August 1 2014 Latest news:
Saturday, July 7, 2012
Centrica’s pioneering North Sea Ensign project has helped deliver previously hard-to-reach gas to shore. Business writer Annabelle Dickson went offshore to find more about the project and a its significance
The hydraulic fracturing process involves pumping high pressure fluids into reservoir rock formations to create fractures and so open up the rock to allow gas to flow.
In the Ensign field the subsea fractures in the rock hundreds of metres long are held open by millions of proppants which are like tiny, very strong, ceramic ball bearings which literally prop open the rock allowing the gas to flow through into the main well.
The Ensign project involves offshore hydraulic fracking, but onshore, near Blackpool, a project which involved hydraulic fracking to access shale gas has been suspended after there were earthquakes in the vicinity of the operation.
Critics of the method have also raised concerns about the contamination of water onshore.
But Centrica Energy Upstream’s deputy managing director Jim Craig insists that fracking is safe.
“We have done many many fracking exercises both onshore and offshore for many many years. Onshore and offshore fraccing is also different. When we frack offshore we use very round granules of sand and effectively you force that between the pores under pressure to basically frack the rock a little bit. You imagine you are forcing bits of sand into a sponge and it cracks a little bit.
“If you look at the amount of safety, the amount of risk assessment the amount of expertise and the recognition by many of the governments around the world that the North Sea safety is second to none, we are very comfortable that what we are doing is safe” he said.
For the many workers 80km off the coast of Norfolk getting on with a pioneering gas project there is a quiet modesty about the significance of what they are doing.
Through the wild, windy and remote conditions of the southern North Sea the first gas from a “tight gas field”, viewed in the past as too difficult and expensive to reach, has flowed to the shore.
Centrica Energy Upstream – the production and exploration arm of British Gas owner Centrica – has seen success in one of its first big investment projects since it acquired Venture Productions in 2009.
The Ensign gas platform has been installed and gas from the first well to be drilled is now coming to shore on the east coast.
Viewed from above by helicopter, in the vast North Sea the platform appears a vulnerable dot in an uncompromising ocean.
But once on it with the complex matrix of pipes and valves, not to mention the deck of super computers which will allow it to remain largely unmanned, the scale of engineering excellence, brain power and skill to power our homes becomes apparent.
The Ensign field was part of the first licence blocks granted in the UK in the early 1960s. The first gas was discovered in 1986, but it has taken 25 years to make it commercially viable.
It is only through recently-developed technology that Centrica has been able to exploit the field in this way.
An innovative project, Centrica first drilled hundreds of metres down and then used a method known as hydraulic fracturing – fracking – to access the gas. Hydraulic fracturing has caused controversy onshore near Blackpool and elsewhere in the world where there are concerns the method could contaminate water supplies and cause earthquakes – see fracking panel, right – but Centrica insists that it is safe.
The process involves pumping high pressure fluids into the reservoir rock formations to create fractures and so open up the rock to allow gas to flow.
The subsea fractures in the rock hundreds of metres long are held open by millions of proppants which are like tiny, very strong, ceramic ball bearings which literally prop open the rock allowing the gas to flow through into the main well.
The gas arrives at the Ensign platform before being connected by a 24km, 25cm export pipeline to the nearby Audrey A Platform. It is then piped back to the shore.
Just under two months after first gas, current production from the platform is 40mmscfd (0.4 therms) – enough gas to power about 225,000 households – the equivalent of more than half of Norfolk households. Drilling and hydraulic fracturing of a second well is now complete and there are eventually plans for two more.
So what is the significance of the project?
For the Ensign platform’s construction manager, Andy Close, who has seen the project from conception to near completion, put simply the project brings longevity to the southern North Sea by extracting gas that was previously unobtainable. And this, he said, gives Britain better energy security.
Mr Close said: “It has opened up the possibility of future exploration by proving that this technology has worked.”
And by piping gas into a hub in the Audrey platform – rather than building expensive completely new infrastructure, Mr Close said that it also extended the life of existing infrastructure.
“With the pipeline going to Audrey it also breathes life into Audrey,” he added.
The platform – which extracts and processes the gas once the drilling is complete – was constructed by Heerema Hartlepool in north-east England.
Initially Lowestoft-based SLP Engineering was going to build the Sea Harvester platform, but when the company went into administration in 2010 the contract went to the north-east.
But since it was bought out of administration the company already has won another contract with Centrica and hopes there will be more to come.
The platform, comprises topsides and jackets both weighing around 400 tons (363 metric tonnes) – the equivalent of 140 elephants.
It is a rig that is bought in for the drilling and hydraulic fracturing.
For the Ensign project Centrica contracted the Noble Julie Robertson (NJR), which drilled both wells.
Centrica’s drilling supervisor John Knowles, who has been overseeing the drilling project and lives on the NJR with about 90 other contractors while the work is ongoing, said the project allowed future explorations to take advantage of the technology that has now been proven.
“The first one is always the hardest one,” he said.
“Overall as a project there were a couple of challenges that were overcome and it was a good team spirit and unity that brought the first gas off.”
And for the gas consumer: what impact will the Ensign project have on our gas bills?
Centrica Energy Upstream deputy managing director Jim Craig said: “In absolute terms while the Ensign field is a big development for us, it is a small part of the gas market that is out there.”
He added: “The more that we can continue to develop locally, the more we can prevent ourselves being dependent on other places like Norway, Russia and all those other sources of supply.”
“The more we can continue to exploit the remaining reserves in the UK the less exposed we are to the volatility of the world gas market. More from a perspective of the security of supply than the price itself. The price is driven by many other factors. If you look at the proportion of the gas price by the consumer then the cost of getting the gas out of the ground then the cost is about 25pc of that.”
Centrica has also come under fire for the huge profits the company makes while gas bills continue to rise.
Mr Craig said: “I think profit is a really odd thing to look at, because you have to look at the profit relative to the amount of money you are committing to a project.
“If you think about a project where you maybe take Cygnus which is £1.5bn, then the return that you are making, of course the profit is relatively quite big but relative to the capital you’ve committed to a long period of time with no certainty about the price you are going for the gas you get out of the ground, no certainty about the tax rate the government is going to slap on you.
“Companies need to make profits to adjust for that kind of risk that they face.”
It is a complex and expensive business getting gas out of the ground to continue to reliably power our homes.
But companies like Centrica continue to invest and with advances in technology, as Ensign has shown, we will continue to get more gas out of the southern North Sea.
A father and son who joined forces to set up their own business are hoping to push the boundaries as their company goes from strength to strength.