Ongoing opportunities in Australia

Rex Hubbard, Atteris, Australia, discusses how a succession of brownfield subsea tie-back projects and an increased focus on integrity management activities should continue for many years to come, with continued opportunities for the Australian subsea and pipelines industry.

Australia’s booming LNG industry is the envy of the world. The race for more Australian-produced LNG has seen investments in seven Australian-based LNG projects, which are all set to come onstream over the next few years, with a combined additional capacity of more than 60 million tpy (Queensland Curtis LNG, Gladstone LNG, Australia Pacific LNG, Gorgon Project, Wheatstone Project, Ichthys LNG Project and Prelude FLNG). This production increase will result in total Australian production exceeding 80 million tpy.

The recent strength of the Australian dollar since the global financial crisis, escalated labour costs, a generally high cost Australian economy, the burdens of government 'red tape' and 'green tape' and other factors has resulted in LNG development costs increasing tremendously in the past decade. So, where does this leave a subsea and pipeline industry that has demonstrated enormous engineering feats in recent years?

Although the next crop of “Big Gas” projects has been suspended or delayed, for the time being at least, some consolation for the Australian subsea and pipeline industry is that maintaining gas supplies to Australia’s existing and emerging LNG developments is a necessity for their operators. Therefore, a succession of brownfield subsea tie-back projects is expected to increase and continue well into the future.

Many sanctioned gas developments have found more gas than their original designs assumed or will be used for tie-ins of future discoveries, presenting an opportunity for a longer operating life. An effective integrity management programme throughout the asset’s lifecycle supports future design life extension opportunities. It also reduces the technical risks and costs of future subsea tie-back projects, by presenting the option to continue or re-use existing assets.

The scene is now set in Australia for a steady market environment where the subsea and pipeline industry can support the operators’ continued need for subsea tie-backs and integrity management activities.

Brownfield subsea tie-back projects

Many operators in Australia are currently in the process of building, or designing, brownfield subsea tie-backs. These include:

• Woodside’s Greater Western Flank Phase 1 project.
• Woodside’s Persephone project.
• ConocoPhillips’ Bayu-Undan Phase 3 project.
• Woodside’s Greater Western Flank Phase 2 (GWF2) project.

The technical requirements of subsea tie-backs are ever-increasing, particularly for tie-backs to existing offshore facilities. Additional subsea functionality can minimise the requirement for offshore topsides modifications, which are expensive and have high cost and schedule risks due to a combination of:

• Short facility shutdown durations.
• Facility accommodation limits.
• Weather windows.
• Technical and design limit constraints.

The cost of additional subsea functionality is high, however it often yields better value for the operator than the corresponding offshore topsides modifications, with their associated higher CAPEX and OPEX budgets and their increased cost and schedule risk.

High technical risk, cost risk and schedule risk associated with a subsea tie-back to either an offshore facility or a subsea brownfield tie-in point can sometimes result in a subsea tie-back to shore having higher value to the operator. Reasons for this include decreased risk and the additional pipeline capacity, which defers a development’s compression project, which is one of the (economically) riskiest types of brownfield projects.

For all of the above reasons, there is likely to be a steady procession of Australian “Big Gas” subsea tie-back projects, with ever-increasing complexity and value.

Life extension of subsea and pipeline assets

Life extension projects could require investment in as little as some “standard” integrity management engineering effort, or as much as a major subsea intervention campaign.

When the time approaches for a subsea tie-in or life extension project, the consequence of intermittent integrity management activities (or retrospective integrity management activities) can be very high. For example:

• Intelligent pigging inspections on subsea pipeline systems are expensive, particularly if subsea launch or receipt is required.
• Damage identified later in the field life is much more expensive than the costs of avoiding damage early in field life.
• Damage found late in field life may result in the operator not being able to extend the development’s design life to produce additional gas volumes should they be found.

There will always be residual risks during the operations phase that should be managed by an integrity management system and plan. System threats and their causes must be understood. Threats that are common to most subsea and pipeline systems. Effective plans can be developed to manage each of these threats.

An effective integrity management programme is a continuous cycle of performing required inspections, monitoring and periodic maintenance, assessing the data that is received, taking corrective action where it may be required, re-evaluating the risk and adjusting the integrity management programme as necessary.

Systematic integrity management through inspection, monitoring and maintenance planning will optimise integrity management costs and effectively manage risks, enabling the subsea asset to be maintained in a fit for purpose condition. Understanding the through life condition and performance of an asset will assist to reduce technical risks associated with brownfields subsea tie-back projects, and provide the historical data to enable low cost life extension engineering assessment to be performed should the operator have the good fortune to find additional gas volumes.

Written by Rex Hubbard, Atteris, Australia and edited by Hannah Priestley-Eaton

To read the full version of this article, please download a copy of the November 2014 issue of World Pipelines.

Read the article online at: https://www.worldpipelines.com/special-reports/09032015/ongoing-opportunities-in-australia/