ATP Oil and Gas: American Ingenuity at Work for a Safer GOM

| About: ATP Oil (ATPAQ)
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I love America and American ingenuity. Business ingenuity is found nurturing in smaller US companies where the stakes for failure can be the kiss of death, where liability risk can cripple if mistakes are made, and where if successful the rewards are bountiful. ATP Oil and Gas (ATPG) is putting American ingenuity to work in its new Titan offshore platform to create a safer work environment, and was doing so long before BP’s (NYSE:BP) horrific series of missteps in the GOM.

Not all oil and gas drilling projects are designed like BP’s MC252 well and Transocean’s (NYSE:RIG) Deepwater Horizon. In these days of heightened analysis, and with the importance of ATPG’s newest deepwater GOM infrastructure asset to its survival, it would be prudent to investigate some of its features. The goal was to determine if this critical asset may stand up to additional regulatory scrutiny.

ATPG is in the process of getting its newest offshore platform operational. Named the Titan, this platform incorporates some of the latest technologies and equipment combinations, and is making several “firsts” in the GOM. Designed in 2007 and commissioned in late 2009, these features were incorporated in the Titan design long before the BP spill.

While not an engineer or a spindle top expert, I think there is sufficient information written in layman’s language that due diligence concerning the Titan, while a bit heady, should be conducted by all ATPG investors.

There are still several unknowns and risks to continuing deepwater development. The design and operation of the Titan platform does not address well design, mud and cement selection and processes, nor drilling technique, all of which are in question with BP. Additional liability requirements are at the mercy of our Congressional leaders.

An in-depth review of the Titan does, however, shed light on the forward thinking approach of ATPG management when designing this long-lived infrastructure investment.

The technological advances utilized on the Titan can be grouped as follows:

Platform design

The Titan is a production platform with “Lego-ed” additions for drilling. The Titan was designed to be built in shipyards surrounding the GOM and floated to the site for final assembly. The structure incorporates several “firsts” for the GOM that should create a long-term safer drilling and production environment.

From Offshore Magazine, May 1, 2010 issue:

The ATP Titan project, a deepwater dry tree platform, is the first of its type to be used in the GoM. The patented MinDOC hull, designed by Bennett & Associates (BASS), consists of three circular columns connected by triangular pontoons and a top tensioned riser (TTR) frame that supports the risers through the center of the hull. On top of the hull sets a two module, "T-shaped" facility designed by Mustang Engineering. The structure measures approximately 726 ft (221 m) from the base to the top of its derrick and has a design capacity of 25 Mbbl/d of oil and 100 MMcf/d of gas.

At first glance, Titan's three-column structure resembles a semisubmersible, but motion-wise, its deep draft and low center of gravity give it pitch, roll, and heave motions more in line with spar designs. This is particularly important for post-Katrina design conditions. The natural oscillation periods for the platform fall well outside the wave periods typically experienced in the GoM. Furthermore, the MinDOC was designed to be moved to new locations over its expected service life. The Titan can operate in depths ranging from 2,000 ft (610 m) to 7,500 ft (2,286 m) with comparable payload and environment conditions. Moreover, the unit can be towed to a new location with the topsides in place. As such, the Titan allows ATP to consider fields that would otherwise be commercially marginal with conventional completions.

Riser Support

The Titan incorporates an improved riser support method designed to comply with stricter regulations developed post-Katrina.

From Drilling Contractor magazine:

The top tension riser system was developed for drilling risers and production risers with dry trees and includes standard riser joints, specialty joints and an innovative riser tensioning system. “The robust mooring of the Telemark Hub is suitable for dry trees,” said David L Garrett with Stress Engineering Services.

The tensioner module is supported by the hull rather than the deck, and the same tensioner is used for all risers, with nominal tension value adjusted to the design value of the particular riser. The system is designed for post-Katrina hurricane criteria, including robustness checks for the 1,000-year-return period hurricane.

A top-tensioned riser (TTR) support frame is located near the top of the column. The riser tensioner module is supported by the TTR frame. The riser tensioning system supports the risers from a tensioner deck that is supported vertically on the four cylinder rods and laterally by two guide posts. The risers extend through the TTR frame and are laterally supported near the keel by a guide tube. The bottom of the riser is connected to an 18 ¾-in. wellhead with a hydraulically actuated connector.

The tensioner assembly design utilized on the Titan is patented by ATP:

From ATPG press release:

ATP is the recipient of a 2008 Best Patents Award presented by the Buskop Law Group in a competition recognizing superior technological creativity. Dr. Robert M. Shivers III, ATP's Vice President of Projects, was recognized for his innovative design of a ram-type tensioner assembly with accumulators to be utilized on the ATP Titan floating drilling and production unit. “This ram-type tensioner assembly will support the top tensioned risers for drilling and permanent production on the ATP Titan," stated Dr. Shivers. "ATP is proud to be recognized for its technical knowledge and innovation which has been instrumental in the company's continuing success." ATP currently holds eight issued patents and has six other patents pending for the pioneering of innovative designs and processes.

Dual Blowout Protectors

Now, we get to the important points. By design, the Titan has 2 blowout protectors (bop) – one above sea level and another at the wellhead on the ocean floor. Now considered “best practices”, utilizing two bops creates a redundancy of safety features in case one malfunctions. The well termination mechanism is state-of-the-art.

The importance of voluntarily designing the Titan with an added back-up preventer cannot be underestimated. The decision to incorporate this design was made a long time before the single bop failed for BP. New regulations that will be instituted after a thorough review of the BP miss-steps will most likely include the utilization of double bops, of which ATP is already using. In addition the subsea isolation device on the wellhead is a module design for easy repair

From the June issue of Offshore Source:

DTC International, Inc. has supplied a Subsea Isolation Device (SID) equipped with its revolutionary MODSYS Modular Subsea Control System to ATP Oil & Gas Corp. for use with the ATP Titan.

During the drilling operations, using a surface stack, the ATP Titan will incorporate a single-barrier drilling riser backed up by a SID for safety shut-off at the seafloor.

This will be the first time that this approach has been used in the Gulf of Mexico, according to DTC. The SID, which consists of a double ram preventer equipped with two blind-shear rams, a wellhead connector and re-entry hub, will be controlled using DTC’s MODSYS control system.

DTC’s MODSYS® control system incorporates components that have been field proven for years within the production and drilling industry, in a very creatively configured package. One of the many features that the MODSYS® control system provides ATP is its ability to be deployed and retrieve using a work-class ROV equipped with a tooling skid. This fundamental feature allows ATP to quickly, safely, and economically maintain its control system with minimal downtime. Because the SID can be left subsea, components can be replaced in a matter of hours and the need to bring the SID to the surface for control component repair/ replacement is eliminated, resulting in substantial savings to ATP. The MODSYS® control system also offers other advantages. Designed to incorporate various and infinitively variable configurations in a small lightweight module means that independent failed components can be changed out with ease, while the system's in built flexibility allows new modules to be added as required, and the system's capabilities expanded or customized.

Monitoring of Well Data

One key to solving a potentially disastrous situation is the collection of data that will describe the changing conditions in the drilling or production processes. The Titan utilizes the newest technology that allows for well monitoring from onshore offices. This is critical if there is a catastrophic event on board the Titan as the situation can be closely managed from afar. There is a report from a visitor to ATP headquarters that describes banks of computer monitors overseeing the operations on the Titan.

From The Rig Zone:

The real-time monitoring system will be installed on one of the production top tension risers (TTR) and linked to a topside data acquisition system. The gathered data can be evaluated offshore or transmitted to shore on demand for further evaluation and integrity management purposes.

The system will incorporate Pulse's award-winning, field-proven INTEGRI™ range of sensors to monitor the global response of the production TTR and enable rig personnel to capture data in real time.

The primary objective of the riser monitoring system is to measure and quantify fatigue damage to the risers from wake-induced oscillations (WIO) during high current events in real time. The gathered data will be used to ensure the integrity of the riser system, especially after severe events. The monitoring system, which is fully remotely operated vehicle and diver serviceable, features Pulse award winning instrumentation INTEGRIstick® dynamic curvature sensors to measure the bending strain at the critical fatigue locations. The monitoring system also includes INTEGRIpod-HM high-precision motion loggers placed along the upper span of the riser string. The real-time, fully synchronized data stream from the motion loggers will provide a more global understanding of riser movement.

Daniel Reagan, Pulse's senior engineer for structural monitoring, said, "We are excited to support the ATP Titan and the Telemark Hub project with our structural monitoring expertise, project execution and full offshore support team. Pulse technology will be utilized to set another milestone in real-time monitoring of subsea risers and structures. It will provide critical riser operational data to help us understand better the phenomenon of wake-induced and vortex-induced vibrations to maximize uptime and reduce risk."

Flag of Convenience

It seems there are various national flags flying around the US waters in the GOM. The design and regulation of drilling and production construction lies in the hands of the nations in which the assets are registered. The US has one of the most comprehensive inspection and regulation processes in the world, and these are managed by the American Bureau of Shipping (ABS). While not required to do so, the Titan is flagged as an American assets and is subject to the stricter ABS rules and regulations.

MMS Recommendation Report, April 2010

The Mineral and Management Service (MMS) commissioned a report titled “Technology Assessment and Research Program” that was published in April 2010. In this report, the MMS recommends the use of a sub-sea isolation device (SID) similar to what is presently being used on the Titan. References can be found on pages 5 and 21. Although not currently required, the Titan would most likely comply with new regulations requiring the use of a SID in addition to a bop.


While the final configuration of new regulations and offshore development practices are far from completed, investors should feel reasonably comfortable that the $1.2 billion spent on the Titan was well invested in its design and should allow for cost-effective upgrades to accommodate the new rules when implemented.

As always, investors should conduct their own due diligence, should develop their own understanding of these potential opportunities, and should determine how it may fit their current financial situation.


Disclosure: Author long ATPG