Developments that may have previously been seen as non-commercial are becoming more of a reality for the oil and gas industry with many offshore projects taking off in the past year.
With the vast improvements in technology, the industry is now able to tap into the hidden resource that lays deep in the sea to help secure energy for the future. With the near completion of the Nord Stream project in the Baltic Sea, to the proposed South Stream Project under the Black sea, and the gas discoveries off the west coast of Australia, the industry is only seeing the beginning of what is to come.
Europe
In Europe, a large number of pipeline projects have been proposed to create a unified gas grid, and to reduce dependence on Russian gas by tapping into offshore resources. Whilst some are nearing construction completion, others are waiting on decisions – for example, from the Shah Deniz consortium – to ascertain whether or not they will ever be realised.
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In April 2012, Nord Stream completed offshore pipelay for the second of its twin 1,224 km, 48 inch diameter gas pipelines ahead of schedule.
The project involves two parallel pipelines running through the Baltic Sea from Vyborg, Russia, to Lubmin near Greifswald, Germany.
Construction of the pipeline commenced in April 2010, and Line 1 began transporting gas to European consumers in November 2011. By the end of 2012, the pipeline will reach its full capacity of 55 Bcm/a with both lines in operation.
Nord Stream AG is a joint venture between Gazprom (51 per cent), BASF SE/Wintershall Holding GmbH (15.5 per cent), E.ON Ruhrgas AG (15.5 per cent), N.V. Nederlandse Gasunie (9 per cent) and GDF SUEZ S.A. (9 per cent).
At the time of writing, the approximately 800 km, 42–48 inch diameter Trans Adriatic Pipeline (TAP) had officially submitted its environmental and social impact assessment to the Italian Ministry of Environment.
The gas pipeline will begin near the Greek-Turkish border (Komotini), cross Albania and the Adriatic Sea, and connect with the Italian natural gas distribution system near San Foca in southern Italy. The approximate length of the sections through each country are 478 km in Greece, 204 km in Albania, 105 km offshore in the Adriatic Sea, and 4 km in Italy.
The pipeline will have an initial capacity of 10 Bcm/a, which is designed to expand to 20 Bcm/a.
In February 2012, the project was selected by the Shah Deniz consortium as the priority gas pipeline route to Italy, and it is expected to be ready for first gas from the Shah Deniz Stage 2 Development in 2017–18.
TAP is comprised of Switzerland’s EGL (42.5 per cent interest), Norway’s Statoil (42.5 per cent interest) and Germany’s E.ON Ruhrgas (15 per cent interest).
Another pipeline option the Shah Deniz consortium is currently considering is the Nabucco gas pipeline. The project involves a 3,900 km, 56 inch diameter pipeline running from the Georgian/Turkish and the Iraq/Turkish border to Baumgarten near Vienna, crossing Bulgaria, Romania and Hungary.
The pipeline would have a 2,581 km section in Turkey, a 412 km section in Bulgaria, a 469 km section in Romania, a 384 km section in Hungary and a 47 km section in Austria. Up to 31 Bcm/a of gas would be supplied from the Caspian Region, Middle East and Egypt.
Nabucco has also offered another proposal to the Shah Deniz consortium – Nabucco West. This project is a shortened version of Nabucco which would start at either the Turkish-Bulgarian border or just inside Turkey. At the time of writing, the concept was still being finalised, and was expected to be submitted in mid-May 2012. Nabucco West represents the first phase of the original Nabucco plan, and both proposals will be considered by the Shah Deniz consortium.
Construction is expected to begin in 2013 with first gas to flow in 2017.
Project shareholders include Bulgarian Energy Holding, BOTAŞ, MOL, OMV Gas & Power, RWE, and Transgaz, with each holding an equal share of 16.67 per cent of Nabucco Gas Pipeline International.
The proposed South Stream gas pipeline will travel 900 km under the Black Sea, transporting up to 63 Bcm/a of natural gas from Russia to south and central Europe. The pipeline is expected to cost between $US28–36 billion and is scheduled for service before the end of 2015. South Stream Transport AG expects to commence construction of the pipeline in December 2012.
South Stream Transport is an international consortium established for the planning, construction and subsequent operation of the offshore pipeline through the Black Sea. The consortium consists of four energy companies – OAO Gazprom, Eni S.p.A, EDF and Wintershall Holding GmbH (BASF Group).
The governments of Azerbaijan and Turkey have signed an Intergovernmental Agreement and Memorandum of Understanding (MoU) to construct the reportedly 2,000 km Trans-Anatolia gas pipeline. This pipeline is envisaged to transport 16 Bcm/a of gas produced from the Shah Deniz 2 field to Europe, passing through Georgia and Turkey. 6 Bcm/a of this gas will be allocated for Turkey’s domestic use, with the remaining 10 Bcm/a exported to Europe.
Under the MoU, the State Oil Company of the Azerbaijan Republic, and Turkey’s BOTAŞ and Turkish Petroleum Corporation will become the first members of the pipeline consortium.
Agreements have now also been signed to allow the project to commence engineering studies for potential gas transportation across Turkey.
The Interconnector Turkey – Greece – Italy (ITGI) pipeline system, proposed by IGI Poseidon SA, a joint venture between Edison and DEPA, involves a number of components, including the Turkish grid, which will be upgraded in order to enable the transit of gas volumes for Italy and Greece. The offshore section of the Interconnector Greece – Italy (IGI) pipeline – known as IGI Poseidon – involves a 200 km long offshore pipeline across the Ionian Sea.
The pipeline is currently in the planning stages, with all environmental licenses required by the Italian and Greek authorities issued. Front-end engineering and design and the environmental impact assessment – both of which have been contracted to a consortium between Penspen and C&M Engineering – will commence in August, and are expected to be completed in the fourth quarter of 2012.
Australasia
Off the west coast of Australia, a number of pipeline projects are under construction to commercialise gas reserves for LNG export projects.
The Ichthys Project will develop gas from the Ichthys Gas Field, located approximately 200 km offshore northwest Australia. Gas will be transported through an 889 km, 42 inch diameter pipeline to an onshore, two-train onshore LNG processing facility located at Blaydin Point, Darwin, in the Northern Territory.
The project is initially expected to produce 8.4 MMt/a of LNG, 1.6 MMt/a of LPG and 100,000 bbl/d of condensate.
The project is now under construction following financial investment decision in January 2012, with Saipem contracted to complete offshore pipelay. The pipeline is expected to reach completion in 2015 to allow for commissioning in 2016.
Joint venture partners in the project are Inpex with a 76 per cent interest and Total E&P Australia with a 24 per cent interest.
The proposed Wheatstone Project will include a 220 km, 34 inch diameter export pipeline that will transport gas from the offshore Wheatstone and Iago gas fields for further processing at Ashburton North, Western Australia.
Initially, the project will involve two LNG trains with a combined capacity of 8.9 MMt/a and a 250 MMcf/d onshore domestic gas plant, to be located at Ashburton North. However, the company has applied for an additional three processing trains, which could bring the project’s total capacity up to 25 MMt/a of LNG. First LNG is planned for 2016.
The project is a joint venture between the Australian subsidiaries of Chevron (73.6 per cent), Apache (13 per cent), Kuwait Foreign Petroleum Exploration Company (7 per cent), and Shell (6.4 per cent).
The proposed Gorgon Project, also located in Western Australia, will transport gas from the offshore Gorgon and Jansz fields via a 121 km subsea pipeline to a three-train, 5 MMt/a LNG processing plant. Allseas has been contracted for offshore pipelay.
Chevron has said that it will approve a fourth LNG processing train at Gorgon before 2013, and a decision on construction of a fifth train will proceed soon after. Front-end engineering and design on a fourth train will begin in 2012. First gas is scheduled in 2014.
The Gorgon Project is a joint venture between the Australian subsidiaries of Chevron (approximately 47 per cent, operator), ExxonMobil (25 per cent), Shell (25 per cent), Osaka Gas (1.25 per cent), Tokyo Gas (1 per cent) and Chubu Electric Power (0.417 per cent).
BHP Billiton has proposed the Macedon Gas Development Project. Gas from the Macedon Gas Field will be piped via a 75 km, 500 mm diameter offshore pipeline and 15.5 km onshore pipeline to a gas plant to be located at Ashburton North, Western Australia.
At the time of writing, the pipeline was under construction by the 50-50 Streicher-Clough joint venture, with completion anticipated in May 2012.
At the time of writing, the Joint Authority for the Commonwealth-Western Australia Offshore Area had recently granted a variation to the conditions of the retention leases associated with the proposed Browse LNG Project.
The variation required that the Browse Joint Venture be in a position to apply for a production licence and take a final investment decision during the first half of 2013, instead of mid-2012.
The proposed project will transport gas and liquids from deepwater facilities in the Brecknock, Calliance and Torosa gas and condensate fields to a central processing facility 70 km away, before bringing hydrocarbons onshore through a 315 km long, 42 inch diameter export pipeline and a 20 inch liquids pipeline.
Onshore, the gas will be processed at a three-train 12 MMt/a LNG plant, which has the potential to expand to up to 25 MMt/a of LNG production.
The project will also involve 900 km of interfield and infield pipelines.
The Browse Joint Venture comprises Woodside Energy as operator, Shell Developments Australia, BP Developments Australia, Chevron Australia and BHP Billiton Petroleum.
At the time of writing, over 300 km of the 407 km, 36 inch diameter offshore pipeline had been laid for the PNG LNG Project in Papua New Guinea.
The project will develop the Hides, Angore and Juha gas fields, as well as associated gas from the Kutubu, Agogo, Gobe and Moran oil fields. Gas will be transported via an approximately 850 km onshore and offshore pipeline to a new two-train, 6.6 MMt/a LNG processing plant, to be located near Port Moresby. Construction of the offshore pipeline is being undertaken by Saipem.
First LNG shipments are scheduled for 2014.
Strong prospects for offshore pipelines
Innovations in technology are constantly being developed for offshore exploration and production, allowing previously unviable gas resources to become available.
As more and more gas resources are discovered and commercialised, offshore pipelines will invariably be in demand to bring gas to shore and ultimately, to market, helping secure energy supply for the future.
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