Subsea Intervention Outlook 2019

January 8, 2019

© wanfahmy / Adobe Stock
© wanfahmy / Adobe Stock

Subsea intervention is going to be big in 2019, just not where you were expecting. David Carr, Senior Vice President - International Development at Helix Energy Solutions Group, gives his forecast for 2019.

Around this time of year, the papers are full of forecasts. Many look ahead to the fashions and trends in store; some try to distract us from the fact that holiday season is over by listing the Top 10 Greatest Things to do in the New Year.

My personal favorite is always The Economist’s Year Ahead edition, with its heads of state and industry viewpoints on what’s coming down the pike for us all. This annual magazine also points to the parts of the world to look out for in the coming 12 months.

In this spirit, I decided to share some thoughts on where, outside the major basins, I see the rigless intervention and subsea wells market moving in 2019, specifically the top three places to keep your eyes on.

West Africa
Even in a down market, and when North American oil production reaches self-sustaining levels, the demand for West African crude remains strong. Why is this? The light sweet crudes of the Bay of Benin and Angolan basins can be blended with the lower quality West Texas and Bakken production to create a more diverse range of petroleum products.

Still, the late 2014 downturn hit this region hard, with a great many projects shelved or postponed indefinitely. Workovers and infill drilling ground to a halt as operators reevaluated their balance sheets.

2018, however, saw an uptick in light well intervention (LWI) activity with Total Nigeria, Exxon Equatorial Guinea and BP Angola all launching riserless intervention campaigns to boost failing production. This trend looks set to continue into 2019 with ongoing activity by the above players, as well as Shell Nigeria and Chevron activity ramping up.

West Africa has long been the ‘new battleground’ for the service providers of LWI and with at least three of the major players currently present along the coast, this looks set to continue in the New Year.

Mexico
On December 1, 2018, the new administration of Andres Manuel Lopez Obrado (mercifully abbreviated to AMLO) took over the government of Mexico. This signifies a massive change of direction following decades of hard right rule, most recently with the term of Jose Pena Nieto, whose perceived loss of control of crime and graft cost him the country last July.

AMLO ran in the style of a classic Latin-American populist (well you would wouldn't you? there’s a lot of it about) but away from the mass rallies and baby kissing opportunities, he is clearly no Chavez. He has talked tough about claiming the resources of Mexico for its people (read: PEMEX, the National Oil Company) but his actions clearly favor a more market-friendly approach.

So what does this mean for the subsea industry? In a nutshell, AMLO needs to get his production up to the three million bbls a day promised by his predecessor in order to fund the larger social reforms he promised in his election... and he only has a six year term in which to get it done.

Twenty-five percent of this production has to come from deepwater, which currently contributes just a single figure percentage of product. As such, there is a powerful need for assets and expertise from outside to deliver these projects and to build a base of indigenous subsea competence. Operators and service companies (Talos, Wild Well Control to name a couple) are looking hungrily across the Gulf of Mexico from the mature deepwater locations of the U.S. Gulf Coast at these opportunities.

A country like Mexico with a massive tourist industry, and that is new to the deepwater industry, has to be concerned with the technical challenges of performing drilling and subsea umbilicals risers and flowlines (SURF) operations in an environmentally sensitive area; to say nothing of how to deal with a Macondo type well control incident, should (heaven forbid) one occur.

Asia Pacific
Have you heard the one about subsea well plug and abandonment? “It’s the next ‘big thing’. What? Just like it was 10 years ago?!?” Well, the same could be said about the rigless intervention and LWI markets in Asia Pacific.

So much potential! So many wells!

Many have tried, but with assets spread across nine different countries (meaning nine different regulators, nine local content laws, nine different legal systems and at least seven languages!) and a well stock spread over a simply vast area (you know the flight time from Singapore to Christchurch is 14 hours?) the problems of conquering this major market soon become clear.

Australia, with its large and fairly concentrated deepwater fields seems like the obvious place to start. However, with Technip’s embarrassing retreat last year; two of the main international LWI providers (as well as ‘local’ Fugro TSM) have tried and failed to establish a beachhead there in the last few years. Sapura Kencana remain the only game in town, but not one that they seem keen (or able) to fully exploit.

Better hunting may be found further north, in particular in Malaysia. Petronas has, to many’s surprise, become an early adopter of rigless technologies, employing these for example in its recent suspension campaign in Mauritania.

More recently, however, Schlumberger OneSubsea and Murphy completed a highly successful subsea hydraulic intervention campaign in Malaysia using a version of the former’s MARS multiple application reinjection system. Given the positive results, further campaigns of this type look likely. Again, this project was heavily supported by Petronas (MPM this time) which has been very proactive and sensible in creating conditions for a rigless subsea market to develop.

With Malaysia as an ‘anchor’, the possibility of offering LWI across the region is opening up, adding the capacity for well containment response in the wider region as well.

Only one thing is certain when making forecasts at the start of a year, and that is that they will be wrong to one extent or another. Either way, and despite the blows to the oil price that closed the year; 2019 looks to be another exciting growth year in the subsea world.

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