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De-risking subsea tiebacks: 4 ways to buck the trend

Stephen Rolfe

Stephen Rolfe | Subsea Manager | 09 January 2019

How can the Oil and Gas Industry improve confidence in investment outcomes as we return our attention to CAPEX projects and the subsea tie-back opportunities ahead? How can we mitigate the key uncertainties and well understood risks in these brownfield projects to the benefit of all concerned? Steve Rolfe explains how a holistic approach may help minimise risk and maximise value.

As a subsea guy it would be natural to focus on the area of the industry I'm most familiar with, but the fact is the subsea sector has come a long way in the last 20 years in coming to grips with the risks associated with tie-backs. Having had the opportunity to see tie-backs from many different perspectives, it’s apparent to me that we need a better understanding of the challenges upstream of the subsea choke valve and downstream of the riser valve if we are going to deliver more robust tie-back projects.


Indeed, the upstream value and downstream processing elements attract many of the uncertainties and risks reported by the Oil & Gas Authority (OGA) in the Lessons Learned from UKCS Oil and Gas Projects 2011-20161 . While subsea clearly plays an important role in the value chain, in my view the best way to maximise value is to adopt a more holistic view of the development and apply many of the learnings at a much earlier stage in the development process. I’d like to focus on a few revealing and impactful OGA findings through the lens of my personal experience, in the hope we can stimulate conversation on how we can improve our ability to achieve successful tie-back projects.


Balancing the risk-cost equation


balanceCost is clearly important for subsea tie-backs and the reality is risk generally leads to cost. When it comes down to it, day rates pale into insignificance when value is eroded through delay to startup. Subsea tie-backs are full or risk, after all it’s a brownfield project much like any other brownfield project, be it in the building industry, civils industry, energy sector, etc. - all have similar challenges. The focus on business risk and uncertainty should be most prevalent at the start of the development maturation process, working closely with the operator to understand opportunity specifics, development challenges, and fundamental business objectives.

My view is that we should assemble a more appropriately-sized and skilled team when key decisions are being made, enabling us to address specific risks to the development opportunity much earlier and avoid what often becomes a cookie cutter approach to field developments. In my experience some of the most common factors are:

  • Establishing a greater appreciation of life of field reservoir dynamics and any resulting implications on other stakeholders in the development team

  • Producing a more mature brownfield solution earlier in the development process with associated benchmarked, probabilistic cost estimates and schedules

  • Gaining a fundamental understanding of the potential benefits, or otherwise, across the system when selecting production technology

  • Assessing obsolescence risks, operational issues, and potential system constraints for remaining field life

  • Identifying the organisational and commercial risks associated with the regulator, partners, and host owners, etc.

Improving NPV through accelerated development


timingI understand the way that our industry assesses value requires expedient project delivery. In fact, we all take pride and an element of satisfaction in working this way - getting our projects across the line in the shortest timeframe, despite the challenges. However, a traditional contracting approach rarely achieves this because of: immature and ill-conceived front-end work, lost time from engineering rework associated with a multitude of issues, the tendering process itself, lost learning through the development stages, disjointed schedules, different contract strategies for main contractors, etc. There may be a perception of expediency when we move quickly into the engineering phase, but often the resulting issues lead us to a failure to deliver on time, with greater expense and a net erosion in value. If we deployed a “more haste, less speed” approach, we would stand a better chance of aligning project teams, partners, and the supply chain to develop deeper relationships at the earliest opportunity, carrying these relationships and knowledge forward through to production. Skin in the game as some might say!


Prioritising engineering quality


cogsMany would agree engineering has become commoditised in our industry. Often the focus is on the contract rates to such a degree that the value and positive impact expertise can have on delivering a successful project is often overlooked – many have written about cost vs. expertise in the past. FEED is critical for many reasons, not least the need to pin down key technical decisions, mitigate risks, and develop a reliable cost estimate in readiness for sanction. Any errors in FEED are likely to be costly if not resolved before Detailed Design. If we take a different approach to engineering and use our expertise to agree on a list of big ticket items to be addressed in FEED and before project sanction, then we increase our chances of avoiding big changes later. A typical tie-back project has the potential to be exposed to big-ticket items such as:

  • Structural integrity and associated implications on weight control and the brownfield solution

  • Expensive and often schedule critical equipment the need for which must be fully defined

  • Clearly defined vendor packages that are fit for the specific development needs

  • Schedule interactions between subsea and topsides to avoid unplanned delay

  • Shutdown requirements for tie-ins, systems upgrades, and integration with subsea systems etc.

  • Balancing the cost benefit of standardisation vs. the potential loss in value from poor equipment selection

Re-evaluating multi-option decision making and Front End Loading (FEL)


front endWe all know tie-backs offer a great opportunity for Operators to add value to their portfolio by accessing additional reserves via existing offshore infrastructure. Maximising this value is a clear driver. Often, the true value potential is threatened by early phase work that fails to fully understand the risks and uncertainties. Tie-backs, by their very nature, require multiple options to be assessed and often complex development decisions to be made. The need to balance reservoir performance with hydraulic limits and reception facility capacity, or ROI with CAPEX, OPEX, and ABEX costs is a frequent challenge. Brownfield projects bring additional challenges - working within the limits of existing systems; integrating new with old; ensuring risk, cost, and schedule implications are understood at the earliest opportunity; minimising deferred production through shutdowns, etc. Many historical projects have suffered from incomplete scope and unclear objectives and priorities as a result of inadequate front end loading. I don’t think we can continue to undervalue front end work. What do you think?

We have a fantastic opportunity to do something different and learn from previous incarnations of the market… Above all else we have a chance to ensure we play our part in being more efficient, less wasteful, cost conscious, and make a lasting contribution to the sustainability of this industry.


An alternative delivery model


The subsea tie-back market is making a comeback as the industry strives to maximise the value of its global investment portfolio. We have a fantastic opportunity to do something different and learn from previous incarnations of the market. This is our chance to review our approach to ensure we apply our time-tested experience in a way that is responsive to the unique challenges of brownfield developments. Above all else we have a chance to ensure we play our part in being more efficient, less wasteful, cost conscious, and make a lasting contribution to the sustainability of this industry.


To summarise, we recognise that subsurface cannot be considered in isolation from the rest of the development. We believe the use of Integrated Asset Modelling techniques to frame and better understand the uncertainties in the early stages will allow us to take a much more holistic approach and make better informed decisions. Using our broader brownfield expertise, we can facilitate improved risk management before we apply the appropriate tools and engineering processes to efficiently move from Concept through FEED and detailed design with less chance of rework. Recognising that a large part of the risk sits with the topsides brownfield scope, we are able to bring that experience and expertise to the table at the earliest opportunity. Finally, acknowledging that subsea is the glue, an integrated team can conceptualise, engineer, and design a system that meets the overall development objectives, which can be competitively bid to select a subsea contractor appropriate to the need.


I believe the Worley/Advisian approach provides the Operator with the best possible chance of achieving the best possible outcome. After all, it addresses many of the challenges we can all relate to.


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