Shell Leads the Way to Move Offshore Production Process to the Seabed

Shells latest fiasco with offshore drilling in the Arctic highlights the risks involved with such ventures; so it is of little surprise that many oil & gas companies, Shell (NYSE: RDS.A) being at the forefront, are researching ways in which to extract oil and natural gas in offshore locations without the need for a platform.

At the bottom of a giant water filled pit in western Norway Shell are in the process of testing a thousand-ton gas compressor which it will use to achieve platform-free production at its Ormen Lange natural gas field in the Norwegian Sea.

Oil companies are driven to move all offshore equipment to the seabed rather than have it on a platform in order to avoid sea ice and violent storms, reduce the operating cost of the well, and eliminate much of the risk generally associated with offshore drilling.

The leaders in the field are Shell and Statoil, who are both racing to develop the world’s first subsea gas compression unit which will prove a major step along the path to move the entire extraction process underwater.

Statoil (NYSE: STO) has announced that it will use subsea compression at its Aasgard field by 2015, however a platform will still be used to provide power to the unit. Shell on the other hand will provide its compression unit with power via a cable from the shore, making it the world’s first complex processing and extraction unit that runs on the sea floor without a support platform.

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The US Geoligical Survey has estimated that the Arctic contains 90 billion barrels of oil and 47 trillion cubic metres of gas, meaning the Arctic will become an important source of fossil fuels in the future. Subsea extraction processes will vastly reduce the dangers associated with drilling in the harsh Arctic environment.

Tore Halvorsen, the subsea chief at FMC Technologies, confidently stated that, “by the time the real Arctic fields in the ice-infested waters of Alaska and Siberia are ready for development, the technology will be there for platform-free production.

The game changer is to have fluid extracted, processed and directly exported from the field without intervention from a platform... We're not far from that.”

There are still several hurdles that must be overcome before subsea technology is ready to completely takeover from semi-submersible platforms, but the main one is the issue of supplying power. Platforms produce their own power, and getting power from the shore to sites further than 100km away is very difficult.

By. Joao Peixe of Oilprice.com