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Closer supplier relationships to reduce subsea development costs

Thursday, March 5, 2020

If oil companies develop deeper working relationships with suppliers, there are ways to achieve big improvements in subsea field development costs, says Baker Hughes GE.

If oil companies could be persuaded to work in a more integrated way with suppliers such as Baker Hughes GE, it might be possible to achieve big reductions in the costs of developing subsea oilfields, says Romain Chambault, manager of Baker Hughes GE's European oilfield equipment business.

By combining better decisions about equipment, finding ways to get fields online faster, using standardised equipment, developing new commercial models, and using digital technology working with real time data, there can be big savings. 'It is a very powerful story,' he says.

Baker Hughes GE estimates it might be possible to save 30 per cent of the costs over the life of the field - from studies of the reservoir to drilling, completion, and intervention.

This aligns with the Oil and Gas Authority's drive to get more smaller reservoirs, or 'small pools' online - which requires reducing the cost of developing and operating them, to make it viable.

The move towards more integrated working relationships is already happening as North Sea oilfields gradually change ownership from traditional oil companies to private equity backed companies. These often look for more collaborative relationships with suppliers, he says. These operators often look for suppliers to provide technical expertise, having less among their own employees.

But this does not necessarily mean life is easier for suppliers - private equity backed companies are often looking for faster return on investment than traditional oil companies, as well as a continual drive for lower costs.

One way to reduce the cost of developing subsea fields is 'to engage a lot earlier with suppliers,' Mr Chambault says.

For example, if suppliers may be able to use their expertise to make better suggestions for layout of equipment or how to develop the field, so that both capital and operations costs are reduced.

In terms of commercial relationships, Baker Hughes GE is entering more arrangements with operators where it takes on some of the reservoir risk. The oil company pays the supplier less money upfront, but the supplier takes a cut of the returns from the reservoir.

In terms of life of field working, Baker Hughes GE is advising clients on the best ways to develop reservoirs, through its subsidiary Gaffney, Cline & Associates. It can help operators better understand how the reservoirs are operating and performing,' Mr Chambault says.

It can also help companies work out ways to optimise equipment and field performance, working out the best time to upgrade equipment and do interventions.

If clients provide access to real time data, it can monitor the equipment while it is in operation, he says. Sharing data 'used to be very unusual' - but is being seen more and more.'

To help clients make better use of digital technology, Baker Hughes formed a partnership in June 2019 with machine learning company C3 AI, to help it do more with well data, making predictions and working out how to optimise, including planning, staffing, sourcing and safety.

The two companies plan to collaborate on 'new integrated AI applications specific to oil and gas, and offer combined teams of oilfield and AI expertise deployed directly into customer environments to deliver AI solutions that meet specific business needs.

Shell is already a customer of C3.ai, using it for predictive maintenance. It also has a long-standing relationship with BHGE for oilfield services.

BHGE has taken a minority equity position in C3.ai and will have a seat on C3.ai's board of directors.



Associated Companies
» Baker Hughes (BHGE)
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