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ITF Technology Showcase - developing new technology faster

Thursday, June 26, 2014

The ITF Technology Showcase in Aberdeen in March had extensive discussion about how the oil and gas industry can get faster at developing new technology, with talks from Chevron, AMEC, CNR, the UK Government and others

Chevron's current business imperatives in the North Sea are 'to eliminate incidents, improve production efficiency, reduce costs, revitalise exploration, increase ultimate recovery, and efficient decommissioning,' said Craig May, president and managing director of Chevron Upstream Europe, speaking at the ITF (Industry Technology Facilitator) Technology Showcase event in Aberdeen on March 5.

Average North Sea production efficiency has dropped from around 80 per cent in 2005 to around 60 per cent today, he said.

Chevron's production efficiency in the North Sea is 80 per cent, he said, although it is over 90 per cent for Chevron's activities in the rest of the world.

Production efficiency is defined as the ratio of actual production divided by (what is considered to be) maximum production potential for the structure. It can be reduced by declining reservoir production, shutdowns or problems with the wells or topsides equipment, problems with export routes (pipelines and tankers) and lack of market demand. Of these, the biggest factor which people can influence is probably the length of time platforms are out of action for maintenance (known as 'turnarounds').

If the UK Continental Shelf meets its targets for production efficiency, the ultimate production will increase by 630m boe, between now and 2018, he said.

Meanwhile, the average annual unit development cost in the North Sea, calculated in pounds per barrel of oil equivalent, grew from around £5 in 2005 to £16 today.

Technology should be able to help both reduce development costs and improve production, he said.

At the moment, the oil and gas industry is doing reasonably well at applying technology for new developments, Mr May said. One example is the Chevron's Alder Field development in the North Sea, coming online in 2014, enabled due to advancements in high pressure high temperature components. The field was discovered in 1975, but could not be produced until the HP HT technology became available.

Meanwhile new seismic technology proved a great help with the Rosebank field, which was hard to identify using towed streamer seismic data. Chevron switched to using ocean bottom nodes to record seismic data, resulting in a much clearer image, which should make it easier to make a decision to produce the field.

But when it comes to producing assets, developing new technology is much harder, with many constraints, including the number of beds for offshore workers, logistics complexities and limits in space and weight available on offshore platforms.

The best way to improve how the industry uses technology might be the 'relentless pursuit of incremental improvement,' he said, rather than looking for big step changes.

Also the industry can get better at how it works with data. 'Acquiring data is pretty cheap, but managing it effectively, gleaning insights and getting insights to decision makers' is an area with room for improvement.

The industry could also do better with inspection technologies, he said, citing an EC joint industry project called 'Petrobot' to develop robotic arms which can go inside a tank to do inspections, removing the need for people.

The future of UK continental shelf could be more about recovery than discovery, he said, shifting the focus onto technologies which can help improve recovery, such as downhole fibre optic measurements which can help manage the reservoir in real time and improve the consistency of 3D and 4D seismic surveys, he said.

Chevron is building an integrated operations centre in Aberdeen, just to focus on producing assets, he said. 'It is designed to help us improve the data that we already have.'

The industry needs to 'move from big development to smarter development,' he said. It needs to 'move from technology as cost to technology as cost reduction.' And we need to 'move from looking internally to learning from other industries.'

CNR - decommissioning


James Edens, vice president and managing director of Canadian Natural Resources (CNR) International (UK), talked about the technology opportunity with decommissioning.

CNR is currently decommissioning the Murchison field, in the UK sector of the North Sea.

Back in 2010, the company identified the first quarter of 2014 as the 'economic cessasion point' for Murchison, and production duly ceased on February 28, 2014, he said.

The company has spent the past three years identifying which suppliers it wanted to involve in the project, and getting them in place. The key contractors are Schlumberger, Halliburton, KCA Deutag, Petrofac and Aker Solutions.

A 'slimline' 65 page document was written about how the decommissioning will happen.

Once the platform has been cleaned, there is some flexibility over when it is actually removed - depending on vessel availability.

It will spend the next 2 years doing well plugging and abandonment, removing conductors (well foundation pipes), and cleaning / engineering down the platform in preparation for removal. From early 2016, it will remove the topsides and subsea equipment, followed by jacket removal in 2017. Some subsea equipment and pipelines will also be removed.

The company did not struggle to find crew to work on the project - but people wanted to know what would happen to their jobs when the platform was no longer in operations. 'Decommissioning is a tremendously complex and exciting phase,' he said.

In-depth information and updates about the decommissioning project are online at http://www.cnri-northsea-decom.com/

AMEC - best time for technology
With the current challenges the oil and gas industry has, 'there's never been a better time to be in technology development', said John Pearson, group president Europe with AMEC. Technology 'is the single biggest growth opportunity, although I'm not sure it always feels that way.'

But the oil and gas industry needs to get better at working with technology, he said. 'We want a step change in business resulting from a step change in how we develop and apply technology. We need to get better organised, focus on a few key areas, and create a system which will deliver an outcome.'

The oil and gas industry is often reluctant to try new technology, often with good reason, considering the risks involved. But what needs improvement is the speed of getting to the point where the industry does feel comfortable with new technology, he said.

'We work in an environment where failure is really bad, we all focus on certainty,' he said. 'There's nothing wrong with being sure, but the process of getting to this certainty could be a lot more efficient.'

Or in other words, the industry needs to get better at 'de-risking a risky bet'.

Companies can also develop better business processes for identifying needs which could be met with new technology, he said.

They could also be more supportive of the companies which develop it. Much technology development is led by the supply chain, 'and the supply chain [companies] tend to have small balance sheets.'

One delegate from a small technology company asked if there was a way to simplify the complex approval processes of getting an oil major interested in new technology, particularly if you have to go through the same process with several companies.

The answer could be that oil companies commit to supporting a new technology in advance of companies developing it, Mr Pearson said. 'People commit to being an equal parent. It can be a lot more efficient than it is now.'

UK Government
Craig Lucas, head of engineering with the UK Government Department of Energy and Climate Change (DECC) said that the UK government aims to invest money in technology development which (for whatever reason) the market won't address.

In the past, the North Sea hasn't needed much government support for technology development - it was led by oil majors, which 'tended not to lobby for money.' So government funding has been focused on areas which don't have financing, like low carbon, he said.

Today, fields are operated by smaller companies with smaller research budgets, so there is a stronger case for government support for research, he said. But government still has to ask if there is anyone else who will fund the research if government won't - (and if so, if the development will happen quickly enough).

If government appears to be doing something illogical, there are often competition or state aid rules behind it, he said. Any funding from government must comply with difficult EU and UK rules about state support and competition, he said. 'If you play in this space, you loathe the words 'state aid'.

Government also has to be co-ordinated, with a clear understanding of priorities. 'Otherwise people who lobby hardest get the minister's attention,' he said.

Government is keen to help small companies, which can often feel that large companies are trying to put them out of business. 'SME's and big companies are an unequal alliance,' he said.

But it is not always helpful to give small companies funding. 'Getting a million pounds can be a very frightening thing, all the vultures come around, the VCs are on the phone.'

OGIC
Paul de Leeuw, Chairman, Oil & Gas Innovation Centre (OGIC), talked about how his organisation, launched just 8 days before the conference, will be able to help with technology development.

It is has £10.6m funding, from the Scottish Funding Council, Highlands and Islands Enterprise and Scottish Enterprise, and was announced by Alex Salmond, First Minister of Scotland, on February 24 2014 (8 days before the ITF conference).

Mr de Leeuw sees an important role for OGIC helping connect the industry with academics and small companies. 'We have around 12 universities in Scotland, there's 450 academics in oil and gas. 800 MSC students who do a project every year,' he said.

'If there's someone who has a good idea and doesn't know how to develop it - we connect them to university people. For example if someone has a downhole tool and needs a control system.'

OGIC will have up to £40,000 funding available to companies for 'early stage assistance' and £40k to £500k for 'project support', to take a prototype to field trials. The funding must also be matched by industry partners.

The first call for projects will be made in the third quarter of 2013, he said.

Exploration Task Force


Andy Leonard, operations consultant with Oil and Gas UK (and a past vice president of BP Cambridge and programme director of BP's Field of the Future project), talked about the Exploration Task Force set up by PILOT, a partnership organisation between the oil and gas industry and the UK Government.

In February 2014, the group ran a London conference on 'Pitfalls in Exploration and How to Avoid Them,' with 100 delegates.

One of the conclusions of the event was that the industry should get better at integrating geological data, and making better use of analogues, he said. The industry also needs to work out better ways to cost effectively drill complex targets.

The Task Force is also identifying areas of the North Sea where it could be worth doing more exploration, and has identified the West Hebrides as a 'poorly explored play,' he said. The Task Force is trying to work out how more seismic surveys of the West Hebrides could be financed.
'It is part covered in basalt so hard to get at.'

GE Oil and Gas
Paul White, director of subsea technology with GE Oil and Gas, said that the biggest challenges from his point of view are finding ways to improve recovery from subsea wells, improving asset integrity of subsea equipment, and being able to improve production efficiency, or reduce the amount of downtime of subsea equipment, perhaps using predictive maintenance.

On brownfields, operators have to manage with reducing reservoir pressures and increasing water cut; on greenfields, operators are working in deeper water, with wells which have a longer offset from platforms, which means challenges with longer pipelines carrying multiphase fluids.
'We're already a long way to solving a lot of these challenges.'

GE Subsea focuses on subsea trees, controls, manifolds and processing power, he said. It is developing new impeller technology for subsea pumps, and switch drives for subsea motors. Other priorities are improving measurement and control capabilities, improving leak detection and acoustic monitoring.

For the groundbreaking Ormen Lange subsea gas processing system, GE supplied power systems, drives and compressors. 'In future we'll see more of these systems deployed, and future systems will be smaller, more compact and cost effective,' he said.

GE is also building analytical models, so it can have a better sense of operational intelligence, to help do predictive maintenance and monitor asset integrity, he said.

In a comment after his talk, one government representative said, 'You emphasise the need to get lots of data from subsea, but it seems half of gauges subsea doesn't work because of control module problems. How can we get more reliable data?

'Reliability across the world is something we're trying to work on,' Mr White replied.



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