Gearing up for growth

With a recent injection of capital having positioned the company for growth, Fairfield Energy – the self-styled only independent of substance solely focused on the UK continental shelf – moved into new operational headquarters at Westhill last month, bringing together personnel from four different Aberdeen offices for the first time. Meg Chesshyre checks out the thinking behind the move.

We moved partly because the lease was up on our original buildings, partly to bring everyone under one roof, and partly because we are anticipating growth and new projects with the need to take on additional staff and additional support,' explains Fairfield COO Ian Sharp. Fairfield has around 50 actual staff on the payroll, but the numbers on site can vary from 150 to 180, not including support from individual companies offshore and for drilling and subsea.

Fairfield has had two recent cash injections. The company was founded in 2005 with $200 million of capital from Warburg Pincus, which also injected $150 million into the business just over a year ago. It received a further investment of $150 million this summer from Riverstone. 'The significance is not only of course the capital injection, but also the fact that we've now got two lead investors both of whom are very experienced in the oil & gas industry and the energy business. Not only is it injecting capital but it's obviously a tremendous strengthening of our board and support for the company,' says Sharp. 'We want to be an independent of substance, and we are on that journey.'

The company has made a major asset integrity investment in the Dunlin cluster, which it acquired in 2008. Dunlin is operated by Fairfield (70%), partner Mitsubishi (30%) with Amec as the duty holder. The Dunlin cluster involves four mature oil fields with transportation via the Brent pipeline system to the Sullom Voe terminal. Satellite fields include Dunlin South West, Osprey and Merlin, all tied back to the Dunlin platform. The main Dunlin field first came into production over 30 years ago, and previous owner Shell was contemplating abandonment around the 2010/11 mark.

The Dunlin area project is known internally as DB20, the Dunlin Beyond 2020 Plan, looking to push Dunlin well beyond 2020. 'Compared with the previous owners' forecast of a 2010 COP this is clearly a 10-year extension and that's just looking at the opportunities that we see on the main reservoirs,' Sharp points out. 'We have recently shot seismic. We spent $6 million this year on acquiring new seismic [shot by PGS], the first seismic I think that has been shot in the area for some 20 years, and that is going to help us identify opportunities off the platform, away from the platform, for new subsea tiebacks.'

The new seismic is being used to evaluate areas to the southeast and southwest of Dunlin. The area to the southeast can be drilled from the platform itself (pictured above), but the southwest will involve an exploration and appraisal programme with a drilling rig in 2015.

Fairfield sees a window of opportunity for exploration drilling in 2015, and hopes to establish a substantive programme, including work to be done on Osprey and Merlin, which could lead to an extension of field life beyond 2020. The operator has also been using light well intervention techniques on subsea wells on Osprey over the last two years, without needing to go to the expense of using a drilling rig, and is continuing to do so. The contractor here is Well Ops using the Seawell and the Well Enhancer vessels. Interventions are also being carried out from the Dunlin platform itself, the operator having recently spent $40 million on reinstating the drilling rig on the platform.

'Our focus originally has been on creating the reliability that we need in the platform,' notes Sharp. 'That's been addressing fabric maintenance, integrity management but fundamentally and most recently we have addressed the fact that we were not able to generate our own power on the platform, we were dependent on imported power from Brent Charlie, so our most recent investment on the platform has been $115 million worth of investment to lay, install and tie-in a fuel gas import line from the Thistle platform down to Dunlin. That's the physical connection. We are actually tying ourselves into the NLGP (northern leg gas pipeline)) system, so that we can import gas from Magnus. It's a bit like tying a house into the mains gas system. We weren't tied into the mains gas before.'

In 2010 Fairfield made the strategic decision to invest in a fuel gas import system to allow it to generate its own power on the platform so then it could have a very reliable water injection system. 'The key to production from Dunlin main field and Osprey and Merlin is reliable water injection and we were not able to maintain reliable water injection without robust or reliable power generation systems. So in tying the fuel gas pipeline into the mains and buying gas from Magnus, we've already demonstrated much, much better reliability using our own power generation system.'

The new fuel gas import system and modified water injection system are expected to enable production to rise to a year-end exit rate of around 10,000b/d of oil. For the first time since early 2000, the operator will be able to use its own independent power generation system to achieve significantly higher and sustained water injection performance.

Hooking up the new fuel line became tied in with replacing the flare access and tips, which had not been planned originally. The work, carried out by Aker Solutions, involved a novel helicopter installation (see panel right). 'I think that's where the Fairfields of the world come into their own because they look for better or quicker or more efficient and safer ways of doing what is at the end of the day conventional maintenance on these old platforms,' observes Sharp. 'It was just one of those things you looked at and thought this is new, this is different, it could be difficult but the advantages of the installation technique were such that it was worth doing.'

'As much as we might be concerned about somebody looking at us, we are looking at others.' Ian Sharp, Fairfield

Another example of innovative thinking has involved coil tubing. The Dunlin platform cranes are no longer able to lift a coil tubing reel, which can weigh up to 30te, in a single lift. This might seem to preclude the option of using coil tubing on the platform, but Fairfeld has recently reeled 20,000ft of tubing – a big 2in coil with a mono-conductor running through it – from the deck of a supply vessel up onto the platform's top deck. 'It's given us tremendous flexibility for well interventions, both in terms of electric logging and in terms of actual well interventions on the platform,' notes Sharp.

A further Dunlin innovation has been the installation of electric submersible pumps on two wells. The first was >page 28 installed in well DA14 in late 2010 and is now due for a workover. The second well, DA33, is still running successfully. 'Clearly we're looking to make sure that we've got a platform which we can rely on well into the early 2020s,' adds Sharp.

Decommissioning is obviously a significant issue for a maturing asset like Dunlin. 'The certainty around cost is very, very important to an independent,' affirms Sharp. 'It's not as if we can be sitting there without any understanding of what we might be exposed to in terms of costs.' He is particularly pleased with recent UKCS moves in terms of tax on decommissioning. 'The idea of being able to move to post-tax securitisation of decommissioning is very, very important,' he says.' This concept is now going through the UK government's consultation process and if successful it will give operators certainty about the money required to securitise decommissioning liabilities, releasing additional cash for investment in the North Sea.

Clipper South is being developed with up to five multi-fracced wells.

In conjunction with partner Taqa Bratani, Fairfield is taking a second look at Darwin (formerly North West Hutton), an asset where the previous decommissioning liability has already been met. With the help of new seismic, Sharp says the partners are looking at opportunities to the south and east of the original field with plans for three wells to be drilled this autumn – two by Fairfield using the Ocean Nomad, and one by Taqa using the Transocean John Shaw. 'There is a high degree of confidence about some of the areas that the North West Hutton platform could not drain, so we know there is oil there. It's an oil-rich territory; what we're testing is just how big this play could be.'

In the southern North Sea, development drilling continues on the RWE Deaoperated Clipper South field, which achieved first gas in August. Fairfield is a 50% partner here. Clipper South is being developed with up to five multi-fracced wells. In one well there are 10 fracs, requiring millable plugs, the first time this technique has been deployed, believes Sharp. 'You need to be able to make sure that each fracture is targeted at a specific area of the reservoir so there are a number of downhole tools that we use to make sure that each fracture is deployed at a particular place along the length of the horizontal well.

'Millable plugs help with that because effectively you just work your way back up the well with these plugs. Set a plug, fracture, set a plug, fracture, set a plug, fracture and then you go in and drill the whole lot out and bring all the fractures on together. You can discretely fracture test each fracture in the well. But that's a new technique. So that's really unlocked the potential as far as we are concerned in the southern North Sea. We see the southern North Sea being another core area for Fairfield especially now that we've proved the development concept with the multi fraccing,' explains Sharp.

Crawford, which with Maureen, were Fairfield's first asset acquisitions, is another revisit of an abandoned field, with EnQuest now the operator here. 'The trick to the likes of redevelopment at Crawford is identifying the technology that means you can do it cost effectively', Sharp notes. The difficulty with Crawford is that to develop the reservoir, a very high amount of reservoir penetration is required, and that typically has meant multiple wells.

Here, Fairfield has again looked at fraccing and drilling multilateral wells from a single mother bore. There is a lot of work to be done and it's still very challenging technically, says Sharp, but the partners are working towards the submission of a field development plan in due course. Maureen was another potential redevelopment, but drilling results have been disappointing and it is now being looked at for CO2 sequestration.

Asked if he was worried about Fairfield being a possible takeover candidate, Sharp agrees that there is a lot going on in the market place, 'but as much as we might be concerned about somebody looking at us, we are looking at others'. The recent $150 million investment from Riverstone and additional access to capital from Riverstone actually puts Fairfield in a very strong position to contemplate acquisitions itself, be they asset or corporate or in exploration. 'We're going to be looking right across the value chain from exploration all the way through to production.'

Sharp sees this as a great time to be an independent, because there's obviously a lot going on in the market. 'I've been delighted with the interest from both our existing investors and new investors. They see a real option and we see a real option left in the North Sea.' If decommissioning issues can be clarified, then a huge uncertainty is removed from the market, which will stimulate market activity in terms of asset movement. 'The difficulty the independent has is that we are absolutely strapped for resources,' Sharp points out. 'It doesn't matter whether it's the next geologist, drilling superintendent or actually trying to get a drilling rig. We are very, very resource constrained.

'The independent, however, does have a story to tell. People come to Fairfield because they want to make a difference,' he adds. 'We have the opportunity and the environment which encourages them to make a difference so we do things like installing flare towers, flare stairs and piping with helicopters. We're fleet of foot. We're funded. We can get good people. They like working in an environment where they can make a difference. We can move so much faster than perhaps larger organisations so when opportunities present themselves, we can actually get in there and do things far more quickly than the larger ones.' OE