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Oil industry’s future seen more automated, leaner, skilled but fewer workers

The recent industry downturn was painful for the oil patch, but it emerged more efficient and with sophisticated technologies that will prepare it for the next few decades, a panel of offshore specialists said.

* Industry pares down, but still room for more

* ‘Massive waste’ must be addressed: BP

* Sensors on equipment allow more real-time views

The future will consist of more automation and more collaboration, resulting in lower costs per unit and possibly less workers per project but more skilled ones, the panel said on Day One of the Offshore Technology Conference, which is celebrating its 50th anniversary.

“Industry is on a mission to turn high-cost, long-cycle barrels into competitive, shorter-cycle [ones],” Susan Farrell, vice president and co-head of energy-wide perspectives for energy consultancy IHS Markit, said. “We’re in competition for funds with short-term barrels coming out of [shale plays] onshore.”

Farrell said her organization recently analyzed how breakeven oil costs fell from Q3 2014 to Q3 2017 and found that in the more recent quarter, they had been slashed 45%-50% to below $40/boe on average.

Half of that stemmed from service sector deflation, and potentially will rise some, but the other half was from design changes which also saw large cost reductions as shallow water projects fell to $25/boe from $45 and deepwater projects to $33/boe from $60.

Moreover, recent meetings with operators and service companies believe estimates of structural changes “may be too conservative,” Farrell said. “Efficiencies are still increasing and could yield another 30% improvement, with a potential to reduce further both time and [costs].”

Offshore is seen as 40% less capital efficient than other businesses, Leigh-Ann Russell, BP’s head of upstream procurement and supply chain management, said, citing a recent Barclays study.

“We have massive waste in our systems,” Russell said, which is reflected in such things as aging equipment sitting around in warehouses, low tool utilization, different customer payment systems, lessons that need to be learned “over and over again, and having backup equipment for other backup equipment.”

BP UNIT PRODUCTION COSTS LOWEST IN 12 YEARS

Using Big Data and predictive analytics is paying off for both upstream operators and service and equipment providers. BP, for example, has used both and in the Lower 48 operations has seen production increases and 22% reduced costs.

Overall at BP, “our unit production costs are down 46% from 2013, and at the lowest levels since 2006,” Russell said. “Moreover, we believe 75% of our savings to date are sustainable.”

In one much-cited example of what the major calls its modernization and transformation efforts, company managers were able to reduce the cost of next-phase production for its Mag Dog deepwater field — which in 2013 carried a staggering $20 billion price tag — to $9 billion.

Maersk Drilling has looked at how it utilizes crews offshore, and found in some cases its rigs were oversupplied with equipment, Chief Operating Officer Angela Durkin said

“We [adjusted the tool level] on our best performing rigs, since in some cases we found we had more resources than we needed,” Durkin said.

In addition, predictive analysis and hundreds of sensors on rigs allows Maersk to watch equipment behavior in real time, so repairs and maintenance can be done as needed rather than a calendar basis, Durkin said.

One important piece of equipment where easier maintenance makes a big difference is blowout preventers on rigs. If a BOP fails or needs to be pulled and fixed, downtime could be a week or two, Hege Kverneland, corporate vice president and chief technology officer for oilfield services equipment supplier National Oilwell Varco, said.

‘PREDICTIVE’ SIGNATURE ON BOPS

Every BOP system has a control valve which often fails, Kverneland said. NOV took data from subsea BOPs from the last 14 years, analyzed it and found a “signature” that is predictive, she said.

“We found we can predict [certain parts] will fail, say 14 days at least beforehand, so we can send a letter to the customer saying we know the regulator valve, for exaxmple, will fail so please switch to the other control system,” she added. “Then they can continue operating and don’t have to pull [the BOP] up. You can pull out the parts you know are going to fail” and replace them.

Learnings often come from unexpected places. Farrell said one operator she knows was told it needed to reduce its carbon footprint 20%. In the process of gathering data for the reduction, the company uncovered operational efficiencies that led to supply chain management savings of 30%.

“A lot of it is related to reduction of people, digitalization and and reducing service sector input to what you produce — and how to bring the internet into the well, where you’re changing everything,” she said.

Also, BP found that monies spent for some types of education have yielded unexpected benefits, Russell said.

“People in industry have the right skills,” she said, adding cross-learning can be very useful.

BP sent field and project engineers to a computer coding boot camp for 12 weeks, Russell said, adding one bright young man returned and was able to eliminate his job.

“He took a small tool, completely automated his 9-to-5 job, said he could now do it in two to five hours a week, and asked for something else to do,” she said. “We can unleash people and see how much they can do.”
Source: Platts

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