First oil to newbuild Sakhalin FSO slated for July

In August 1998, Sakhlin Energy Investment's Molikpaq was towed across 1,495 nautical miles through the Sea of Japan to the Piltun Astokhskoye (PA) Field in the Sea of Okhotsk off Sakhalin Island.

• The Vityaz Production Complex includes the Molikpaq drilling/ production platform, a two-kilometer pipeline to a single anchor mooring buoy and production transfer to a double-hull FSO/tanker named Okha. [34,416 bytes]

Russia's first offshore oil facility - the Molikpaq, a gravity based platform structure - will begin producing this summer, a history making moment for Sakhalin Energy Investment Company Ltd. Delivery of the Molikpaq to the Piltun-Astokhskoye Field in arctic waters offshore Sakhalin Island in September 1998 represented the first milestone in the delivery of the Vityaz Production Complex. "Vityaz", a Russian word meaning "warrior" or "protector", is intended to symbolize the project's role in protecting the region's economic future.

Remaining components of the Sakhalin II Vityaz Production Complex include a newbuild offshore floating storage facility, due on site in June, and associated installations for tanker offloading for six months of the ice-free season.

Delivery of the FSO to the Sea of Okhotsk is another significant milestone in the Sakhalin II project. Named Okha, after a city on the northern portion of Sakhalin Island, the FSO will take first oil from the Molikpaq. Before yearend, Sakhalin Energy anticipates producing from at least six wells, with flow rates expected to reach about 65,000 b/d of oil and 50 MMcf/d of gas. During the second producing season, production rates should reach a design capacity of 90,000 b/d of oil and 70 MMcf/d of gas, which will be reinjected into the reservoir.

FSO operations

The FSO, built at Daewoo Heavy Industries in Okpo, South Korea, will remain on site from July through December in 1999. In December, Okha will disconnect from its single anchor leg mooring buoy (SALM) and the SALM unit will be ballasted and laid into a dredged recess in the seabed. Okha will leave the field for the winter and return when the ice departs in late spring.

The FSO will have a dual capability as a tanker and can deliver its last production load directly to market. Okha is one of the few vessels worldwide with this dual capability. As such, it will retain its ABS class as a trading tanker. The vessel is ice-classed "D0" for its reinforced bow, allowing it to push through "young" or "light" ice.

This capability will allow the vessel to remain on site into the early winter to maximize oil production, without risking its ability to reach open water. The vessel's reinforced shell plating provides additional protection for the arctic environment. Sakhalin Energy will use the FSO for the duration of Phase I production, after which it will be returned to its owners for future trading as a conventional tanker.

The Molikpaq is presently operational, except for hydrocarbon processing and exporting facilities. Sakhalin Mornefte Montazh, a Russian company, commenced hookup and commissioning onboard the Molikpaq in September 1998. Development drilling began in November 1998. The SALM and a two-km pipeline from the Molikpaq to the SALM also were installed during 1998.

The Molikpaq, originally design ed for Beaufort Sea exploration drilling, was refitted for both drilling and production service in Russia's arctic waters. Molikpaq will facilitate early oil from the Astokh feature of the P-A Field, which is located 16 km offshore Sakhalin Island's northeast coast in 30 meters water depth.

Molikpaq operations

The only platform of its kind, the ABS-classed Molikpaq is designed for an environment of high ice loads, combined with significant seismic activity and intense wind and wave loads. The Sea of Okhotsk experiences storm winds, high waves during open-water season, icing of vessels, snowfalls, and poor visibility. Broken rubble ice may build ridges up to 25 meters thick in shallow water. Wave heights can reach as high as 19 meters from peak to trough during a 100-year storm.

The lack of infrastructure for oil and gas development at this remote location presented a challenge for the Sakhalin II team in defining a design scheme for an early production system. The converted Molikpaq provides all of the required facilities for this remote development, including accommodations, the ability to drill and produce up to 32 wells, an oil export system, and gas injection.

A significant new component of the Molikpaq is its substructure, known as a spacer, which was designed and built in Russia. The spacer is necessary for the Molikpaq's operation in waters deeper than its initial 15-to 20-meter Beaufort Sea design. Facilities design and construction for the entire Molikpaq retrofit and newbuild components followed the project's guiding principles for simplicity and standardization.

Management structure

Sakhalin Energy Investment Company is a project company, established for implementation and development of the Sakhalin II Project. The shareholders in Sakhalin Energy and their respective ownership interests in Sakhalin Energy are: Marathon Sakhalin Limited (37.5%), Mitsui Sakhalin Holdings B.V. (25%), Shell Sakhalin Holdings B.V. (25%), and Diamond Gas Sakhalin B.V. (12.5%).

Sakhalin Energy is the first non-Russian company to secure a production sharing agreement (PSA) for the development of hydrocarbons offshore Russia. The Piltun-Astokhskoye Field was discovered in 1986 and the Russian Federation awarded Sakhalin Energy the PSA in 1994.

Russian contributions have been critical to the success of the Molikpaq installation and will continue to enhance developments on the Sakhalin II project. Over the life of the project, the PSA requires 70% Russian content, subject to quality, schedule, and price considerations. To date, some 150 Russian companies have performed work for Sakhalin Energy.

Among the many Russian companies and joint ventures involved in Phase I of Sakhalin II are Amur Shipbuilding Plant in Russia's Far East, which built the Molikpaq substructure; Sakhalin Mornefte Montazh, which performed hook-up and commissioning onboard the Molikpaq; and Sakhalin Marine Ltd., which will provide operations services for the FSO and SALM.

Sakhalin Energy is seeking Russian contractors to bid work. Joint ventures and cooperative efforts with major contractors are helping to increase Russian content.

Environmental impacts on waters offshore Sakhalin are another significant area where Sakhalin Energy has worked very closely with the Russian Federation. To address Russian concerns for proper, long-life protection of its resources and environment, Sakhalin Energy submitted an environmental impact statement to a panel of Russian experts, which approved the plan in May 1998. Approval for the use of advanced technology for treatment of fluids onboard the Molikpaq is being applied for and seabed surveys at the project site will monitor any changes in the conditions. Emission simulation models also will be used to check air quality and impacts on bird wildlife.

Project schedule

The Sakhalin II schedule to meet first oil in mid-1999 would be aggressive in a mature oil and gas province with established infrastructure, let alone in a new offshore region, making the success of the Vityaz Production Complex in Russia very significant.

Lack of infrastructure, including transportation, telecommunications, and many key oil and gas supply and service businesses needed to support a major offshore development, complicated completing a project of this magnitude. Other considerations that impact the project include capital and cash flow issues, as Russia needs an immediate infusion of capital to modernize facilities and equipment.

Arctic conditions of North America and Far East Russia placed strict limitations on the schedule. The project had very narrow weather windows for tows throughout the project. Had the team missed any one of the several windows, the entire schedule would have slipped by one year. The tow of the Molikpaq from the Beaufort Sea to Daewoo's yard at Okpo had a six-week window of open water in which to remove the vessel from the North American arctic region.

In the Russian Far East, the Amur River, which provides the only outlet for transporting the spacer blocks, freezes in the winter. Amur Shipbuilding Plant at Komsomolsk completed fabrication in summer 1997, ready for an August tow out of the spacer blocks down the Amur River to Bolshoi Kamen, where the sections were welded together.

The tow out and installation of the fully mated Molikpaq were also necessary before harsh winter weather set in during the fall of 1998. To achieve early oil and six months of production prior to winter storms and ice, all installations needed to be complete and ready for a July 1999 start-up.

History

The Sakhalin II team began studying the Molikpaq in 1995, and in 1996 the project team acquired the platform from Gulf Canada. Sakhalin Energy then announced its Phase I plan for development, and detailed design for the Molikpaq conversion began.

Sakhalin Energy towed the Molikpaq from the Canadian Beaufort Sea some 3,600 nautical miles to the Daewoo yard in Okpo for refurbishment and additional equipment in 1997. Engineering considerations included wave, wind, ice, and earthquake. However, studies proved that wave conditions in the relatively shallow water represented the major design criteria.

Molikpaq construction activities included adding a five-story production module, upgrading the drilling system, adding wave deflectors, earthquake stiffening, pipe barn modifications, and HVAC improvements for accommodation and service modules. The Sakhalin II team also built a wellhead truss to create space below the rig for the wellheads and expanded the vessel's two-well capability to 32 wells. Safety upgrades included additional firefighting capability, improved escape capability, and a new temporary safe refuge.

Appropriate positioning of the process module became a technical challenge, as the unit weighs 2,250 metric tons. Only the caisson ring of the Molikpaq could support this weight. Orientation of the module toward high-impact waves also was an issue. The project team positioned Molikpaq with the process module facing open water east of Sakhalin Island. The module then was designed to withstand forces from large waves generated in the open water, making the unit a huge wave wall on the vessel's east side.

In addition, the vessel's ice deflectors - an important design feature for the Beaufort Sea - became wave deflectors with a few design enhancements. In some areas, the team raised the height of the deflectors from 4.5 meters to 6.5 meters. To prevent bulk (green) water from coming across the deck, some deflectors were modified to include a 5-meter outstand to break the waves.

While improvements were underway in Okpo, Amur Shipbuilding performed detailed engineering and fabrication of the Molikpaq spacer. In building the spacer, Amur Shipbuilding overcame significant constraints in its conversion from a Cold War fabricator of nuclear-powered submarines and merchant marine vessels to a peacetime oil and gas contractor. Amur's construction bays were restricted dimensionally, both in width and height, and plate-cutting facilities were limited. These constraints necessitated that the spacer be fabricated in four blocks. Maximum loadout was limited to 4,000 metric tons.

Amur maintained an aggressive schedule to build and load out the blocks for the 110-meter by 110-meter steel spacer before October and the seasonal freezing of the Amur River. In fact, Amur built the blocks for the 14,200 metric-ton spacer within 10 months of contract award. Amur towed the blocks in two separate shipments down the Amur River to Bolshoi Kamen near Vladivostok in August 1997 and then welded the structures together.

In March 1998, Amur secured a separate contract to tow the spacer across 539 nautical miles to Okpo. Meanwhile, the Molikpaq retrofit and topside enhancements were on schedule, with the team completing the critical April installation of the process module onto the vessel. The spacer arrived in Okpo on schedule in April and in May was mated to the Molikpaq using a free-floating mating procedure. The mating was successful on the first attempt. The spacer was ballasted below water level at a deepwater site near Daewoo's yard and the Molikpaq was pulled over it. The combined Molikpaq and spacer weight was then 51,600 metric tons.

Site development

In August 1998, the Molikpaq was towed 1,495 nautical miles through the Sea of Japan to the development site. There, the facility was installed on the Astokhskoye portion of the field in September 1998, on schedule according to the 1996 plan. The installation was successful, with the Molikpaq setting down within five meters of the target, in the face of high winds and stormy seas because of remnants of typhoon "Rex" off Japan.

The Molikpaq core was then filled with 300,000 metric tons of sand, which was densified with explosives. Some 27,000 metric tons of rock were installed around the base of the structure for scour protection from waves.

Sakhalin Mornefte Montazh will complete the process hookup and commissioning onboard the Molikpaq in July. The SALM, measuring 38 meters tall and 6 meters in diameter, and the two-kilometer pipeline to the SALM, for tie in to the FSO, will be commissioned in June. Molikpaq production will flow through the subsea pipeline to the SALM riser piping and swivel. The oil then passes through a submerged flexible loading hose to the bow of the FSO.

Okha, a Suez-max double-hull tanker, has 12 cargo tanks with a storage capacity of one million barrels. The 157,200 DWT tanker can accommodate tandem offloading from the stern and is equipped with a double-carcass offloading hose. The vessel also features a 15-metric ton offshore crane and one of the world's largest offshore metering skids: three 25,000 bbl/hour turbine meters for a total capacity of 75,000 bbl/hour.

An ice-breaking support vessel will assist the FSO and the entire Vityaz Production Complex. The Smit Sakhalin, owned by Smit International and chartered to Sakhalin Energy, will assist in mooring and unmooring export tankers and the FSO. The multiservice vessel, essential to efficient operation of the FSO, also will carry supplies to the Molikpaq during the winter. A sister ship, the Smit Sebu, also is providing assistance until production commences.

The Molikpaq is operated and maintained by Sakhalin Energy's permanent crew, which includes mostly Russian employees. The operations team completed a one-year training program, with activities including classroom, laboratory, and English instruction. Safety training has included safety policies, procedures, emergency action plan, aviation and marine safety, well control procedures, blowout contingency plans, medical evacuations, and oil spill response. When production begins in July, Sakhalin Marine Ltd. will manage operations for the FSO and SALM under the direction of Sakhalin Energy.

Bringing the Vityaz Production Complex onstream marks first production from a platform in Sakhalin waters and first oil from a production sharing agreement in Russia.

Author:

Billy T. McCaslin is manager of upstream projects for Sakhalin Energy Investment Company. He has 30 years experience in oil and gas development. He was seconded to the firm from Marathon Oil Company. He holds a BS in Civil Engineering from the University of Texas, and a MS in Civil Engineering from the University of Houston. He has 23 years with Marathon Oil in upstream and downstream engineering, engineering design, and project direction.

Copyright 1999 Oil & Gas Journal. All Rights Reserved.