Article produced by Navingo
Globally some 250,000 jobs have been cut in the oil and gas industry, Bloomberg recently published, quoting Houston based industry consultant Graves & Co. More than 1,000 rigs now lay idle and the industry has reduced its spending by more than USD 100 billion this year to cope with oil prices that have fallen by more than half since 2014.
Doubtless, the 2015 Offshore Energy Conference, held in October 2015 in Amsterdam, took place in a very different industry context than a year ago.
Oil services, drilling and supply companies are hit the hardest, according to Graves & Co. “It’s going to get worse before it gets better, Bloomberg Business quotes John Graves of Graves & Co.
With over twenty meetings, each catering to different target groups, the Offshore Energy Conference offered ample room to discuss the changes in the industry, addressing industry wide challenges and zooming into technology niches. For when – few would say “if” – the rebound occurs.
Technology niche: Subsea processing
One technology niche that has been gaining importance is subsea processing. Included in the Offshore Energy Conference program for the second consecutive year, the subsea processing session was moderated by Pieter Swart, Subsea Pipeline and Materials Team Lead at Shell, Norway.
One of the speakers was Arne Birger Olsen of OneSubsea. OneSubsea developed a subsea wet gas compression system in collaboration with Shell and Statoil and the first commercial OneSubsea wet gas compressor was installed on the seabed and then tied back to Statoil’s Gullfaks C platform in the North Sea in July 2015.
Olsen explained its function: “The technology is capable of reducing the back pressure on the gas wells and overcome losses through the pipelines, and hence allows the gas to flow more easily to the process facility, it being platform or land based.”
OneSubsea, or more accurately Framo Engineering, which was later taken over by OneSubsea, started developing the wet gas compressor technology already in the late 1980s. Although the technology development was driven by the request for boosting of large hydrocarbon volumes and in particular gas, the market was not really ready for another thirty years before being able to turn technology into commercial success. The first commercial subsea wet gas compressor will increase the recovery rate from the Gullfaks field. Olsen: “According to Statoil, it will ultimately increase the recovery rate from the field from 62% to 74%.”
“According to Statoil, it will ultimately increase the recovery rate from the field from 62% to 74%.”
Subsea compression can be a game changer for the industry. Olsen: “It allows tying back large gas fields to existing infrastructure or to land in an economical way as well as increasing the recoverables.”Higher recovery rates while reducing costs and safety issues sound like the ideal combination of factors. And there are more potential benefits. When asked whether subsea compression can play a role in tackling climate hange, Olsen responded affirmatively: ”By avoiding or minimizing topside installations with personnel which requires transportation to and from by helicopters. In addition, gas has the potential of replacing other sources of power generation which can be much more harmful to environment.”
HPHT, especially now
While operators and service providers are driven to ways to cut costs, sometimes even shelving projects, room for investments in new projects, for example in High Pressure High Temperature (HPHT), remains. Ian Penman, Senior Global Technical Advisor at Halliburton, who flew in from Dallas, Texas, for the HPHT Conference session during Offshore Energy, argued that the low oil price is not affecting HPHT developments at all.
“It’s just a glitch on the radar. Everybody that was planning HPHT projects is still planning HPHT projects. With the cyclical nature of our industry, by the time we’re developing this, the oil price will be back up again.”
As HPHT projects are by definition planned for the long term, now is even an excellent time to be preparing for HPHT developments: “HPHT projects are planned with a long-term strategy, and the risks and implications of low oil prices are taken into the economic models to ensure long-term profitability.”
During the Offshore Energy Conference, Penman focused on Ultra HPHT developments, typically described as pressures at 20,000 psi. Penman compared old versus new methodology for design, material verification, component level testing through to final assembly qualification testing. Also speaking in the session on HPHT developments was Henk Kramer, Senior Wells Engineer with NAM.
Kramer discussed the conflicts in HPHT well design and where the industry is at present in resolving the challenges. There are, for example, physical limitations with regards to steel manufacturing which affect the options available for well design. Legislation and environmental concerns of pipe dopes based around lead based products make the challenge explained Kramer.
“Don’t fall in the paperwork trap”
How industry legislation affects the industry was discussed in depth during the meeting on the Offshore Safety Directive (OSD).
Moderated by George Galloway, Director at WellSpec, several stakeholders presented their views. They were Gert-Jan Windhorst, Deputy Secretary General of the Netherlands Oil and Gas Exploration and Production Association (NOGEPA), Jürgen Joosten, HSE Manager NL Operations, Centrica Production Nederland B.V, Bram Leerdam, HSE&Q Manager, Paragon Offshore (a member of IADC) and Ben Oudman, Head of Gas Consulting & Services, DNV GL – Oil & Gas Netherlands.
NOGEPA’s Gert-Jan Windhorst reminded the audience of the background of the Directive – the Piper Alpha and Macondo incidents. Windhorst said that operators in The Netherlands are ready for the OSD implementation in the Dutch law. According to Windhorst, the focus should be on smaller companies and operations and on what prevents accidents to happen. “Don’t fall in the paperwork trap”, Windhorst warned.
According to Joosten of Centrica Production, the OSD is being introduced with an intention to provide adequate assurance that risk and potential impact from major offshore accidents is inimized and consistently classified throughout the EU.
Historical events like Piper Alpha and Macondo have made clear that legislation had to change. For an operator these legislative changes can have a huge impact ranging from change in maintenance philosophy and inspections to legislative document requirements such as Safety Case and Emergency Response plans. Bram Leerdam of drilling company Paragon Offshore discussed the safety and environmental critical elements (SECEs).
Leerdam manages a team of Health, Safety and Environmental specialists with Paragon Offshore in the European Division since the spin off from Noble Corporation in 2014.
Leerdam focused in particular on process safety and SECE and what Paragon Offshore has identified as Major Accident Hazards and which could lead to Major Environmental Incident. These include for example Drill Floor Blowout, Subsea Blowout, Shallow Gas Blowout, Ship Collision, Structural Failure and Leaks & Explosion During Well Test. Leerdam further explained how the verification scheme process seeks to demonstrate how the SECE are identified. When asked whether the offshore safety directive will lead to more safety or
more paperwork for the operators, DNV GL’s Oudman said that the OSD should lead to less paperwork because there is more clarity andless duplication.
Another topic with many legal aspects is decommissioning. Organized in cooperation with the Association of Dutch Suppliers in the Oil and Gas Industry (IRO) and moderated by Eric van Ewijk, Asset Manager with EBN BV (the Dutch NOC), this session attracted well over 100 delegates.
Speakers in this session were Peter Valkenier, Engineering and Construction Manager at Wintershall, Simon Axon, Decommissioning Consultant at Centrica Energy E&P, Aart Geurtsen, Project Coordinator at ENGIE, and Paul Yeats, General Manager Eastern Hemisphere, Oceaneering.
Valkenier presented the various phases of decommissioning from an operator’s perspective and gave several examples of platform removal and plug and abandonment operations. Session chair Van Ewijk emphasized how “decommissioning projects have to be done, there is no way around it.”
According to Valkenier, the best way to deal with decommissioning to date, is to delay it as long as possible. There was a threat that regulations will become more adverse and drive up cost, he added. Geurtsen said that the objectives of an effective decommissioning strategy are to achieve maximum economic value from a platform, or group of platforms; to ensure that key assets are not decommissioned prematurely; and to ensure that decommissioning is executed in a safe, environmentally sound and cost-effective manner.
In order to maximize the remaining value from remaining assets, companies need to plan ahead, manage late-life assets differently than regular assets, ensure that no value is left behind, get the timing of decommissioning right, plan for cost-efficient decommissioning and execute according to plan i.e. on time and on budget. Yeats presented lessons learned during a Axon stressed the importance of preparing for decommissioning during the installation phase. “Soon is not soon enough,” argued Axon.
Supply chain optimization
Optimization of project planning and business processes was also a central theme in the session on supply chain optimization. In a low barrel price environment, everyone is looking at ways to reduce costs and in Supply chain optimization session speakers presented their views on and best practices in cost reductions, discussing both the role of technological innovation and the potential of new business models in supply chain optimization.
The session was moderated by Willem Molenaar, CEO of SMRT Projects, a company that develops software solutions for material management.
Speakers in this session were Harry Koning, Regional Sales Director North Sea at Allrig. In his daily business Koning has the goal to add value to every relevant part in the supply chain: “I want to be a real partner in terms of solution providing, cost effectiveness and efficiency rather than – only – providing the cheapest solution possible.”
Martin Jonker, Director Global Purchasing at CB&I addressed supply chain optimization from an EPC perspective. Jonker discussed how procurement is a key influencer of a project, representing 40% of project cost. Therefore procurement is of strategic importance in the quest to achieve shorter and reliable delivery times against reduced cost.
According to Jonker, integration in the supply chain is imperative to achieve these goals: integration between the client, key suppliers and EPC contractor. Rob Petersen and Arjen de Groot, respectively Commercial Director and Director of the Shared Service Centre at GreenPower Nano Surface Technology Group, talked about how a different look at partnerships can be a catalyst of innovation. Jimmie van der Zwaan, global service line leader of Taxand’s energy tax service line shared insights about the optimal supply chain from a tax perspective. In optimizing your business, tax benefits can be achieved, said Van der Zwaan.