This article summarizes development of the Azurite field as a way of providing context for evolution of the Floating, Drilling, Production, Storage and Offloading (FDPSO) concept. It also reflects on the project’s technical and economic drivers that led the Azurite project team to select the FDPSO concept. The paper also highlights other application for FDPSOs and discusses some of the key variables that determine the suitability of the FDPSO concept for use in field developments. The step change in economics afforded by the incorporation of a drilling rig onboard a conventional FPSO brings new hope to fields of similar geometry and in similar environments that heretofore were considered marginally economic or uneconomic. The FDPSO concept also has application as an early production system, in advance of full-field developments. The concept has tremendous potential as a ‘game changer’ for field developments, whether it is employed to unlock the value of marginal fields in deepwater – even in a low oil price environment – or as an early production system. As the concept employs a drilling rig onboard the vessel, traditional challenges regarding deepwater drilling rig day rates and availability are eliminated.

## Article

David Harris, Harry Howard, Kenneth C. Hampshire, Murphy West Africa, Ltd.; Jeffrey A. Moore, Kenneth Bayne, Jean Pepin-Lehalleur, Doris, Inc

Copyright 2010, Offshore Technology Conference This paper was prepared for presentation at the 2010 Offshore Technology Conference held in Houston, Texas, USA, 3–6 May 2010.

This paper was selected for presentation by an OTC program committee following review of information contained in an abstract submitted by the author(s). Contents of the paper have not been reviewed by the Offshore Technology Conference and are subject to correction by the author(s). The material does not necessarily reflect any position of the Offshore Technology Conference, its officers, or members. Electronic reproduction, distribution, or storage of any part of this paper without the written consent of the Offshore Technology Conference is prohibited. Permission to reproduce in print is restricted to an abstract of not more than 300 words; illustrations may not be copied. The abstract must contain conspicuous acknowledgment of OTC copyright.

## Abstract

The Azurite field development, installed in the Republic of Congo in 2009, employed the industry’s first Floating, Drilling, Production, Storage and Offloading (FDPSO) vessel to develop the field.While the FDPSO concept has been a subject of interest within the industry for some time, the Azurite project team took the FDPSO from concept to reality.

The concept has tremendous potential as a “game changer” for field developments, whether it is employed to unlock the value of marginal fields in deepwater – even in a low oil price environment – or as an early production system. Because the concept employs a drilling rig onboard the vessel, traditional challenges regarding deepwater drilling rig day rates and availability are eliminated.

This paper summarizes development of the Azurite field as a way of providing context for evolution of the FDPSO concept. This paper also highlights other application for FDPSOs, and discusses some of the key variables that determine the suitability of the FDPSO concept for use in field developments.

## Introduction

History was made in August 2009 when the Azurite field began producing offshore Republic of Congo [1]. Azurite employed the industry's first Floating, Drilling, Production, Storage and Offloading (FDPSO) vessel to develop the field. While the FDPSO concept has been a subject of interest within the industry for some time, The Azurite team made the FDPSO concept a reality. It is a robust concept that has potential for much broader application, as the number of large discoveries in deepwater shrink and the industry seeks new ways to monetize stranded pockets of oil and gas.

This paper will reflect on the project technical and economic drivers that led the Azurite project team to select the FDPSO concept. This paper will also discuss other applications for the FDPSO, and identify key variables that determine suitability of the FDPSO concept for use in field developments.

## Azurite: Inspiration for the Concept

### Discovery and Appraisal

The Azurite Marine Field lies within the Mer Profonde Sud (MPS) block offshore Republic of Congo, just north across the border from Cabinda Block 14. Water depths across MPS range from 1100 – 2000 meters.

Azurite field was discovered in January 2005 with the Azurite Marine-1 (AZRM-1) well. The field was subsequently appraised in late 2005 and early 2006 with the drilling of AZRM-2 and AZRM-3 wells. Each of the latter two wells was sidetracked (ST). AZRM-2ST was also cored and tested.

Aquifer support was found to be essentially non-existent along the producing trend, necessitating the requirement for water injection to support reservoir pressure.

Figure 1 Azurite Reservoir Faulting and Bottom Hole Locations

### Field Size Description

The AZRM-2 and AZRM-3 wells were ST to appraise the four fault blocks of the field as shown in Figure 1.

### Concepts Considered

Azurite integrated project team began the task of identifying and evaluating of field development alternatives, as well as leading the capital project execution planning effort.

Multiple development schemes were identified and evaluated. The four main alternatives evaluated were:

• Subsea tiebacks to third party facilities

• Subsea tieback to infield FPSO

• Dry Tree Unit (DTU) producing to FPSO

• Infield FDPSO

A subsea tieback to third party facilities in Congo or Angola was considered and deemed technically feasible, with the aid of subsea boosting. However, tiebacks to third party facilities in Congo or tiebacks to third party facilities in Angola, with the associated cross-border issues, would have introduced too much schedule and political risk. Furthermore, subsea tiebacks to third party facilities did not fully support the Azurite team's objective of establishing production operations in Congo. Hence tieback schemes involving third party facilities were not selected.

A subsea tieback to an infield FPSO was considered. This alternative represents the “classic” solution for deepwater field developments offshoreWest Africa. However strong market demand for deepwater floaters exposed the project to significant schedule delays. Likewise their associated day rates adversely impacted project economics.

DTU options were considered as a way to overcome the roadblock posed by the tight market for deepwater rigs. A DTU option was a possibility because the Azurite reservoir depth and areal extent permitted directional drilling from a single surface location. One alternative considered was a minimal wellhead facility with a tender assist drilling rig. This concept was successfully employed to develop the Kikeh field in Malaysia. Another alternative considered was a DTU with a self contained compact drilling rig. In both DTU cases, processing would occur on an FPSO in the field. The option of a minimal wellhead facility with tender assist rig was ultimately rejected due to a lack of available tender rigs. The DTU with compact rig producing to an FPSO was retained as a technically viable alternative, however it was considered cost prohibitive.

Faced with deepwater rig shortages and the desire to make a step-change improvement in project economics, the project team conceived of the FDPSO alternative. Figure 2 shows the overall view of the Azurite field development.

Figure 2 Azurite Field Development – Overall View

## FDPSO Feasibility

The FDPSO concept has tremendous potential as a “game changer” for the oil and gas industry for deepwater field developments, whether it is employed to unlock the value of marginal fields in deepwater – even in a low oil price environment – or as an early production system. Because the concept employs a compact drilling rig onboard the vessel, traditional challenges regarding deepwater drilling rig availability and expensive day rates are eliminated.

Field development economics heavily favor an FPDSO concept when reserves can be produced from a single location. However the concept still has application for fields with multiple drill centers. The FDPSO can be located over the drill center containing the majority of a field's reserves, and other drill centers can be tied back to the FDPSO.

FDPSOs have been discussed and the concept developed in the marketplace since the 1990s but, until Azurite, never became a reality. While it sounds relatively novel, the technology involved is not new. Combined drilling and production platforms are commonplace, as are deepwater drill ships. Thus extending these time-tested concepts to drilling from an FPSO did not represent a quantum leap.

Both wet and dry tree FDPSO solutions have been studied in industry, however the Azurite team opted to focus its efforts on a wet tree solution because it represented less of a technological step-out.With the wet tree FDPSO, the moon pool is located in the center of the vessel in order to minimize rig motions. A base suitable for mounting a modular drilling rig is installed.Wells are drilled from the vessel and completed subsea.

Drilling from an FDPSO requires either a spread-moored solution or drilling in a continuous dynamic positioning mode. Benign environments and uni-directional seas permitted the use of a spread-moored FDPSO. Motions studies for Azurite confirmed that the relatively benignWest Africa seastates, dominated by a long-period swell from the southwest, permitted drilling operations to continue even during a 10-year event.

A FDPSO Concept Hazard Identification (HAZID) review was held prior to final consideration of the FDPSO as an acceptable option. The HAZID team included facilities engineers from the Azurite team, drilling engineering and field supervisor representatives from Kikeh Team, and drilling contractor HSE and engineering representatives. No high risks were identified that could not be mitigated through layout restrictions or the implementation of specific operating procedures.

## Other Applications for the FDPSO

As the previous discussion suggests, market supply and demand forces and the operator's own strategic aims in Congo led the team down a path to the logical conclusion of employing an FDPSO. However the concept is certainly not limited to Azurite. The concept can easily be extrapolated to other uses: in fields with marginal reserves, as an early production system, as part of a phased development, and in fields where other storage and offloading infrastructure are already present.

### Marginal Field Development

As a 2002 study by Matthew Simmons [2] noted, 116 of the world's largest oil fields produce 47% of the world's crude oil supply. In contrast, over 4,000 fields produce the remaining 53% (ref. Figure 3). While the report is somewhat dated and does not reflect recent discoveries in the Gulf of Mexico and Brazil, Simmons’ work points to the reality that the vast majority of new discoveries produce less than 100,000 barrels per day.

Figure 3 Oil Field Size Distribution [2]

We do not suggest that a 100,000 barrel per day field defines a marginal field, as many other factors play into the equation, some of which are technical and some non-technical.

As NPV tornado diagrams[3], shown in Figure 4, normally indicate, non-technical factors such as oil price and fiscal terms oftentimes have the greatest effect on field development economics.

Figure 4 Typical Tornado Diagram [3]

As far as technical factors go, subsurface factors such as recoverable reserves, well productivity, and well count also drive economics. As well counts increase, so do drilling costs as a percentage of the overall field development capital cost. Likewise, intervention costs and operating expenses increase.

Setting aside then the ability to re-negotiate fiscal terms as well as technical and non-technical factors beyond our control, the key to making marginal fields economical lies in our ability to find a step-change improvement in capital cost and operating expense. In the case of the FDPSO concept, operators can move away from the cost-prohibitive deepwater semisubmersible drilling rig rates and towards day rates approaching that for a conventional land based drilling rig.

## Conclusions

This paper illustrated some of the project technical and economic drivers that led the Azurite project team to select the FDPSO concept. Looking beyond the specifics of Azurite, this paper also identified some of the key variables that determine suitability of the FDPSO concept for use in field developments.

Regardless of application, Azurite has shown the way forward. The possibilities and permutations are many. The step change in economics afforded by the incorporation of a drilling rig onboard a conventional FPSO brings new hope to fields of similar geometry and in similar environments that heretofore were considered marginally economic or uneconomic. The FDPSO concept also has application as an early production system, in advance of full field developments. Drilling and production can commence, generating revenue while at the same time generating valuable data regarding reservoir performance. The FDPSO can also be an integral component of phased development schemes.

Thus the FDPSO has proven to be a robust concept that can add significant value – both in terms of reduced cost and information gained on reservoir performance information that permits further field development optimization. Against the backdrop of today's lean economic times, and as the number of large discoveries in deepwater shrink and the industry seeks new ways to monetize stranded pockets of oil and gas, the concept will no doubt receive much more scrutiny.

1.
Howard, Hampshire, Moore, White, and Bayne. “First-Ever FDPSO at Work on Azurite Field Development,” November 2009, Offshore, PennWell.
2.
Simmons, Matthew R. “The World's Giant Oilfields: How Many Exist? How Much do They Produce? How Fast are They Declining?”, January 2002, M. King Hubbert Center for Petroleum Supply Studies.
3.
Lavingia, Nick J. “Managing Risk for Global Energy Projects,” 2005 AACE International Transactions.