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Technology can make North Sea more competitive

Thursday, August 27, 2015

Smart technology, and integrated operations, can help a great deal to improve the cost competitiveness, writes Murray Callander, chief technology officer of Eigen.

The role of technology was consigned to just one of five core areas of recommendation within the Wood Review report (a report commissioned by the UK government to work out how to improve recovery from the North Sea by industry veteran Sir Ian Wood).

The list of five are Exploration, Asset Stewardship, Infrastructure, Technology and Decommissioning.

Written in a different economic climate, the report repeatedly puts increasing exploration at the top of any list, implying a bias towards making exploration attractive as the top priority.

However, the rapid decline in oil prices has brought the much greater issue of costs sharply into focus.

Cost inefficiencies threaten to put operators out of business and force early decommissioning of assets, both of which are extremely bad for the long term value in the UK Continental Shelf.

With average lifting costs of around £17/boe and capital efficiency down to 20 per cent on 2002 figures, operators are now spending 5 times more to get the same output.

Once cost are sorted out, the problems around exploration, asset stewardship and decommissioning will largely take care of themselves.

So the principal role of the any regulator must be to help the industry bring down the development and operating cost of any new facility. This is the only real way to increase the viability of bringing new discoveries into production.

Reduced operating costs will also naturally extend the economic life of fields within the UKCS.

And radically changing the way projects are developed will inevitably carry over to decommissioning projects.

Lowering costs will also naturally increase the economic feasibility of greater recovery from individual fields and the UKCS as a whole.

Reducing manning costs

One of the most important factors in reducing operations costs is manning.

Examples such as the Angel Platform (Woodside), show how the technology already exists to achieve minimum manning on large, complex facilities.

By reducing maintenance hours to below 5,000 hours, this platform can be maintained by a 20 man team (1 helicopter) visiting the platform 5 days out of every 60.

To reduced manning you need to reduce work, and if this can be reduced to the point where no-one needs to stay on a platform overnight, then the need for an accommodation block disappears along with the associated utilities such as potable water, sewage treatment, deluge and other equipment associated with continuous presence on board. The result is a significant decrease in Capex for new platforms and even Opex for existing platforms such as West Sole Bravo (ex BP, now Perenco), which has been adapted over time.

Remote monitoring

While there is no 'one thing' or 'game changing technology' that makes minimum and unmanned facilities possible, improvements in remote monitoring over the past decade certainly play a significant role.

Within integrated operations, the ability to monitor all aspects of a working system in real-time often enables operators to spot problems before they occur.

A single land-based maintenance team can now monitor multiple platforms. This on its own, has a disproportionate effect on cost, by removing the need to pay three offshore shift workers to cover every position.

When issues arise, engineers can now examine the problem remotely. Knowing what to expect, this reduces the need to hold spares offshore and reduces the time needed on-site to carry out physical repairs and servicing.

For decades, most offshore infrastructure has been serviced through cadence-based maintenance: swapping parts based on an expected lifespan. The understandably risk-averse nature of the industry lead operators to lower these life expectancies and err on the side of caution.

The result has been massive inefficiencies, unnecessary maintenance and replacing parts that are still in perfect working order. Worse still, the deviation around any average naturally means that some parts did not survive their expected lifespan, leading to outages, reduced production efficiency and in some cases more serious disasters.

Modern remote monitoring enables condition-based maintenance. Telltale signs, such as anomalies in pressure and flow, enable engineers to spot wear as it happens and replace parts before they break.

Moreover, the ability to record and analyse monitoring data over time is now opening up a whole new science of operational systems refinement. Monitoring over time allows engineers to iterate systems and operations practices, constantly learning and improving efficiency.

How technology is applied

What is required now, is a change in thinking about how this technology is applied.

Within offshore oil and gas, the traditional project approach works out how much maintenance is required after the platform is designed. Process design and technology selection are all too often an afterthought in the context of minimising maintenance and inspection requirements.

By contrast, design for minimum manning requires simplification and a drive towards highly reliable designs. The new possibilities that digital technology opens up enable simpler, more efficient platform design.

To achieve the kind of efficiency savings operators the world over now need to survive, digital technology and innovative design and equipment selection need to be baked in to operations and engineering projects from the very start.

Role of the regulator

One of the most effective ways to promote greater efficiency would be for a regulator to guide the government in underwriting commercial loans for the most innovative new projects.

Much of the industry's conservative behaviour stems from highly risk-averse lending which discourages new ideas and strangles innovation.

If government were to shoulder some of the perceived risk in well chosen projects, this would arguably be the most significant single driver for change in the industry.

Also, with the prospect of tax relief, the government has a powerful 'carrot' with which to change operator behaviour. Tax breaks need to favour innovation and meaningful adoption of new technologies.

Associated Companies
» Eigen Ltd
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