Apache’s Strategic Expansion and Success in the North Sea Oil Sector
Exploring the possibilities
Formed in 1954 with $250,000 of investor capital, with the simple concept of becoming a significant and profitable oil company, today Apache carries a value of approximately $40 billion on the New York Stock Exchange, and is the largest global, independent oil and gas exploration and production organisation in terms of daily production.
Of the ten operational regions in which Apache’s operations are divided, one is the North Sea where the company first began work in 2003 with the purchase of the Forties Field from BP. Located in block 21/10 in the Central North Sea, the field is currently home to four self-contained production installations, Forties Alpha, Bravo, Charlie and Delta, installed during 1974 and 1975, as well as the Forties Echo, a minimum facilities installation introduced in 1986.
“In the time since Apache acquired the Forties Field it has successfullly taken production up from approximately 40,000 barrels per day to a peak of 80,000 barrels per day,” states Mark Richardson, projects group manager of Apache North Sea. “For the past five years a steady production outlook of over 50,000 barrels per day has been maintained, while at the same time lifting costs have been reduced in such a way that the field now represents one of the best performing assets anywhere in the North Sea. This is supported by the fact that, in terms of capital expenditure, the Forties Field is currently seeing the investment of approximately half a billion dollars every year into drilling and facilities upgrades.
“The Forties Field’s prosperity comes mainly from the first-class reservoir that it hosts, which produced over 20 million barrels of oil in 2011 alone. One recent example of the ways the company has worked to try and capitalise on this was the 4D seismic surveys it has conducted that have allowed it to locate unswept oil. In 2011 alone Apache North Sea drilled more than 14 new wells as a result of these surveys, three of which have produced wells with production levels of over 10,000 barrels per day, and it is still finding lots of additional production opportunities as we speak.”
The most significant ongoing development for Apache in the Forties Field is the installation of a new satellite platform alongside the Forties Alpha platform. This comprehensive project has come as a result of the company utilising almost all of the available platform drilling slots plus the requirements for more gas lift capacity and ullage. In response, Apache North Sea has commissioned the building of its Forties Alpha Satellite Platform (FASP), which will house a total of 18 new production well-slots, be a full processing facility including gas compression and two Solar Titan power turbines, and be bridge linked to the existing Alpha platform with an operating design life of 20 years.
“From the time that the initial idea of introducing a new platform to the field to the tendering for fabricators and then the commissioning of the FASP, is planned to be in the order of 40 months, which is roughly a year faster than most other full process platform developments,” Mark continues. “As it relates to the speed and quality of delivery, the whole process to date has been exceptional by UKCS standards, across everything from the engineering to the design and fabrication processes.”
With the wells due to be drilled from a heavy duty jack-up rig, the oil production of the FASP will be tied into the existing Forties Alpha export route, while produced water will be routed overboard via a polishing unit. Meanwhile, production gas compression, gas dehydration and deep gas lift compression facilities will be provided which can operate in parallel with the existing facilities on the main platform, with utilities being supplied from both the Forties Alpha platform via the bridge and the FASP itself.
One particular aspect of the FASP project that is especially important to focus on is the level of UK based content involved. One such example would be the company’s selection of OGN Group, an oil and gas engineering and fabrication contractor brought in to assist with the actual construction of the FASP. “It is estimated that at least 70 per cent of the total content on the FASP, still presently under construction in Newcastle, is UK based,” Mark enthuses. “Such commitment to local content and skills has not gone unnoticed, with both the current Business Secretary, Vince Cable, and the DECC Minister of State Charles Hendry, reserving praise for how Apache North Sea’s approach is helping to re-emphasise how UK companies can continue contributing to the oil and gas sector.
“Throughout the Apache organisation, each of its ten different regions of business work very autonomously. This has allowed the FASP project, and the other work taking place in and around the Forties Field, to benefit from speedy devolved decision making, with a very local competence based application of project management skills. What the company has done is bring onboard those individuals and companies that can best support the development of a project, while maintaining its Apache ethos in the way it goes about its day-to-day business.”
As extensive as the ongoing work is there at present, the Forties Field does not represent the only source of excitement coming from Apache’s operations in the North Sea, as Mark goes on to explain. “One of the projects currently being undertaken by the company is the development of the Bacchus Field, a Jurassic discovery seven kilometers northeast of the Forties Alpha platform, specifically the tie back of two horizontal subsea wells via a pipeline bundle. For the better part of two years work has been undertaken to bring this particular project to a conclusion and has brought it to a point where first oil is expected by the end of April 2012.”
The other big news item involving Apache North Sea, which was announced at the turn of the year, is the completion of its previously announced acquisition of ExxonMobil Corporation’s Mobil North Sea Limited assets, which includes the Beryl field and related properties. This acquisition has resulted in Apache assuming operations in, and responsibility for, the Beryl, Nevis, Nevis South, Skene and Buckland fields, the SAGE pipeline and St Fergus gas plant. The transaction also includes non-operated interest in the Maclure, Scott and Telford fields, and exploration acreage at Benbecula, West of the Shetland Islands.
Having evaluated from afar since it first entered the UK market in 2003, the company has been able to identify numerous benefits and opportunities that will ultimately be gained from this acquisition. With significant remaining life, high levels of production efficiency, quality reservoirs and a portfolio of low-risk exploitation projects, Apache also believes that the complex structural setting holds significant reserve upside: “The company is now moving ahead, making a concerted effort to identify new opportunities in this region and will soon commence the shooting of a seismic survey that will assist in this process,” Mark says. “Already, this acquisition has brought about the doubling of Apache North Sea’s work force, based both onshore and offshore, and together this strong, combined team is looking forward to leading the business through a new period of growth.”
Further boosted by the recent UK budgetary announcements regarding decommissioning activities and the increase in small field allowances, both the immediate and long-term prospects for the company look particularly strong: “Apache North Sea is always on the look-out for what it considers to be good purchases or asset deals, monitoring the market closely while also seeking out the opportunity to buy aging assets, which it can reinvigorate,” Mark enthuses. “At the same time the company is diligently working to increase its presence through the drill bit, looking to secure significant acreage and exploration drilling opportunities. All this will take place against the backdrop of what will be the company’s biggest and most complex commitment, that being the redevelopment and exploitation of the Beryl field.”
Apache North Sea Ltd
Services: Exploration and production