Baker Hughes New Approach Connects Entire Subsea Development Process

Two years after its introduction as “a new way of doing business” and the “future of subsea,” the Subsea Connect portfolio of applications and processes has provided Baker Hughes with serious traction in reshaping the subsea market, the company said during a recent webinar.

“If you look at some of the enablers that go into getting an oil field up and running, sometimes it’s that cost of capital that makes it very hard even though you know you can do something that is economical,” said Barbara Thompson, early engagement delivery manager for North and Latin America, during Baker Hughes’ Digital Coffee Break last week.

Though the industry is riding tailwinds in reducing breakeven costs for subsea development, Baker Hughes has focused on the applications and processes that influence 80% of subsea project development costs and value drivers.

“We want lower breakeven costs and have payback in five years or less. That’s the goal we’re aiming for so we can match some of the other parts of the world,” she said. “We’re not the largest part of the oil and gas segment, but we’re still very significant.”

The outcome-based approach integrates planning and risk management, new modular deepwater technology, innovative partnerships and digital tools to improve project economics and certainty. The connected series of technology enables Baker Hughes to better configure projects from concept to commission and from reservoir to topsides.

“The most significant changes have come from deepwater offshore because we’re increasing standardization, simplifying how we do a project and the technical designs, and we’re improving our supply chain. By having more standardized products, our supply chain is much easier to understand, introduce and maintain,” she said.

Thompson said reducing the economic development point by 30% for unsanctioned subsea projects with a breakeven between $10 a barrel (bbl) and $50/bbl, would unlock 16 billion barrels of reserves.

“That’s a significant number and by knowing that we can do this, we can keep extending the oil and gas projects of the future and keep this industry and all of our customers viable,” she said.

The application of the new approach has provided results in the North Sea offshore U.K., and has secured several contracts with Equinor in Norway.

In the North Sea, Subsea Connect transformed an uneconomic asset that had been stalled since 2015. For the case study, the company administered an independent assessment at the concept stage using Project Connect, which helps develop targeted project outcomes to optimize execution.

“Typically, a project will have a very structured and choppy method. We want to engineer the outcome from the beginning by looking at all the technology we have but also introducing partnerships and commercial models that might be enablers that may not have been there before.”

The analysis allowed Baker Hughes to exceed its 30% target and achieved a 50% reduction in capex—which improved the net present value by 200%—through the use of the technology. Another impacted economic includes a 65% improvement in IRR, and the company was able to reduce the breakeven from $30/bbl to $15/bbl for the undisclosed operator.

“This project transformed our thoughts about how we can impact the subsea oil and gas business,” Thompson said.

Another offshore project using the Subsea Connect model is Siccar Point Energy’s Cambo field asset located offshore Shetland Islands, which follows the same protocol as the North Sea case study.

“We integrated from the beginning with our services on the reservoir and our SURF [subsea umbilicals, risers and flowlines] installer, then we put together what we knew on the subsea system,” Thompson said. “They were very happy because we engaged them from the beginning, found a way to help enable the project commercially, and we provided equipment that overall lowered the cost of development.”

Baker Hughes has also impacted the topside footprint with over 1,400 unit upgrades globally, Thompson said. This included gas turbines, centrifugal and reciprocating compressors, steam turbines, control panels and FCC hot gas expanders.

“With all of these we have extended their life, improved their availability and uptime, reduced emissions and reduced the controls that we’re required on actual intervention by people so that it can be all remote operations,” she said.

“By looking very comprehensively at a project all the way from the reservoir, through the subsea development and to the topsides, we have a new way of doing business.”