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Achieving cost-savings in a ‘lower for longer’ environment

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Oilfield Technology,

Troels Albrechtsen, Maersk Oil, looks at how technology can allow for long term cost-savings in a low oil price market.

Technology has always had a prominent role in making Maersk Oil more efficient. Our technological heritage goes back many years– right back to when we had to find an economically viable solution to produce our Danish reservoirs in the North Sea, and found it in innovative deployment of horizontal wells.

Today, the challenges facing the oil and gas industry are even greater. After several years of relative stability which followed the 2008 global economic crisis, the price of oil reached a historic recent low of sub-US$28/bbl at the start of the year. This environment is forcing us to innovate like never before, finding ways to to work better, smarter and more efficiently.

A current example of innovation at work is how we are starting to capitalise on Big Data. Big Data presents the challenge of converting masses of information available to us into a digital format and it’s something many industries are grappling with. In our sector we’re looking to harness this data to help us with smarter and faster decision-making, while improving efficiency, safety and the unit cost of our operations. We’re starting to collect data and use algorithms to predict the performance of deployed machinery. This means we can intervene more easily at critical points, improve maintenance, create longer maintenance cycles or shift to predictive maintenance, which can significantly reduce downtime.

More broadly, we’re responding to the current environment by taking a very close look at all our activities in Research & Development. It’s vital across the industry that we hone in on the activities that are addressing priority issues for our operations. For instance, we’re now concentrating our efforts on improving unit cost.  When looking at unit cost, there are multiple ways we can measure savings; from Opex or Capex per barrel to Unit Technical Cost per barrel, but we also use metrics such as full-time employees deployed per barrel and feet drilled per day. And one of the most useful metrics is Uptime, or the time a platform is operating in a productive capacity. If we can operate a facility at 95% uptime instead of 85% there is huge benefit to be gained. This is where predictive maintenance through digitisation can provide real savings.

We’re also participating in joint industry R&D projects which offer economies of scale and relevance. Again, we’re ensuring the focus remains on priority areas that will help to support the success and sustainability of the business.

Maersk Oil’s HPHT Culzean field, is our flagship platfom when it comes to technology and the development of a truly 21st century, fully digitised platform. Culzean was the largest project to receive sanction on the UK Continental Shelf in 2015 and in April of this year, we reached the important milestone of starting fabrication of the topsides. When the field begins to produce in 2019, Culzean will become a key contributor to our ambition to become a top 5 operator in the North Sea for the next decade. 

At Culzean, we’ll be using advanced communications via software and systems, handheld devices, Radio Frequency Identification tags and scanners, to allow for monitoring and maintenance operations to be carried out, recorded and uploaded to systems instantaneously. This supports the efficient monitoring and maintenance of equipment in real time. The information we can gather includes manufacturing data, drawings, video simulation of maintenance and operations activities, maintenance history and so on. And through better data management, we can save up to 20 - 30% of an Offshore Operator’s time and generate efficiency savings of at least US$10 million annually.

Whilst saving money is a priority, it’s vital to remember that sustainable cost saving is not just about reducing upfront spending, it’s also about investment. A horizontal well, for instance, is up to four times more expensive to develop than a vertical well, but it can produce 10 times as many hydrocarbons. We know that the Oil & Gas industry can have a profitable and stable future if we think about gains in the longer term and continue to invest now for tomorrow.

Technical innovation has huge potential in being a growth enabler. I encourage the industry to think outside the box and develop innovative solutions to tackle industry challenges. When we see an opportunity, we must explore it further and assess if it has potential in preserving the long-term viability of our operations. It’s this mindset that’s needed in order to ensure that we future-proof our industry, make it more resilient and profitable.

Adapted by David Bizley

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