When the forecasts are flawed

Subsea processing market projections have consistently overestimated the growth of the market – DNV GL looked into why. Elaine Maslin reports.

For the last 15 years a number of market outlooks have had very optimistic projections for subsea processing installations. What do you think is the MAIN reason for these projections being too optimistic? Images from DNV GL.

The potential for subsea processing has always seemed clear. Growth in deep water developments, subsea production, and longer steps-outs and the need for production enhancing or boosting technologies, have long been seen drivers for subsea processing technologies – both new and mature.

But, the potential has never quite matched up to forecasts. Why? The good news is that the main reasons are not about the technology itself.

According to a survey of subsea technology professionals devised by Norway-based subsea specialists at DNV GL, a GCE Subsea partner, one-third of participants believe it is a lack of business cases and a further 29% said it was project risk, cost and schedule. Together, those reasons add up to some 62% relating to economics. Meanwhile, just a quarter, cited technology.

“I think it’s a sign or symptom that those justifying business cases for specific fields are not the same people as those designing the next generation of equipment,” says Bjørn Søgård, Segment Director for Subsea at DNV GL – Oil & Gas. “There’s a fundamental disconnect between those communities in a way.

“One of the limiting factors is that there are too many variables involved in a system, so that when it comes to a tender, so many of these have been fixed, limiting options,” Søgård says. “There is also not enough interaction with the subsurface team, to really understand what systems are required.”

Subsea layout.

For Tore Irgens Kuhnle, a business development leader, SURF, DNV GL, the ever optimistic forecasts also do not take into account who operates particular fields and how they view subsea processing technologies. “There are many fields that are good candidates, but you look who is operating that field, you known it will never take that [subsea processing] technology into use,” he says.

Of the subsea processing technologies, multiphase boosting is the most mature and, according to the survey, also the most attractive, followed by bulk water separation and injection, gas/liquid separation, to which most respondents were “neutral,” and then finally gas compression, deemed “unattractive” by most, and which was the only technology not in operation at the time of the survey in 2H 2015.

The attraction to multiphase boosting, considered by 88.2% of the survey respondents to be a proven technology, was its ability to offer higher and faster production, from low pressure wells, deep water and long distance tie-backs. But, while it’s the most mature of the technologies, adoption has still not been as great as could be expected, with cost, power, barrier fluids and topsides modifications listed as weaknesses.

Multiphase boosting has found itself a market. It has an obvious business case and the technology has proven itself with systems proving some eight years without maintenance. But even so, there are just 40 projects are out there and very few players providing this technology on the market, which limits operator’s options.

Perhaps the bitterest pill in the survey was the view of how many of each of the subsea processing technologies would be sanctioned over the next five years. It amounted to a total of seven, at the lower estimate, to a maximum 19. These were split as follows: 4-10 multiphase boosting projects, 1-3 bulk water separation, 1-3 gas/liquid separation, and 1-3 gas compression projects.

Given those figures, it was not surprising that 50% of respondents said subsea processing’s share of the total subsea market would stay the same. Still, 46% said it would increase, with just 4% predicting a decrease.

“I think the way ahead will be to be more modular, with more compact and smaller units instead of massive central units on the seabed,” Søgård says, suggesting cartridge style modular systems with common interfaces. “What we are then losing is overall efficiency, but with lower risk and phased possibilities for investments instead of massive investments.”

Other ways to make systems more attractive would be to share power between power users, instead of individually controlling each and every pump. You might have one common speed control and switch pumps in or out when you need them, for example.

But, there will also be a need for new technologies, Søgård says, especially when it comes to powering longer step-outs.