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North Sea Task Force launches to step up action on efficiency

Thursday, September 3, 2015

Oil & Gas UK formally announced the launch of the Efficiency Task Force (ETF) - a group tasked with driving improvement, making the sector more competitive, and supporting the drive to maximise economic recovery from the UK continental shelf, at a meeting of the trade association's operator and contractor councils.

Oil & Gas UK is taking the lead to help drive pan-industry initiatives to secure efficiency improvements and transformational change, formalising those initiatives under the ETF. This action is in addition to key changes already taking place at individual company level.

The latest in a number of steps taken by industry, the ETF is led by John Pearson, Group President Northern Europe and CIS, AMEC Foster Wheeler, and Oil & Gas UK Co-Chairman, and is supported by a dedicated resource from Oil & Gas UK and its industry members.

John Pearson commented:

'I'm delighted to announce the official launch of the Efficiency Task Force (ETF). It will encourage cooperation and focus on initiatives that add real value for our sector - helping the UK to compete globally.

'Tackling efficiency has been at the forefront of industry minds for some time - but has become more acute and urgent as the value of our end product has more than halved in the last year. We now need to step up, increase the effort and resource we're putting in, and get the job done as a united industry.

'We're taking a three pronged approach under the themes: Business Process; Standardisation; and Cooperation, Culture and Behaviours, and are focusing on two or three projects in each. What's essential here is that we don't try to boil the ocean. We've put a lot of thought into where we can have most impact - and will be working with the industry to see these projects through.

'Only if industry works together can we achieve the major transformation in efficiency we need to see.'

The ETF will focus on three themes:

Cooperation, Culture and Behaviours: the ETF will aim to deliver the behavioural change this sector needs to compete in a lower oil price world, and will put in place an Efficiency Charter and host efficiency sharing events before the end of the year.
Standardisation: the ETF will look to simplify business approaches and drive standard solutions in order to lower costs, accelerate delivery and reduce operational complexity. Early analysis suggests that simplification and standardisation in areas such as well plugging and abandonment could deliver significant savings.
Business Process: is an area where significant saving could be achieved across the industry. The ETF will review the day to day operations of the offshore oil and gas industry, exploring how companies can work together to share resources and good practice.

As an example, the ETF is working to help companies rationalise their inventories, exploring opportunities for the pooling and sharing of items of high value kit and creating visibility of stock holdings across the industry. The ETF currently holds a dataset of 10 operators' stock listings, containing in excess of 165,000 items, and is working with those operators to rationalise and reduce their inventory holdings in order to reduce the cost associated with storage and maintenance of materials.

In addition, the task force is also aiming to tackle the efficiency of compression systems, which have been identified as being accountable for at least 20 million barrels of oil equivalent each year in production losses. Working with operators to identify the key drivers of the compression systems issues, the ETF aims to create cross industry solutions and facilitate the sharing of industry good practices.

Oil & Gas UK's chief executive, Deirdre Michie, commented on the launch of the ETF:

'Oil and gas currently account for 70 per cent of the UK's primary energy demand - a figure which will remain unchanged until at least 2030, according to the Department for Energy. A large proportion of that demand could still be met by oil and gas produced from our resources in the UK. This is an estimated 20 billion barrels of oil and gas still to find on the UK Continental Shelf, but the industry is undoubtedly facing an uphill struggle to maximise recovery.

'Becoming more efficient is the most critical challenge we face today. The oil price has more than halved - from over $100 per barrel in September last year to XX today, whilst the cost of oil and gas operations more than doubled since 2014.

'Companies have already started on the difficult road to reduce costs and become more efficient. Early signs show this concerted effort is paying off, as production from our sector has increased this year and the cost of operating on the UK Continental Shelf is expected to fall by the end of 2016. There is, however, still much more to do. It is imperative we pull together to achieve even greater strides forward.

'The Efficiency Task Force provides us with the vehicle we need to enact change - quickly and effectively with those companies who are ready and willing to be the early adopters of such change. Moving from focusing on cost reduction to efficiency improvement and the transformational change we need to see to help sustain activity in the North Sea, and in turn sustain oil and gas supply and hundreds of thousands of jobs throughout the country.'

Stephen Marcos Jones, Oil & Gas UK's business development director, who is leading Oil & Gas UK's support of the task force added:

'As the industry's leading trade association, Oil & Gas UK isn't instructing or enforcing change, but we have been listening to our members and believe it's increasingly vital we have in place an effective means of sharing - expertise, resources and ideas - throughout the supply chain.

'As the Efficiency Task Force, we will hold a mirror up to the industry with the aim of transforming our sector from within - planning together and allowing individual companies to act in a way which best suits the challenge they face.

'At our the meeting of our operator and contractor councils today (Wednesday 2nd September) we will be taking feedback from 100 Oil & Gas UK Council members on our initial projects, and will be inviting the wider industry to share their thoughts at our stand at Offshore Europe this year.'

Today's announcement comes a week in advance of the launch of Oil & Gas UK's Economic Report, on Wednesday 9th September 2015 at an industry event Offshore Europe. The report, based on data provided by Oil & Gas UK's members, along with information from the Department of Energy & Climate Change (DECC) will provide the most accurate and up to date information about the health of the industry and will underline the need for continued action on efficiency.

In addition to pan-industry action, companies are addressing costs individually by working smarter and more efficiently. For example, Total has improved the completion of planned tasks by 12 per cent over three months by encouraging offshore teams to use visualisation techniques to help improve the process of planning operations and maintenance activities. Elsewhere, BP has reviewed its inventory management process, halving the number of storage locations, halving the number of inventory items and generating around $32 million by disposing of scrap and materials identified as surplus to the company's needs.



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