East Spar Development: First Offshore Gas Field in Australia Developed by Alliance Approach
Authors: Campbell P.F. , Miller G.L. , Speechley A.E. 
Published: December 2007

The East Spar gas field, offshore Western Australia, commenced production in November, 1996 from 2 subsea wells and a subsea gathering system controlled by an innovative unmanned Navigation, Communication and Control Buoy. The control room and gas processing plant are located 63kms from the field on Varanus Island. The development phase was executed by an operator-contractor alliance - the East Spar Alliance. The field was developed in 22 months from approval to first production - a record for a new offshore gas field in Australia. This is more remarkable given that initial development approval was for a platform-based control and gathering system. The Alliance, contracted on the basis of a performance specification, was able to further optimise the development plan in response to challenges and opportunities presented by new site data and new technologies.

This paper outlines the process of optimisation of the development plan and the technical innovation in the final development concept. The emphasis is on the role of the Alliance in enabling the timely optimisation of the development concept and its role in the effective incorporation of new combinations of technology in the context of a tight schedule.

The paper discusses the Alliance concept, the processes for forming the East Spar Alliance and the structures adopted for the Alliance organisation and contracts. The manner in which responsibilities and risks were allocated and managed is reviewed. Alignment of the goals of operator and contractors was found to be the key to success of an Alliance.

The paper concludes with a summary of the key areas critical to the success of an alliance - from the viewpoints of both operator and contractors.

Introduction

East Spar is a gas/condensate field located 40kms west of Barrow Island, offshore Western Australia (Fig. 1). Proven plus probable reserves at the time of development were estimated as 430Bcf of gas and 28MMbbls of condensate. The reservoir is 2500m subsurface and the water depth at East Spar is 95m. At the time of development, WMC were operator of the field on behalf of the East Spar Joint Venture (ESJV).

East Spar was discovered in early 1993 when deregulation of the WA gas market was occurring and the concept of a gas pipeline to the goldfields was proposed. This created a "window of opportunity" for East Spar, but only if plans could be established quickly. A "base-case" development plan was established to support gas marketing while alternate plans could be matured in parallel.

The completed East Spar facilities comprise two subsea wells, a subsea gathering system and a multi-phase (gas/condensate/water) pipeline to new gas processing facilities on Varanus Island. The subsea facilities are controlled via a Navigation, Communication and Control (NCC) Buoy. Sales gas is exported via a pre-existing gas sales pipeline to the Dampier-Bunbury and Goldfields Gas Transmission (GGT) pipelines. Condensate is stored and exported using pre-existing facilities on Varanus Island.

Alliance Formation

The objectives of the operator in determining the preferred contracting strategy for East Spar were to find the optimum balance between risk and cost exposure, minimise the number of contracts and hence interfaces to be managed and bring together the best possible resources for the project. The contractors were looking to leverage their expertise through a measured exposure to the overall project result. All companies were looking for a cooperative approach with an emphasis on developing a long-term relationship between the parties.

Selection of Alliance Concept. The parties' concept of an alliance was a contractual relationship which defined not just scope and price but also how the parties would work together.

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