2 - Company Z BOD Rev 0

COMPANY Z
Basis of Design
Prepared for: Subsea Field Equipment Unit
Prepared by: Curtin University
Project Title: Company Z Case Study

Document/Rev No: CU-SFEU-0001A Rev 0
Date: October 2015
Rev Date Description Issued by Checked by Approved by
0 Oct-2015 Issued for Design MUH LIK YUM

Prepared for : Curtin University
Project Title: Company Z Basis of Design
Document No: CU-SFEU-0001A
Contents
ABBREVIATIONS .................................................................................................................... 4
1.0 INTRODUCTION ............................................................................................................ 5
1.1 Company Profile .................................................................................................... 5
1.2 Background ............................................................................................................ 5
1.3 Regulatory Requirements and Relevant Legislation .............................................. 5
2.0 PROJECT LOCATION ................................................................................................... 7
2.1 Field ....................................................................................................................... 7
2.2 Nearby Infrastructure ............................................................................................. 7
2.3 Market .................................................................................................................... 7
3.0 RESERVOIR AND FLUID DATA .................................................................................... 8
3.1 Reservoir Structure ................................................................................................ 8
3.2 Reservoir Pressure and Temperature ................................................................. 10
3.3 Reservoir Fluid Properties ................................................................................... 10
3.4 Formation Water .................................................................................................. 11
3.5 Hydrate Dissociation Curve ................................................................................. 11
3.6 Production Chemistry .......................................................................................... 12
3.7 Well Performance Data ........................................................................................ 13
4.0 DRILLING ..................................................................................................................... 15
4.1 Maximum Well Step-out ....................................................................................... 15
5.0 GENERAL SUBSEA ..................................................................................................... 16
5.1 Design Life ........................................................................................................... 16
5.2 Existing subsea infrastructure .............................................................................. 16
5.3 Trawling / Fishing ................................................................................................. 16
5.4 Shipping ............................................................................................................... 16
5.5 Intervention Philosophy ....................................................................................... 16
5.6 Future Development ............................................................................................ 16
5.7 Fabrication ........................................................................................................... 16
5.8 Installation ............................................................................................................ 17
6.0 EXISTING PLATFORM ................................................................................................ 18
6.1 Arrival Conditions ................................................................................................. 18
6.2 Produced Water Disposal .................................................................................... 18
7.0 PRODUCTION DATA ................................................................................................... 19
7.1 Production profile ................................................................................................. 19
Page 2 of 26
8.0 ENVIRONMENTAL DATA ............................................................................................ 21

8.1 Water Depth ......................................................................................................... 21
8.2 Seawater Temperature ........................................................................................ 21
8.3 Air Temperatures ................................................................................................. 21
8.4 Current / Wave and Soil Data for Stability Design ............................................... 21
8.5 Geotechnical Data ............................................................................................... 21
8.6 Marine Reserves .................................................................................................. 21
8.7 Near-shore Conditions ......................................................................................... 21
9.0 ECONOMICS DATA ..................................................................................................... 22
9.1 Preliminary Cost Data .......................................................................................... 22
9.2 Economics Data ................................................................................................... 22
APPENDIX A BUILDING BLOCKS TEMPLATE ................................................................ 24
APPENDIX B RESERVOIR ARRANGEMENT ................................................................... 25
APPENDIX C THEME OPTIONS ....................................................................................... 26
Page 3 of 26
ABBREVIATIONS
API American Petroleum Institute
BHP Bottom Hole Pressure
CGR Condensate Gas Ratio
CO2 Carbon Dioxide
EFAT Extended Factory Acceptance Test
FTHP Flowing Tubing Head Pressure
GOR Gas Oil Ratio
H2S Hydrogen Sulphide
IPR Inflow Performance Relationship
MMBbls Million Barrels
mTVDss Metres True Vertical Depth Subsea

National Offshore Petroleum Safety & Environmental Management
NOPSEMA
Authority
NORMS Naturally Occurring Radioactive Materials
NW North West
OHS Occupational Health & Safety
OIW Oil in Water
OPGGS Offshore Petroleum & Greenhouse Gas Storage
SARA Saturate, Aromatics, Resins and Asphaltenes
SIT System Integration Testing
tcf Trillion Cubic Feet
WA Western Australia
WAT Wax Appearance Temperature
WGR Water Gas Ratio
Page 4 of 26
1.0 INTRODUCTION
1.1 Company Profile

Company Z is a large national company which has their headquarters located in Perth, Australia
and has significant capital to invest but a limited number of prospects to monetise in the short-
term. Company Z is a large operating player in Oil and Gas with significant experience in this
sector including recent projects.
1.2 Background
Project Z is a joint venture between the operator and 4 other partners.
Investment Company
Overseas Energy Company, customer for LNG from gas
Competing Energy company with other assets in the area. Currently investing heavily in
other projects in the area.
Minor non-oerating energy company
Company Z will be the operating partner while other joint venture associates have a range of
involvement from minor capital investment to significant stakeholder arrangements which dictate
the requirement for due diligence reviews.
1.3 Regulatory Requirements and Relevant Legislation

As an Australian operator, Company Z is bound by both National and State Government bodies,
primarily NOPSEMA and the Department of Primary Industries.
NOPSEMA has functions and powers conferred on it under the Offshore Petroleum and
Greenhouse Gas Storage Act 2006 (OPGGS Act) and its regulations. The OPGGS Act primarily
provides that NOPSEMA is the regulator for health and safety, well integrity and environmental
management of petroleum exploration and development activities in Australias offshore areas
beyond the first three nautical miles of the territorial sea. It also has similar functions where
these are conferred on it under relevant State and NT offshore legislation covering the area
within the first the first three nautical miles.
NOPSEMA is a cost recovery agency and the Offshore Petroleum and Greenhouse Gas
Storage (Regulatory Levies) Act 2003 enables specific levies for OHS, Well Integrity and
Environmental Management regulatory activities.
A list of the associated regulations is provided below:
Offshore Petroleum and Greenhouse Gas Storage (Safety) Regulations 2009
Offshore Petroleum and Greenhouse Gas Storage (Environment) Regulations 2009
Offshore Petroleum and Greenhouse Gas Storage (Resource Management and
Administration) Regulations 2011
Offshore Petroleum and Greenhouse Gas Storage (Regulatory Levies) Regulations
2004.
Page 5 of 26
The relevant legislation relating to Western Australian waters can be found within: Western
Australia Petroleum (Submerged Lands) Act 1982 (WA).
Australia is considered a stable political climate.
Page 6 of 26
2.0 PROJECT LOCATION
2.1 Field
The project is located off the North West coast of Western Australia approximately 140km
offshore from Dampier, North West Australia. The first phase of development consists of two
reservoirs, Reservoir A and B. Water depth is between 90 and 120 m.
2.2 Nearby Infrastructure

The fields are located approximately 140km offshore in the Carnarvon basin, North West
Australia.
There is an existing platform located approximately 15km South East of Reservoir B which is
located in 130m water depth. This platform has sufficient spare capacity to accommodate fluids
from Reservoirs A and B. The Platform includes partial processing capabilities and water
treatment facilities and is rated for sour service. Wet gas and condensate are combined and
routed to an onshore LNG facility.
Several other pipelines and facilities exist in the area both onshore and offshore. The localised
industry is remote but mature.
Engineering and services can be assumed to be based in WA, either in Perth or local to the NW
shelf.
2.3 Market
An international customer base is being explored in South East Asia for all gas and liquid
products. Alternatively, the gas produced from the field may be utilised in the domestic market
via the existing Dampier to Bunbury Pipeline.
Page 7 of 26
3.0 RESERVOIR AND FLUID DATA
3.1 Reservoir Structure
3.1.1 Volume (reserves)

It is estimated that there is 3 trillion cubic feet (tcf) of recoverable gas and up to 100 million
barrels (MMbbl) of recoverable condensate in the region and constitutes approximately 15
undeveloped fields.
Reservoir A and B are estimated to contain 25% and 15% of the total regional reserves
respectively. The remaining fields will be developed during later phases.
3.1.2 Areal Extent

The areal extent of Reservoir A is approximately 10km x 5km and Reservoir B is approximately
8km x 4km.
Figure 3-1Overall Field Layout
Reservoir A
Reservoir B
Platform
5km
3.1.3 Depth to reservoir

Reservoir depths are approximately 3500 mTVDSS (Reservoir A) and 3700 mTVDSS
(Reservoir B).
Page 8 of 26
3.1.4 Reservoir Structure
The reservoir structure is indicated in Figure 3-2, showing local structural high points which are
the preferred well target locations.
Figure 3-2 Reservoir Structure
Page 9 of 26
3.1.5 Porosity
The average porosity of the reservoir rock is calculated to be 11%.
3.1.6 Permeability
The average permeability of the reservoir rock is calculated to be 2000 millidarcy.
3.1.7 Compartmentalisation
The reservoirs are bisected by several faults, resulting in a high level of compartmentalisation.
3.1.8 Drive mechanism

There is an underlying aquifer below both reservoirs which is expected to provide some
pressure support. However, due to the high level of compartmentalisation, many zones within
each reservoir are not expected to receive aquifer support, and will be produced by depletion
drive.
3.2 Reservoir Pressure and Temperature

The reservoir pressure and temperature for Reservoirs A and B are as follows:
Pressure (psia) Temperature (C)
Reservoir A 4300 110
Reservoir B 4600 125
3.3 Reservoir Fluid Properties
3.3.1 Composition
Composition for the two reservoirs is given below:
Component Reservoir A Mol% Reservoir B Mol%
Nitrogen 1.5 1
Carbon Dioxide 1.5 2.2
Methane 80 83
Ethane 7 6
Propane 3 3
i-Butane 0.5 0.4
n-Butane 1.2 0.9
Page 10 of 26
i-Pentane 0.4 0.3
n-Pentane 0.4 0.3
C6 0.5 0.4
C7+ 4 2.5
3.3.2 Condensate Gas Ratio

The reservoir fluid for both fields is labelled as a condensate rich gas. The Condensate Gas
Ratio (CGR) is as follows:
Reservoir CGR (stb/MMscf)
A 56
B 50
3.3.3 API
The API Gravity of the fluids is 55 for Reservoir A and 58 for Reservoir B.
3.4 Formation Water
3.4.1 Quantity
Minimal formation water production is expected during early production. Zones with connectivity
to the aquifer will likely rapidly begin to produce water during late field life. The maximum Water
Gas Ratio (WGR) will be limited only by operability of the well and subsea system. A preliminary
estimate of 150 bbl/MMscf has been provided by subsurface.
3.4.2 Scale Tendency

Analysis of formation water samples has indicated a risk of forming carbonate scale during
production.
3.5 Hydrate Dissociation Curve

The hydrate curve for the system is shown below:
Page 11 of 26
3.6 Production Chemistry
3.6.1 Wax
The following wax properties have been determined from laboratory testing of condensate
samples from Reservoirs A and B:
Reservoir Dead Oil WAT (C) Pour Point (C)
A 24 0
B 18 -6
3.6.2 SARA Analysis

A SARA analysis has been performed on a sample of stabilised condensate from Reservoir A.
Analysis is unavailable for Reservoir B.
Reservoir A B
Saturates (wt%) 38.1 40.1
Aromatics (wt%) 48.3 47.4
Resins (wt%) 11.8 11.6
Asphaltenes (wt%) 1.8 0.9
Page 12 of 26
3.6.3 Corrosion
CO2 content is low, approximately 1.5% for Reservoir A and 2.2% for Reservoir B.
Moderate levels of H2S have been recorded in fluid samples to date, and internal pipeline
corrosion is anticipated to be an issue if carbon steel is selected.
3.6.4 Sand
Sand production quantities are uncertain but significant sand production is not anticipated.
Sand control should be allowed for.
3.6.5 NORMS
Naturally Occurring Radioactive Materials (NORMS) should be considered in the design.
3.7 Well Performance Data

The well inflow performance relationship is shown below. A preliminary estimate of
corresponding flowing tubing head pressure is also included. Note that the relationship between
flowing bottom hole and tubing head pressure will change depending on well size and
completion design.
Page 13 of 26
Page 14 of 26
4.0 DRILLING
4.1 Maximum Well Step-out

The wells are expected to be high-angle deviated wells. The maximum well step-out distance is
limited to 2.5 km.
Page 15 of 26
5.0 GENERAL SUBSEA
5.1 Design Life

Production from Reservoirs A and B is expected to continue for 16 years. Options for an
extended field life should be considered in the design as exploration is ongoing in the area and
further gas reserves may be proven in the future. A minimum design life of 25 years should be
considered for all subsea equipment.
5.2 Existing subsea infrastructure

There is no local subsea infrastructure which could be utilised for the development.
5.3 Trawling / Fishing

Fishing activities, including trawling, are currently undertaken in the area. Adequate provisions
for fishing protection should be included in the design of subsea equipment.
5.4 Shipping
A large amount of shipping traffic is present in the area, servicing the export of oil and gas, salt,
iron ore and other minerals from the nearby ports of Dampier, Point Sampson and Port
Headland
5.5 Intervention Philosophy

The intervention philosophy will be defined as part of the field development plan, and should
include, but not be limited to:
The use of divers versus diver-less intervention
Pigging strategy. Subsea pigging is acceptable to Company.
Change out and maintenance of subsea equipment
Well intervention and work-over
5.6 Future Development

Reservoirs A and B form the first phase of a series of planned developments in the region. The
impact of future infill developments on the selection and design of subsea equipment should be
included as part of the field development plan.
5.7 Fabrication
Based on a preliminary assessment of capability and cost performed by the Company, all major
infrastructure is expected to be manufactured in South East Asia. Lead times for long lead items
and the impact on the installation schedule should be considered.
Page 16 of 26
5.8 Installation
There is not anticipated to be any restrictions on the availability of any particular installation
vessel type.
Unless shown to be economically advantageous to mobilise elsewhere (e.g. Darwin or
Singapore), due to proximity, mobilization is expected to be from the nearby port of Dampier
(150 km from field). Accordingly all items required for offshore installation shall be required to be
transported to Dampier prior to mobilization.
It is similarly assumed that storage at Dampier may be required, depending on the fabrication
and installation schedule. Any EFAT and SIT required would also be assumed to be performed
in Dampier.
Page 17 of 26
6.0 EXISTING PLATFORM
6.1 Arrival Conditions

The following arrival pressures are required at nearby infrastructure:
Nearby platform: 100 barg (1450 psig)
Onshore LNG plant: 80 barg
Inlet to Dampier to Bunbury Domestic Gas Pipeline: 70 barg
It is assumed that a new-build platform / floating facility will require an inlet pressure of
100 barg.
6.2 Produced Water Disposal

The target OIW (Oil in Water) for water discharged overboard is to be 20 mg/L over any 24 hour
period.
Page 18 of 26
7.0 PRODUCTION DATA
7.1 Production profile

Production profiles are given below in tabular and graphical form:
Year Reservoir A Gas Rate Reservoir B Gas Rate
(MMscfd) (MMscfd)
0 400 250
1 270 220
2 200 180
3 150 150
4 130 120
5 120 100
6 110 90
7 100 80
8 80 70
9 60 50
10 50 40
11 40 25
12 30 2
13 20 2
14 10 0
15 5 0
16 2 0
7.1.1 Reservoir A
Page 19 of 26
7.1.2 Reservoir B
Page 20 of 26
8.0 ENVIRONMENTAL DATA
8.1 Water Depth

Water depth varies between 90m at the Platform and 120m at both Reservoirs A and B.
8.2 Seawater Temperature

The following will be assumed:
A surface maximum temperature of 31C
A constant minimum seabed temperature of 15C
8.3 Air Temperatures

The following temperatures will be assumed:
Mean Ambient Air Temperature = 25C
Max Ambient Air Temperature = 39C
Min Ambient Air Temperature = 15C
8.4 Current / Wave and Soil Data for Stability Design

Tropical cyclones occur in the area between November and April and cause severe wind, wave
and current conditions. The area experiences large tidal variations.
The installation weather window is flexible.
8.5 Geotechnical Data

The seabed profile is gently undulating, with no significant trenches or escarpments. Some
small reefs and exposed rocks are found in the area.
The seabed is generally characterized by a surface layer of softy muddy clay to a depth of
generally up to one meter with an underlying layer of carbonaceous, silty, sand to a depth of ten
to twenty meters.
8.6 Marine Reserves

The fields are located in the vicinity of several marine reserves, with restrictions on activities
which can take place within these boundaries.
The fields are located on the annual migration path for humpback whales, which occurs in the
months of April June and September October. There are legislative restrictions on
operations which can take place during these times if whales are present in the area.
8.7 Near-shore Conditions

The near-shore environment consists largely of mudflats with some mangrove vegetation.
Page 21 of 26
9.0 ECONOMICS DATA
9.1 Preliminary Cost Data

Initial CAPEX estimates have been developed during the screening phase based on
independant tie-backs of the fields to the existing platform.
Reservoir A Reservoir B
Subsea CAPEX $1.4 billion $1.0 billion
Topsides CAPEX $0.3 billion per 100 MMscfd over 400 MMscfd
OPEX 5% of CAPEX per year 5% of CAPEX per year
9.2 Economics Data

n Ri Ci
NPV = i =1
(1 + r )i
Where R = Revenue after escalation
C = Expenditure after inflation
r = Discount Rate
i = Time Period
Table 9-1 Preliminary Economic Output Data
Reservoir A Reservoir B
NPV $1767 million $1233 million
VIR 1.42 1.36
Page 22 of 26
Discount Rate multipliers based on a discount factor of 7% is as follows:
Table 9-2 Discount Rate Multiplier
Year Discount Rate Multiplier, M
0 1.00
1 0.93
2 0.87
3 0.82
4 0.76
5 0.71
Page 23 of 26
APPENDIX A BUILDING BLOCKS TEMPLATE
Page 24 of 26
APPENDIX B RESERVOIR ARRANGEMENT
Page 25 of 26
APPENDIX C THEME OPTIONS
Platform
Reservoir B
Reservoir A
5km
Page 26 of 26

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COMPANY Z

Prepared for: Subsea Field Equipment Unit

Prepared by: Curtin University

Project Title: Company Z Case Study

Rev Date Description Issued by Checked by Approved by

0 Oct-2015 Issued for Design MUH LIK YUM

8.0 ENVIRONMENTAL DATA ............................................................................................ 21

API American Petroleum Institute

BHP Bottom Hole Pressure

CGR Condensate Gas Ratio

CO2 Carbon Dioxide

EFAT Extended Factory Acceptance Test

FTHP Flowing Tubing Head Pressure

GOR Gas Oil Ratio

H2S Hydrogen Sulphide

IPR Inflow Performance Relationship

MMBbls Million Barrels

mTVDss Metres True Vertical Depth Subsea

OHS Occupational Health & Safety

OIW Oil in Water

OPGGS Offshore Petroleum & Greenhouse Gas Storage

SARA Saturate, Aromatics, Resins and Asphaltenes

SIT System Integration Testing

tcf Trillion Cubic Feet

WAT Wax Appearance Temperature

WGR Water Gas Ratio

1.1 Company Profile

1.3 Regulatory Requirements and Relevant Legislation

2.0 PROJECT LOCATION

2.2 Nearby Infrastructure

3.0 RESERVOIR AND FLUID DATA

3.1 Reservoir Structure

3.1.1 Volume (reserves)

3.1.2 Areal Extent

Figure 3-1Overall Field Layout

3.1.3 Depth to reservoir

3.1.4 Reservoir Structure

Figure 3-2 Reservoir Structure

3.1.8 Drive mechanism

3.2 Reservoir Pressure and Temperature

Pressure (psia) Temperature (C)

Reservoir A 4300 110

Reservoir B 4600 125

3.3 Reservoir Fluid Properties

Component Reservoir A Mol% Reservoir B Mol%

Carbon Dioxide 1.5 2.2

i-Butane 0.5 0.4

n-Butane 1.2 0.9

i-Pentane 0.4 0.3

n-Pentane 0.4 0.3

3.3.2 Condensate Gas Ratio

Reservoir CGR (stb/MMscf)

3.4 Formation Water

3.4.2 Scale Tendency

3.5 Hydrate Dissociation Curve

3.6 Production Chemistry

Reservoir Dead Oil WAT (C) Pour Point (C)

3.6.2 SARA Analysis

Saturates (wt%) 38.1 40.1

Aromatics (wt%) 48.3 47.4

Resins (wt%) 11.8 11.6

Asphaltenes (wt%) 1.8 0.9

3.7 Well Performance Data

4.1 Maximum Well Step-out