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Industry future operating models

Thursday, November 17, 2011

A plenary session at Offshore Europe conference in Aberdeen in September discussed which future operating models will be most successful in the oil and gas industry

The operations specialist, who can develop and operate an asset as efficiently as possible; the national oil company, who owns land; the financial investor (or 'passenger') who is involved in different joint ventures but does not to any operations; and the 'proprietor', small niche exploration player.

This is the operating models which Jim Pearce, partner at the London office of consultancy A T Kearney, thinks will be successful in the oil and gas industry in the future.

Conoco Phillips

Brage Sandstad, manager of Norway operations with ConocoPhillips, believes that the 'integrated operations' model is the model for the future, with onshore and offshore operations integrated closely together using digital technology.

'In Norway, integration is what we're trying to do, integrate onshore and offshore. Integrated operation is not something we do in addition to our work, it is the way we work. We think it makes good sense to integrate people and process facilitated by new technology,' he said.

A good example of the company's integrated operations is its Ekofisk field, which has been producing for 40 years and expected to produce for 40 more.

Over the past 6 years, Conoco Phillips has been gradually integrating various aspects of its business, starting with drilling (2004), to operations and logistics (2005), production operations (2007), integrated planning (2007), well integrity work (2009) well services, health and safety (2009), with an onshore control centre built in 2010.

The aim is to run the field in a more proactive and predictive manner, so there are less surprises, he says.

The way Mr Sandstad sees it, if the field is reliant on offshore staff to get it right, and someone fails 1 in 100 times, then the only option available is to send the person to training, which might mean he fails 1 in 200 times.

But if the person offshore is working with someone onshore, and each fails 1 in 100 times, then the risk of both of them failing at the same time is just 1 in 10,000.

'People always ask how integrated operations affects the bottom line,' he said. 'But integrated operations is a great way to create value. It is one of the best tools that we have at our disposal to reduce costs in a smart way. This is all that we need to work in the future.'

'We can bring information to the experts wherever that expert will be, rather than sending that expert into the field. We can have a full complement of a multi discipline team, onshore or offshore.'

'We can integrate it with our suppliers to become more efficient and effectively on both sides.'

At Conoco Phillips there are 1200 people offshore at any time, three quarters of them contractors.

In the early days of development, the rig had one radio communications phone line, and it couldn't be used at the same time as a local fishing boat was using it.

Now the field has 30,000 data points sending data every second.

This leads to the challenge of working out what to do with the data, and how to get the most out of it. Advanced analytics 'is the type of technology I'm excited about when it comes to improving into the operating model,' he said.

Wood Group PSN

Bob Keiller. Group Director for the Wood Group PSN division, talked about how outsourcing is likely to fit into future business models.

His company Wood Group PSN provides a range of outsourced services connected to running brownfield (older) assets.

'Every company I know outsources some aspect of their operation. Some activities are always outsourced, some are never outsourced.'

Companies should not be reluctant to outsource work. The best time to outsource work is 2 years earlier than when you were planning to do it, he said.

Wood Group PSN measures 20 indicators every day to monitor how safe its operations are. 'When we get a failure, we call it a 'crack'. A crack that's not attended can become a hole.'

The company analyses 4 different barriers: engineering barriers (how close operations are to the operating limit of the equipment and how many temporary repairs are in place); maintenance barriers (how many overdue maintenance jobs); the processes system; and the behaviours of people running the asset.

'We give behaviour the same weighting as all the other barriers. For example a failure of a local supervisor to respond to a problem.'

Mr Keiller said that the relationship between oil companies and service companies can work in many different ways. Service companies can 'manage, do, help, provide people,' he said. 'There's no right answer.'

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