Malaysia’s field of ‘firsts’

Kikeh production to kick off in 2007

Kikeh, the first deepwater development offshore Malaysia, is on track to begin production in the second half of 2007.

By now, there are few in the industry that are not aware that Kikeh will be the first development outside the Gulf of Mexico to use a spar as a production system. Few, however, know the details of how this project was able to go from discovery in August 2003 to the verge of production in 2007.

Roger Jenkins, vice president, operations, for Murphy Sabah Oil Co., Ltd., has been involved with the project from the outset. Jenkins says Murphy and partner Petronas Carigali Sdn. Bhd. are pleased with the project over all.

“The project is on schedule, and we’ve maintained our schedule for over four years,” Jenkins says. “Needless to say, we are very happy about that.”

Frontier challenges

Working offshore Malaysia brings some unique challenges.

“On the one hand, it’s easier than working in the Gulf of Mexico,” Jenkins says. “The drilling is less complicated as the reservoirs are shallow, the weather is better, and we do not have loop current problems. Although the monsoon season caused some delays in lifting some of the drilling packages onto the spar topsides, the rainy season hasn’t been a big factor in terms of scheduling.”

Bigger challenges lay elsewhere. The isolation from the deepwater mainstream was the primary concern, Jenkins says. “The problem we have in Malaysia is that we do not have the onshore support services as in Houston or Aberdeen. However, we have worked a great deal with Petronas, Malaysia’s national petroleum corporation, to build up the shore base on Labuan Island.

“When we have a problem here, we need to rely on our extensive contingency plans or we could end up expediting equipment from the US or Europe,” Jenkins explains. “The impact of that sort of oversight on the project schedule could be extreme. While our wells are not difficult to execute, we are still faced with moving all of the specialized deepwater well construction equipment to Malaysia for the drilling and completion of over 30 wells, including both subsea injection wells and dry production wells.”

Local content

When developing a field in a foreign country, American companies are often challenged to meet their local content obligations. According to Jenkins, Murphy managed the local content requirement without a great deal of difficulty.

“We bid all the contracts requiring a certain level of local content,” Jenkins says, noting that the ability to increase local content is very much on the rise in Malaysia.

“Aker Kvaerner Subsea (AKS), our subsea tree, manifold and umbilical provider, is building a new facility in Malaysia to build subsea trees. FMC has the ability to build subsea trees and wellheads here. All of the major players are moving infrastructure and equipment to Malaysia,” Jenkins says, pointing out that Schlumberger has a new facility in Labuan, and that Intec and Mustang are increasing engineering presence in Kuala Lumpur.

Another major local contributor to the Kikeh project, Jenkins says, was the Malaysia Marine and Heavy Engineering Sdn. Bhd. (MMHE) yard in Pasir Gudang, Johor, Malaysia.

“MMHE is quite a facility,” Jenkins says. “It has been in business for many years, and it is building itself up in stature. MMHE delivered the spar in record time.”

The spar, however, is not the end of the line for the Kikeh development.

“While the spar installation is behind us, we have a big year ahead with the FPSO installation and the hookup of our fluid transfer lines, and we must maintain the momentum heading into the third and fourth quarters,” Jenkins says. “But it has been a good run to date.”

Concept selection

When Murphy was looking for a development concept for Kikeh, the first decision was that the development plan required a dry-tree unit (DTU).

“When Murphy bid this project, the company had what is probably the only global design competition that encompassed all types of DTU development systems,” Jenkins says. “We had TLPs, mini-TLPs and spars bid together in a design competition.”

Award was based on the best design that was technically acceptable and priced most competitively.

“The spar concept won the design competition.” Jenkins explains. “We are now seeing that we have some advantages over other DTU systems.”

Some of the advantages include the ability to bring on a large number of wells through the spar, which is able to accommodate a more accessible well pattern. Jenkins says, “A DTU lowers drilling expenses, lowers life-of-field operating expenditure, enhances recovery and enhances well intervention.” With the limitation of few vessels in the region capable of intervention services, the DTU is an obvious plus over an all-subsea concept.

“We see now that drilling costs would have been much higher with an all-subsea development using a MODU (mobile offshore drilling unit) for drilling,” Jenkins says. “We’re happy with the choice.”

Designing, installing the spar

In the end, Murphy awarded Technip a full engineering, procurement, construction, installation, and commissioning (EPIC) contract to design theKikeh spar.

Technip carried out the first open-sea catamaran floatover and topsides installation on theKikeh spar Nov. 6, 2006.

Click here to enlarge image

The contract included the delivery of the spar hull and topsides as well as the drilling and production riser systems, along with the marine installation, hookup, and commissioning of the facilities offshore.

“Technip placed a large team here in Malaysia to help with the execution, and they were able to meet the schedule,” Jenkins says.

“AlthoughKikeh isn’t a huge spar, it is definitely not on the small end when compared with the spars operating in the GoM,” Jenkins says. “In fact, this is probably one of the largest spars from a standpoint of well count,” Jenkins says, “because there are 24 well slots on the Kikeh spar.”

According to Technip, the spar is a good choice for Kikeh because it provides a stable floating platform that allows drilling and production via dry trees, significantly reducing cost and complexity of the drilling operations.

“TheKikeh spar is unique,” says Syed Feizal Syed Mohammad, senior vice president, business development at Technip, “because it has been designed to accommodate a tender assist drilling (TAD) rig, comprising a temporary drilling derrick equipment set mounted on the spar and a semisubmersible drilling tender barge, which is moored alongside. This allows the operator to avoid the capital cost of installing permanent drilling equipment on the spar itself.”

For the most part, Feizal explains, the design principles and configuration for theKikeh spar hull are very similar to the GoM spars. One difference, however, is that the benign metocean criteria offshore Malaysia allowed the draft, freeboard, and weight of the spar hull to be decreased from a comparable GoM design.

TheKikeh FPSO will work in conjunction with the spar.

Click here to enlarge image

“Malaysia does not suffer the hurricane conditions that occur in the GoM,” Feizal says, “so the mooring system and air gap could be designed differently for theKikeh spar.

“Another plus was that the spar hull and topsides could be installed without using deepwater heavy lift vessels or DP construction barges, which are not readily available in the region,” Feizal says. The topsides was designed to be installed by floatover, a first for spar installation.

Technip completed the world’s first open-sea catamaran floatover and topsides installation on theKikeh spar in early November of 2006. “The actual floatover operation took place Nov. 6,” Feizal says.

Using the floatover method to install the spar topsides as a single integrated deck allowed a large amount of hook-up and pre-commissioning work to be completed onshore prior to load-out, which significantly reduced both the duration and cost of the offshore commissioning phase.

The success of the floatover installation is significant because this test case proves the viability of the installation method, which can be considered as an option for future projects in other regions where access to heavy lift vessels for topsides installation is constrained.

“In fact, the floatover has attracted a lot of attention from other operators who are interested in the advantages this can bring to the offshore installation operation,” Feizal says.

Ongoing R&D work at Technip has advanced floatover capacity to accommodate full drilling and production decks. In the Gulf of Mexico, the target is to use the largest available Jones Act qualified (i.e., US-built) barges to floatover decks up to 22,680 metric tons (25,000 tons), Feizal says.

Along with increasing the size of floatover decks, Technip has developed tools and methods to make the actual load transfer in a matter of minutes, which opens up more areas of the world for floatover operations, Feizal says.

Murphy awarded Intec Engineering a contract for follow-on engineering services on the Kikeh project. Intec’s responsibilities included:

Detailed design review of the field facilities, including the FPSO marine systems, FPSO processing and utility systems, DTU topsides facilities, flexible flowlines and risers, and subsea equipment
HSE and risk assessment
Flow assurance control
Coordinating hookup and commissioning
Assisting with interface management
Detailed design review of the gas export pipeline
Assisting with regulatory compliance
QHSE audits
Special studies and analysis verification.

As part of its contribution to the project, Intec designed the unique fluid transfer line that connects theKikeh spar to the Kikeh FPSO.

The flowline is a mid-water steel pipe flowline assembly that will transfer produced crude from the spar to the FPSO, return treated seawater from the FPSO to the DTU for water injection, and provide electrical power, controls, and communication between the units.

Intec also assisted Murphy to develop a gas pipeline to shore, including front-end engineering and design support, preparing bid documents, and evaluating bids. Intec’s role will extend through the execution phase of the project.

When the 30-cm (12-in.) gas pipeline is completed to shore, it will allow produced gas to be monetized rather than re-injected into the reservoir.

Local experience, global expertise

Building the spar in Malaysia was another of the Kikeh project’s considerable challenges.

MMHE carried out spar construction. Manoel Gomes, general manager of marketing and sales at MMHE, explains some of the hurdles that had to be overcome to make delivery.

“Because this was the first spar built in Malaysia, we had to supplement the expertise,” he says. “What we did was work with Technip to bring in the additional expertise from Finland, where they have built many spars.”

MMHE sent a seven-man local team to Pori, Gomes says, and had them stationed there to learn some of the specialized skills needed to build the spar in Malaysia. The team learned about quality control, dimensional control, construction methods and design issues. “It was essential technology transfer,” Gomes says.

After several weeks, the team returned to MMHE, followed by a group of 10 Technip engineers from Finland, who would oversee the work in the yard.

“We set up additional facilities, including skidding tracks, the jacking system, covered shops and so on to support the spar construction,” Gomes says.

“Technip brought their people, and we formed a joint team to undertake construction of the spar, which we delivered on time and according to schedule,” Gomes says.

Feizal agrees that the team was a key component to ontime delivery. “Interface between the various offices could be perceived as a challenge from an external point of view, but managing projects with the support of its network is one of the key accomplishments of the Technip group,” Feizal says. “The challenge of a true international delivery strategy was never an issue because Technip paid proper attention to communications from the very beginning.”

Completing construction

MMHE’s part of the spar project ended with the spar’s departure from the yard, Gomes says, but the hull itself was not the only component of the project handled by MMHE. “We also built the topsides for the DTU here in Malaysia,” Gomes says.

Working with Technip allowed for significant growth opportunities, Gomes says. “Imagine, we had a yard here, a technical office in KL, a design office in Perth, a yard in Pori, and a setup in Houston, as well as some other parts of the world. This was a globally integrated project, and it was very successful.”

“The job went fine,” Gomes says, and it has laid the groundwork for future opportunities. “Moving forward with the completion of this spar, it can be acknowledged that MMHE is competitive and capable of world-class quality. In the future, Technip has the option to build spars for the Asia-Pacific region at MMHE here in Malaysia. Our relationship goes beyond theKikeh spar project,” he says.

Indeed, MMHE’s role on Kikeh went beyond construction of the spar. The yard is also carrying out the FPSO conversion.

TheKikeh FPSO was scheduled to sail away at the end of March.

Managing the project

Inside Murphy, the team that managed the Kikeh project was remarkably small.

According to Steve Dechant, Kikeh facilities manager for Murphy, the company dedicated a small, but experienced team to the project. Recruitment for this small team focused on well-rounded personnel with multi-discipline backgrounds, familiarity with deepwater, and global experience, Dechant says. “Because Murphy wanted the project to be done by a small team, experience was critical.”

Early in 2003, Murphy and partner Petronas jointly set a Kikeh field first-oil target date of the second half 2007. This aggressive target necessitated what Dechant calls, “a parallel appraisal/development approach.” In translation, that means Murphy was moving forward with a dynamic development plan that was changing as it progressed. This made meeting the schedule an even bigger challenge.

With little time to spare, Murphy needed to make decisions quickly and to move into the construction phase of the project. “We didn’t want to overbuild,” Dechant says. “We wanted to build only what we needed. The project team had a very efficient decision making process.”

With the new area and the many firsts the company would have to contend with, Murphy realized there would be technological challenges. “We maximized the use of existing technology, but leaned forward,” Dechant explains.

Project success rested in great part on the Murphy team’s ability to lead and to leave specialized work in the hands of those who could handle it best. “We relied on the contractors to perform,” Dechant says. For that reason, Murphy awarded EPCIC contracts on all the major Kikeh packages.

“We wanted to select only industry-proven contractors,” Dechant says. And Murphy required each of those contractors to assign full-time staff to actively participate with the other EPCIC contractors in the Murphy-led interface management team.

Despite all of the obstacles and challenges, however, Kikeh is still scheduled to go onstream in the second half of this year.

“That’s only five years from discovery to first oil,” Dechant says. “That’s quite an achievement.”