Technip is undertaking basic design and project management of the Western Libyan Gas scheme, which involves taking onshore and offshore Libyan gas to a new 10 bcm/yr processing plant in Melitah on the coast. The scope of the $100 million contract includes a new fixed drilling and production platform and subsea clusters in Agip's offshore block NC41, 34 and 10-in. diameter subsea pipelines to Melitah.
Mergers and oil spills lately have overshadowed the technical achieve ments of France's oil and gas service sector. But the stream of innovations continues to pour forth, particularly for deepwater production problem-solving. 580-km export line to Sicily. First production is expected in late 2003.
The Total Fina Elf amalgamation appears on the surface to diminish opportunities for French contractors. In fact, it may increase their workload as the new super-group strives for parity with the big three of Exxon-Mobil, Shell, and BP Amoco.
Mid-level industry mergers like those between Bouygues Offshore/Sofresid (parent of Doris Engineering) have barely impacted these offshore luminaries' research and development (R&D) schedules. The one "loss" to France was the effective transfer of ETPM's pipelay expertise to Aberdeen, following its absorption into the Stolt Offshore group. However, ETPM's core West African operations are still being masterminded out of Paris.
So despite the contractions, opportunities still abound for fresh ideas from contractors across the spectrum. This explains why the French industry's trade association, GEP, has managed to attract 20 new members in the past fiscal year. "Many SMEs remain interested in the offshore sector," explains GEP President Victor Vachier. As an example, he cites one new member company that is developing inflatable systems to aid heavy lift jacking operations. Other areas attracting growing interest offshore are process automation and documentation. "The big contractors need to be sustained by these small niche companies," he says. "We at GEP act as consultants, so to speak, on their behalf. The SMEs want to know who are the decision-makers in the contracting companies, both in France and elsewhere.
"We don't perform large studies, but we can answer questions for them such as 'What is going on in Angola or Nigeria?' Last year, we staged three seminars - Iraq, Algeria, and Iran - which gathered for each event representatives from more than 20 French companies for each event. The mission to Iran was introduced to NIOC officials, in association with the French Trade Commission." This April, GEP repeated the process in Libya (where Elf and Technip Geoproduction currently are instrumental in new offshore projects), arranging meetings with the national oil company NOC. "We want to emphasize our relations with Mediterranean countries," says Vachier. A further GEP mission is planned to Angola later this year.
Upstream expansion
However, the topic of overriding commercial interest to the French service sector remains the outcome of the merger between their key benefactors, Elf and Totalfina. Thierry Desmarest, Chairman of the new group, outlined his board's thinking at the Institute of Petroleum's annual conference in London this February.
At the end of 1998, Total on its own was ranked ninth in the league of world oil companies. The newly combined group, including Fina, has leapt to No. 4, with a market capitalization of $99 billion. "But the merger was not done just for size," Desmarest insisted. "We had a good fit in our businesses - Fina brought strength in the downstream in Europe, while Elf brought synergies in exploration and pro duc tion (E&P), plus European and African refining and marketing."
Daily production from the combined group currently is 2 million b/d, he said, with 2.8 million boe/d being targeted by 2005. In the current lists, he claimed, it ranks as:
- Europe's fourth biggest oil producer, at 700,000 b/d
- No. 1 in Africa with over 600,000 b/d
- No. 2 in the Middle East with 350,000 b/d
- No. 4 in Southeast Asia with 200,000 b/d.
Among Total Fina Elf's biggest upcoming challenges, he maintained, was its upcoming deepwater exploration program in two permits offshore Gabon, plus the deepwater field developments - Girassol off Angola and Aconcagua in the Gulf of Mexico. But the group also was a key player, he pointed out, in LNG schemes in Indonesia, Yemen, and Qatar, with more investments to come.
"We are keeping our finding costs below $4/BOE, and we are looking to produce within the range of $10-13/bbl. Between 1999-2005, we're seeking 40% volume growth, which is roughly twice the average for the majors. Our priority is expansion upstream, to enhance the group's profitability." Out of 8 billion Euros allocated by the group for global activities, 60-65% would be heading upstream, he anticipated, with further increases in the coming years. "In time, we want to generate at least 20%-plus annual earnings growth."
Spin-offs
From the standpoint of the French oil and gas service sector, the merger is a good move, Vachier believes, "as they will invest more than Fr20 billion in the upstream. However, now that the price of oil is so high, will the oil companies in general resume the amount of work they used to authorize before the crises of the past two years? In my opinion, they won't return to former levels, because exploration and production productivity has increased dramatically. The fact that activity in seismic is nowhere near full speed affirms this."
Philippe de Panafieu is General Secretary of CEPM in Paris, which coordinates and supports new R&D initiatives by France's petroleum industry. He sees deepwater E&P "as one of the biggest axes on which the new group's R&D effort will be focused. Also, on improved recovery of heavy oil. Total Fina has stressed that its recoverable reserves, together with those of Elf, are currently 10 billion bbl, which is about half those held by the Big Three. This corresponds to 15-20 years of production." To sustain or increase those reserves, he suggests, "the group will try to find alternative sources, because the amount of light oil is diminishing." This will mean further impetus for studies into bitumen processing and heavy oil extraction in Venezuela and Alberta.
"Elf and Totalfina are less advanced in gas-liquids conversion techniques," he claims. "The two companies apparently have given up ideas of developing proprietary licensed techniques. But the fact is, they have plenty of gas reserves in the Middle East, Far East, and Africa, which they don't know what to do with. That includes Qatar's North Field, where there is so much gas, but for which markets are difficult to find. It will be some time before LNG floaters or other production schemes evolve for offshore use. Bouygues Offshore has been sponsored by CEPM, the EU, and others to do studies, but I don't see immediate signs of application."
He does, however, see the newly expanded super-major positioning itself as an integrated value chain company, pursuing greater involvement in power generation and combined cycle power plants. "At the same time, France's national gas distribution company, Gaz de France, is trying to go in reverse direction, away from the downstream, by participating in more North Sea projects."
Vachier interjects: "The problem for Gaz de France (GdF) is that it needs an association with another group to enter into these upstream projects. That will surely mean a change of status. It could be that Total Fina Elf takes equity in GdF, or maybe Statoil will do it." For this to happen, however, GdF would have to change its shareholder status, which may prove problematic to sell to France's unions.
Deepwater dilemmas
In the deepwater development arena, Girassol is well underway, and Dalia will likely be the next project authorized in Angola Block 17. In anticipation of this and other projects in West Africa and Brazil, French contractors have invested heavily in deepwater or ultra-deepwater pipelay/construction vessels, says de Panafieu, such as the Saibos FDS, ETPM's Polaris, and Coflexip's Deep Blue.
"All of them are quite novel, but the big challenges remaining to be solved are working in 1,300-1,500 meters water depths. For instance, how do you lower to the seabed suction anchors, tower base plates, or manifolds weighing 300 tons at this depth? It has been done once at 1,600 meters water depth in the Mensa Field in the Gulf of Mexico, but it's not easy, and it requires very specific equipment and materials. Here, we are talking about fiber ropes such as polyamid, or drill pipe to handle very big loads.
"Another big concern at these depths is thermal insulation. For Girassol, oil at the seabed is at 60° C, but you must keep it above 20° C before it reaches the surface to avoid hydrate formation," he explained. "However, if you suffer a stoppage of production of say 15 hours, the temperature of the product will cool down. The question is, can you re-start production?
"However, there are plenty of suggestions being put forward on how best to deal with this problem. Interpipe in Louveciennes, for example, has formulated some very clever ideas, which have already been adapted for pipe-in-pipe projects in the North Sea."
Deepwater riser integrity is also preoccupying the major players. "Bouygues Offshore is working on self-supporting risers with buoys at the surface, to avoid the need for riser tensioners and as an alternate to riser towers or groups of risers which could clash. But they are also saying, why forbid contact between risers altogether? Maybe it's not so dangerous - you could put in some sort of spongy material, perhaps, to amortize riser impact."
Bouygues Offshore is working with 2H in the UK on a hybrid riser for extended water depths, for use in 1,500 meters depths (possibly attached to a spread-moored barge off West Africa). Coflexip Stena Offshore has also developed a double hybrid riser for deepwater use, consisting of two flexible sections top and bottom and one rigid section in the middle.
As for deepwater production systems, Bouygues Offshore has completed new moonpool studies to confirm the stability and safety performance of its multi-function/wellhead barge concepts. Technip-Geoproduction has its TPG 3300 deep draft semisubmersible, and Stolt (ETPM) has some concepts of its own, according to de Panafieu. Doris' two latest ideas are the Arch 5000 wellhead drilling unit, in association with drilling contractor pride Foramer, and the tension leg wellhead platform, which has been proposed for Roncador offshore Brazil. "Many of these concepts include good ideas for supporting wellheads on the surface," he points out.
France's key contribution to deepwater drilling at present may be the two new Sedco Forex semisubmersibles completed recently in Brest by the DCN-owned naval shipyard. "They are impressive structures of a new design
featuring a completely new derrick arrangement in a big rectangular tower," comments de Panafieu.
"DCN has finished these jobs with only a relatively minor delay. What is less desirable is that they overran their budget. DCN has been surprised at its own boldness in taking on this work, but it may not do this type of work another time, preferring to restrict business to repairs and conversions.
"Separately, DCN is maintaining its offshore R&D program. With CEPM's support, it has built a thermal generator in Cherbourg that provides 100 watts of power for isolated subsea wellheads (taking advantage of the temperature difference between the wellstream and the sea). DCN has also been engaged in an electron beam welding project, which involves an enormous vacuum chamber for welding of different metals such as titanium or special duplex steels. Technip Geoproduction was very interested in this technique for big jackup legs, because of their huge steel thicknesses."
Another special materials innovator is Composites Aquitaine, which hitherto has concentrated on the space and aerospace industries. "They are trying to enter the offshore sector - one of their projects, with IFP, is to replace the kill and choke lines on a drilling riser by a sandwich of steel and composite. They are very good at fabricating complicated pieces." De Panafieu lists other innovators:
- Techlam, which has engineered and built flexjoint connections for the Girassol export flowlines. The connection systems feature laminated elastomeric components (rubber/steel structure) and easily installed connectors with an integrated pre-tensioning device. They are placed at the export line connection points (FPSO and buoy side), and can handle crude throughput of 6,000 cu meters/hr with a pressure of 75 bar and angle variations of up to 36° over a 20-year lifespan.
- Freyssinet, in collaboration with Soficar, a subsidiary of Elf Atochem, has been adapting its work on cables for pre-stressed concrete for suspension bridges using carbon fiber to new types of tendons for TLPs and drilling/ production risers.
In conclusion, Vachier says, "We benefit in France from having one super-major working around the world. We have four groups able to handle EPCI projects, plus a network of very good SMEs. We have two major R&D institutes, IFP and Ifremer, and we also expect to collaborate more in future with other trade associations throughout Europe on offshore R&D, via the Euro GIF program."
