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IADC Plenary Session

Thursday, June 20, 2013

The Plenary Session of the International Association of Drilling Contractors (IADC) drilling event in Amsterdam in March covered what the industry has learned from Macondo and how the industry is evolving

It has embarked on much closer inspections. Mr Sigurdson quoted Frank L 'Skip' Bowman, a retired Four Star US Navy Admiral now on BP's board, who says, 'you get what you inspect not what you expect', and also says that when you think things are going (best) that's when you should be losing most sleep.

BP conducts detailed checks to see that people involved with drilling understand what they are doing, and how they maintain specific barriers.

'We ask mudloggers, how do they know their sensors are working. Who decides what point alarms are set at, and who decides when to change it?'

BP has established cementing as a 'formal subdiscipline' in BP, he said. 'We're establishing a competency.'
It is making more comprehensive auditing of cementing suppliers.

It has upgraded its well control training course, which is given to both BP staff and staff of its service companies. 'Crew members are introduced to specific field risks, and are observed and assessed,' he said.

It has also reorganised its wells organisation, so it has one global wells organisation, rather than each business unit looking after its wells separately, he said.

The regulator's view

Øyvind Tuntland, vice president of Norway's PSA (Petroleum Safety Authority), talked about the oil industry's regulators forum 'International Regulators Forum (IRF).

The members are from UK, Norway, USA, Australia, New Zealand, Canada, Netherlands, Canada, Brazil, Mexico and Denmark. Meetings have been held annually since 2005.

The organisation has been sending letters to the International Association of Drilling Contractors (IADC) and the International Oil and Gas Producers Association (OGP) asking the industry to take measures to improve after the Macondo disaster, in particular with blow out preventers, well integrity and robustness.

'So far we have not seen the progress we would have expected,' he said.

'We have scheduled a meeting with OGP and we hope OGP will report better progress than before.'

A particular area of focus is on when exactly the blow out preventer should be activated during an emergency. Perhaps there should be systems for automatic shut off of a well in case of emergency, he said.

'We need to improve reliability of BOP systems. We know very little about the progress and have not seen any result yet,' he said.

The regulators in the forum are also concerned about the shortage of competent staff for drilling.

'We urge the industry to co-operate and find remedies,' he said. 'We do not want to get in a position of saying no to a drilling permit because of competence issues.'

Mr Tuntland said he was seeing a growing interest in crew resource management (management system training) which looks at nontechnical risks (such as miscommunication and situational awareness).

'We need to look at other types of training, like crew based simulation training,' he said.

The PSA has to put in much more effort following up the smaller companies on the Norwegian Continental Shelf than the bigger ones, he said.

Diamond Offshore

Lyndol L Dew, Senior VP Worldwide Operations, Diamond Offshore, said that the public mainly wants 'invisibility' from the oil and gas drilling industry.

'They don't want to hear from us - they want us to deliver the fuel without any problems,' he said. 'Nobody cares how the sausage gets built - they just want to eat it at the end, and they want well-paying local jobs.'

Macondo demonstrated that the public's concerns and expectations were maybe different to industry's, he said.

The industry's concerns (in decreasing order) were probably loss of life, loss of rig, equipment damage / loss of revenue, and pollution.

But the general public's concerns were ordered differently. Pollution is the biggest public concern, followed by loss of life. The public doesn't care much about losing the rig or loss of revenue.

Blow out preventers are the 'Achilles Heel in our industry,' and the biggest source of downtime, he said.

Mr Dew said he gave serious consideration to the Baker Report (into the Texas City Refinery explosion in 2005), which said that there had been too much focus on personnel safety and not enough on process safety.

'I gathered my team and said, this could be us,' he said.

To try to re-orientate the company to think about process safety, Diamond Offshore wrote a simple safety guide which was displayed on board drilling rigs, emphasising that the most important safety goal was to 'keep the pointy end [derrick] up]', or in other words keep the drilling rig afloat.

Other goals were to 'keep the hydrocarbons where they belong', and 'don't give up the ship'.

'We don't want to be putting people in lifeboats unless we really have to,' he said.

'We have a plaque in every ship - so people know what the goals are.'

Think deepwater

Ole Storer, head of the US energy research group with Morgan Stanley, said that there is not enough appreciation outside the industry how important growth in deepwater operations will be, and perhaps too much expectation on shale gas.

The industry will need to find 27m bopd of new production by 2020 to meet demand.

'Deepwater and ultra-deepwater will be the most prominent component,' he predicted.

'Ultra' deepwater (considered drilling deeper than 1500m water depth) will increase production from 1mbopd now to 4 mbopd by 2020 he predicted.

The deepwater floating rig fleet will need to grow from 300 units now to 500 by 2020.

'The question is - is the industry ready for these challenges?' he asked.

What has happened after Macondo?

One audience member said 'One thing that surprised me - I heard the word Macondo mentioned once. Disasters such as Macondo can have a positive impact. Each of you talked about your improvement enhancements - how much of the recent changes were a positive reaction to Macondo - and how much of it would have occurred in the absence of Macondo?'

Steve Orr from Schlumberger said, 'I think our focus on barrier stack was a result of Macondo without questions. Certainly the in depth focus on barriers came from Macondo.'

Rosli Hamzah, Head of Well Delivery, Exploration with Petronas said, 'What worries me more is not Macondo - but ensuing litigations and press coverage. After Macondo we did an extensive and exhaustive study of the barriers we have and put in steps - it took us nearly 2 months to do this.'

Øyvind Tuntland, Director of Professional Competence Norway's Petroleum Safety Authority (PSA) said 'we have been very close to a serious accident on the NCS. Other countries have had their fair share. We ask ourselves could it happen in North Sea waters and said yes.'

'So we had to understand what happened in that incident - we have a big project in PSA to see what we could learn.'
Lyndol L Dew, Senior VP Worldwide Operations, Diamond Offshore, said, 'Macondo was a huge event for us - we put together a working theory and tested it against our procedures. We discovered 6 procedures that needed to be modified or which didn't exist.'

'I took my team to Louisiana, Aberdeen and Brazil to meet all our decision makers. These are definite positives.'
Costs have gone up, due to a much more intensive inspection program, he said.

Scott Sigurdson, Vice President of Deep-water Wells, BP said that there is much more focus on process safety. 'I don't do rig visits anymore, I do rig inspections. We test the understanding of individuals. We ask mud loggers, drillers, what is your role in maintaining hydrostatic [pressure],' he said.

Changing business models

One audience member asked whether the segmentation and business models in the industry are likely to change, or if we will continue to have operator companies, rig companies, service companies in separate segments.

'I think there will be an opportunity to work differently in the future. It's probably not going to be all that fast,' said BP's Mr Sigurdson.

One question is whether you should work with a variety of different service providers or have a more integrated approach, he said.

Diamond Offshore's Mr Dew said that he would not welcome any system which put another company between the drilling company and the operator.

'We man rigs, maintain the equipment, we do it very well. He who has the goal makes the rules,' he said.

Audience surveys

The IADC plenary session audience was asked a number of questions which they replied to using smart phone apps and handheld devices.

Q: What are the main challenges our industry is facing?

A: Exploration and development in the Arctic - 5%, Shortage of competent staff - 65%, blemished reputation - 15%, The vast number of wells to be abandoned with full integrity - 15%

Q: How should our industry prepare for the next challenge?

A: We have everything in place - 3%, Improve competence development - 55%, Introduce new technology - 15%, Develop global drilling standards - 28%

Q: How should we educate society in the importance of hydrocarbons to the future of the world and its economic activity?

A: School programs - 25%, Influence government - 19%, Concerted industry media campaign - 36%, don't bother - 19%.

Q: Our industry is perceived as conservative, why is this?

A: We trail other industries in automated solutions - 9%, The prevailing business models do not stimulate change - 13%, Our industry is not conservative but different and we do deliver the goods - 12%, I don't agree our industry is conservative - 26%

Q: Should the role of the regulator be further enhanced?

A: No it's fine - 17%; Regulator influence should be reduced - 6%; Restrict regulators to verification, but in a more intense manner - 20%; yes they need to set and enforce the minimum standard our industry is working against - 57%.

Q: What would be the prime are to focus on to improve integrity of the well?

A: Positive identification of all barriers - 68%;Cementing practises - 6%; Automated well control - 23%; Oil spill contingency planning - 3%.

Q: What type of company do you work for?

A: Oil and gas operator 40%, service company 31%

Q: Where do you live?

A: Europe 51%, NorthAmerica 38%

(Some percentages do not add up to 100 because not all results are shown)

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» Macondo

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