Aclear understanding of upfront risks is a key component of accelerated deepwater development projects. The project team for the Zia subsea development in the Gulf of Mexico defined and documented all project risks at the beginning of the project and used that proactive process to support project planning and decision-making.
Zia, operated by independent Devon Energy Corp., is on Mississippi Canyon block 496 in 1,800 ft of water. The project, executed with a small company team supported by EDG, achieved first oil in June 2003, 18 months from project screening and within 12 months of project sanction.
The Zia field development used a classic application of a five-step project management process that was modified and accelerated on schedule to bring the small field onstream. Effective management of project risks resulted in the on-time delivery of the subsea tieback system 7% under the approved budget.
The Zia field development scheme comprises a single well tied back via dual flowlines to the host platform.
The project began with an analysis of the risks and the identification of the critical-path equipment necessary to execute the subsea development. Sole-sourcing key equipment contributed to the reliability of the system and facilitated the accelerated schedule.
The Zia team used a compressed development process, targeting the subsea tree and control system as critical long-lead items to drive the schedule, while ancillary components and systems, including umbilical, flowline, and host platform topsides modification, proceeded in parallel.
Devon developed the Zia field using conventional subsea technology via a 16-mi tieback to an existing platform operated by others and located on South Pass block 89 in 422 ft of water. The field development scheme comprises a single well tied back via dual flowlines to the host platform. Major components include:
* 10-ksi subsea tree and control systemTransoceans semi Polar Pioneer has begun drilling in the Barents Sea.Transoceans semi Polar Pioneer has begun drilling in the Barents Sea.
* Intelligent well completion with dual zone remote actuated sliding sleeves
* Electro-hydraulic multiplex umbilical with super duplex stainless steel tubes
* Umbilical termination assembly
* 5-in. un-insulated service flowline rated for 7,000-psi shut-in tubing pressure
* 5-in. by 10-in. pipe-in-pipe production flowline rated for 7,000 psi
* Pipeline end termination (PLET) assembly with remotely actuated pigging valve and expansion slot
* Various topsides equipment additions and modifications to accommodate subsea production.
Project drivers
The Zia project drivers include early first oil, field-proven technology, operator credibility, and value-based decision making. A clear understanding of these project drivers, defined and communicated to the project team early in the field development process, contributed to effective decision making throughout all project phases.
Net present value of the development was sensitive to the first oil date. As such, the project was deemed schedule-driven, with capital cost versus schedule trade-off understood prior to execution.
To achieve predictable operability and an accelerated project schedule, the team selected only field-proven technology with previous, successful deployment in the GoM.
Early in the project, the team recognized operability in deepwater as a critical success factor, resulting in early flow assurance work that drove host platform selection and subsea system architecture. Early involvement of operations personnel also facilitated the transition following production start-up.
The team reviewed each decision to ensure project-driver intent, as well as total cost of ownership, balancing capital expenditures with projected operational expenses.
Project management
While the team acknowledged the benefits of the compressed schedule, effective project management required recognition of the risk involved in altering an industry-accepted conventional project management process. The project team defined, analyzed, and documented risks that might impact a modified process and accelerated schedule, and also developed a plan to mitigate obstacles.
The mitigation process continued throughout the execution phase, with the project team reviewing and updating proactive measures as needed. Importantly, the risk assessment reassured the project team throughout the implementation phase.
Adding value to the entire Zia effort, the project team incorporated industry best-practices and assigned experienced personnel to facilitate the accelerated schedule and modified development process.
The conventional five-step project management process includes several hold points, often referred to as “gates.” These checkpoints help to ensure that all critical project issues are addressed prior to the next phase, minimizing project risk.
The hold points also trigger a summary of findings, including decisions that support project cost and schedule updates, with expenditures typically approved one phase at a time. This traditional project management process requires that all project components queue at the hold points to maintain a consistent level of definition for the overall project.
Based on the aggressive schedule drivers and use of conventional technology, Zia project management concluded that a modified work process would accelerate first oil without compromising project risk. This process modification allowed the longest lead items - the subsea tree and control system - to drive the project critical path from concept selection through start-up.
Zia proceeded with overlapping activities; that is, alternative analysis and front-end engineering and design (FEED) progressed with varying maturity of definition for each project discipline. For example, the team sole-sourced the subsea tree and control systems, allowing associated FEED to begin immediately following team definition of basic subsea architecture and operating philosophy.
While the subsea tree and control system progressed in a definition (FEED) mode, topsides and pipelines underwent alternative analysis, as a host facility was not yet selected. This out-of-phase progression allowed the team to procure subsea trees and associated control systems at the completion of the subsea hardware FEED.
The Zia team awarded umbilical supply and line pipe while production-handling agreement (PHA) terms were still being negotiated and topsides facilities design was still in the FEED stage.
Devon dedicated a company project manager supported by consultants. These team members represented the company and were responsible for technical and commercial issues for their respective discipline areas.
The team matched the organizational structure with the work breakdown structure - a project management tool detailing tasks and their sequence of performance - and documented the roles and responsibilities for each lead individual. The team also held formal coordination meetings with all project leads each week.
Following preliminary engineering, field visits, and review of PHA terms together with cost estimates and preliminary project schedules, the team recommended “B” platform on South Pass block 89, some 16 mi from Zia, as a host facility.
An original “preferred” host selection - located 6 mi from the subsea site - seemed to be the “obvious” choice because of its proximity to Zia. Focused on making value-based decisions, however, the team considered two additional shelf platforms as hosts for the Zia subsea development.
Based on the aggressive schedule drivers and use of conventional technology, Zia project management concluded that a modified work process would accelerate first oil without compromising project risk.
Preliminary flow assurance work identified technical complexities associated with downhill flow from the subsea site to the “obvious” host. These flowline operability issues - primarily terrain slugging - while mitigable with additional capital solutions, could have led to increased system downtime.
Marketing analysis also revealed a product value differential between the nearby host, which exported to a sour oil system, versus the shelf host platforms, which exported to a sweet oil system.
This positive differential allowed the team to consider additional capital expenditures associated with a longer tieback to the shelf. Having executed a complete value chain analysis from the reservoir to the export system, the project team eliminated the short tieback alternative and focused on two longer tieback options, each 12 to 20 mi away from the subsea location.
Contracting strategy
The project management issued more than 120 individual purchase orders and contracts for subsea and topsides facilities during execution. To achieve competitive cost while maintaining the schedule, the team aligned the contracting strategy with its project drivers, making schedule-critical contracts candidates for sole-sourcing while competitively bidding remaining contracts.
Based on a detailed schedule, contracts associated with critical-path equipment included liquidated damages provisions as well as early completion bonuses when the early delivery resulted in time savings.
Because of their extended deliveries, the team issued early approvals during FEED for the subsea tree and control system supply to minimize the overall project cycle time while sole-sourcing the field-proven technology.
The team competitively bid the umbilical supply, including approximately 16 mi of an electro-hydraulic multiplex line, two quad cables, and 10 super duplex stainless steel tubes.
The team separated the line pipe procurement into two packages, one for the seamless carrier pipe and the other for the electric resistance welded casing pipe. The completed line pipe was shipped to the coating contractor where fusion bonded epoxy and insulation were applied.
The project team based the contract award of the pipeline installation on cost, experience with pipe-in-pipe installations, and availability of the installation vessel.
The scope of work included receiving coated/insulated line pipe, spooling the 5-in. service flowline as well as the 5 x 10-in. pipe-in-pipe production flowline at a spool base, and installing both pipelines via reeled method. This scope of work included the design, fabrication, testing, and installation of the PLET skid.
The team competitively bid the umbilical installation following umbilical manufacturing award and associated delivery confirmation. The installation contract included pulling in umbilical at the host platform, laying umbilical, and installing the umbilical termination assembly (UTA) at the subsea well location.
The owner and operator of the host platform assumed responsibility for facilities upgrades to accept Zia production. The operator issued and managed all offshore installation and hook-up. To facilitate this process, the project team reached joint agreement on contractor selection prior to contract execution. Various individual contracts awarded included temporary crane, structural deck extension installation, piping, electrical, and instrumentation hook-up.
Project execution
The project execution phase progressed on schedule, with the team managing challenges and delays as they arose. The team also monitored critical activities and cost on a regular basis. Umbilical manufacturing, equipment delays, unplanned route changes, and topside issues created the greatest challenges.
Manufacturing problems in the supply of steel tubes nearly resulted in severe delays and threatened first-oil date. The manufacturer responded by remanufacturing 50 mi of tubing in three weeks.
Pipeline installations initially were slated to occur back to back with the same installation vessel; however, reel modification delays necessitated that an alternate reel pipelay vessel install the 5-in. service pipeline.
During installation of the pipe-in-pipe production line, the team discovered that an anchor had been dragged over the 5-in. service line, moving it from its original “as laid” location and causing an unplanned route change for the pipe-in-pipe line during the actual lay operation.
Subsequent ROV and diver inspections found no damage to the 5-in. service pipeline. Delays to the pipelay vessel and the cost of additional pipeline crossings, together with higher than anticipated drilling rig stand-by time, resulted in additional costs, but within the project contingency.
The team based topsides cost estimates on equipment sharing. While this approach was generally successful, simultaneous operations during topsides modification activities required greater effort and higher associated cost than originally expected.
Two weeks after well start-up, pressure monitors indicated a malfunction of the subsea choke resulting from frac proppant flowing from the well, which caused some erosion of the retrievable choke insert components.
Closing the upper sliding sleeve and isolating the upper zone, together with recovering and re-installing the choke insert, solved the problem. During this period, the team pigged the dual flowlines to remove frac proppant.
While initiating post start-up flow assurance verification engineering, the project team learned that actual pipe-in-pipe thermal performance did not follow anticipated predictions. Current operating experience indicates that host platform arrival temperatures are approximately 10° F lower than calculated, which could result in potential earlier wax deposition at lower flow rates.
Early risk assessment indicated this potential for poorer flowline thermal performance with the original design, including additional chemical injection points for wax inhibitor in the completion and provisions for round-trip pigging to remove any wax deposition in the flowline.
Best practices, lessons learned
Following start-up, the key contractors and the host platform operator participated in separate workshops to identify best practices and lessons learned that could assist future industry projects with accelerated schedules in deepwater. The team organized comments into planning and execution categories, assigning high, medium, or low impact to each. Samples include:
* Ensure subcontractor deliveries - Secure frequent subcontractor updates and detailed subcontractor schedule information to proactively identify and resolve concerns
* Confirm contractor commitment - Verify new contractor commitments prior to contract signing to ensure timely equipment deliveries
* Resurvey as-built locations of pipelines - In the case of any significant time laps between installations, confirm as-built pipeline and/or umbilical locations to avoid potential damage to existing installations, eventual remediation, and additional complexities
* Execute production handling agreements early - To avoid project delay and additional project cost, rely on the host platform operator to control the entire scope associated with facility modification, including design, equipment supply, installation, hook-up, and commissioning. If awaiting execution of PHAs, project teams should include sufficient schedule reserve and cost contingency for a host facility in the project execution plans
* Ensure constant project drivers - Consistent project drivers throughout project planning and execution provided clear alignment among the project team members and contractors
* Early approval of clear project drivers by all decision makers and communication to stakeholders contributes to effective cost management and timely delivery
* Build quality relationships - The Zia contracting strategy provided a working environment in which all participating contractors understood the project’s “big picture” and how each contractor’s contribution fit into the overall project plan.
Increased awareness of how late deliveries of key components impact project success further facilitated contractor relationships and overall productivity. Operator and contractor alike assume joint responsibility for cultivating this awareness and encouraging open, honest communication.
The Zia project team used a secured Web-based information and document-sharing platform. Project team members, host platform operators, and contractors could access common information, including project documents, specifications, drawings, project calendars, and contact information, from anywhere in the world. Web site architecture restricted access to certain documents and announcements.
During the peak of project execution, the team granted access to varying levels of the Web site to more than 130 users. User-friendly and easy access of key project data promotes consistency, reduces project administration, and provides real-time data.
Early operations involvement, including host platform operators, was a key success factor for Zia. Operations personnel provided input into subsea equipment operating philosophy and procedures, piping and instrumentation diagrams, equipment layouts, and topsides control system operations philosophy.
Operations personnel remained engaged throughout onshore topsides equipment pre-commissioning and subsea systems integration testing. This effort ensured offshore commissioning and start-up at Zia progressed without incident or major follow-up.
Through effective risk management and a clear understanding of project drivers, smaller deepwater fields can be developed quickly and economically. Working with small company teams, project managers should consider using modified project management processes to accelerate field development.
Additional success factors included adherence to the project drivers, early agreement on contracting strategy, proactive identification and mitigation of project risks, and respect for the value of win-win negotiations in company-to-contractor relationships.
Project schedule management, along with a proper understanding of critical-path components, facilitates project team responsiveness. Provision for schedule reserve also makes for realistic schedule execution. Finally, the best practices and lessons learned on Zia provide a foundation for future project performance improvements.
