. “It’s like little mini-towns out there,” Kimball says.
They’re also very susceptible to weather. It’s difficult to transport these floating platforms quickly, so they’re often caught in sudden storms, and getting people off the platforms, even by helicopter, can be dangerous in those conditions. These issues are only compounded in the Arctic, where the weather is more severe, more unpredictable and the locations are more remote.
FMC is developing equipment similar to Statoil – processing systems and other devices that could be anchored to the sea floor year-round, but the technology needed to really make these underwater factories work is communication.
FMC currently uses remote-operated vehicles (ROVs) to maintain and operate its subsea equipment, as divers can’t go below 500 feet. Typically, these ROVs are attached to an umbilical cord leading to the surface and providing them with the hydraulic system and power. That’s just not feasible in the Arctic. “Right now the Arctic environment is still somewhat dependent on ships and platforms on the surface,” Kimball says. “The next generation will include more autonomous ROVs that can stay down under the ice during the winter and still perform some of their functions.”
FMC is developing ROVs that can recognize problems and react in an emergency, shutting down a valve or a system. And these ROVs could stay under the ice full time, servicing the equipment and monitoring progress. The nearest human could be miles and miles away.
But that doesn’t mean the technology is risk-free. Even with subsea equipment, Kimball says icebergs present a major problem. “Icebergs could scour the bottom and just come by and tear up all your equipment. So sometimes in those very shallow environments, they’ll have to dig depressions – dig a big hole – and put the equipment in the hole.”
Of course that solution highlights the logistical challenge of Arctic drilling: it’s not easy to dig a hole in the sea floor.
The bigger risk with the subsea factory is a risk that accompanies all Arctic oil exploration. What if there’s a spill? “The ability of companies to respond to an oil spill in Arctic waters is very much an unknown,” Matthews says.
The Arctic is not only extreme; it is also sensitive. A disaster like the BP spill in the Gulf of Mexico, if it happened in Arctic waters, could be even more catastrophic for the environment, and much harder to deal with. “If you look at the BP spill they were able to bring in 2,000 vessels and 5,000 men – you simply can’t do that in the Beaufort,” Matthews says.
FMC’s Kimball admits the challenge of servicing subsea equipment is significant. “Greater depth presents tremendous engineering challenges in terms of engineering the equipment to operate at those depths, and maintaining the equipment.” According to Statoil’s Haland, the most important thing is taking the time to develop the technology. “We will not move faster than technology will allow us, meaning we will only enter into activity in the Arctic when we’re sure we can do this safely and sustainably.”
Northern Exposure: The Social Aspect
In the excitement of new technologies for Arctic oil exploration, it can be easy to forget about the impact this development will have on the over 100,000 people living in Canada’s Arctic.
This isn’t the first time the Canadian Arctic has been flooded with explorers searching for black gold. In the 1970s and ’80s, oil companies entered the Beaufort and Mackenzie Delta to begin exploration, with much of the activity supported through government grants and tax breaks under the national energy program. “In that respect, the need to come to the frontiers to find oil, we see a similar situation between the 1970s and today,” said Tuktoyaktuk Mayor Merven Gruben at a speech given at the 2013 Arctic Oil and Gas Symposium in Calgary.
But this time around, the explorers coming into the Beaufort are international companies spending their own money, not the taxpayers’, and so there’s a push to ensure that Arctic communities benefit from the vast resources in their homeland. Member of Parliament and chair of the Arctic Council Leona Aglukkaq made the theme of her new chairmanship “development for the people of the north.”
The Arctic Council, an intergovernmental forum addressing issues facing governments and indigenous peoples of Arctic communities, also focuses its efforts on consultation. “It’s not development at all costs, but at the same time it has to be done responsibly. It has to be done with Inuit participation,” says Terry Audla, president of the Inuit Tapiriit Kanatami, a national Inuit organization.