Intelligence brief: Support grows for standardization; North Sea operators to be told to use it or lose it
Upstream oil and gas news you need to know
Industry support for standardization grows
Support for standardized equipment and processes is growing as operators eye the potential cost savings, DNV GL’s annual survey of oil and gas industry leaders has found.
Sixty-one percent of respondents agreed that operators would increasingly push to standardize their operations worldwide, up from 55% one year ago and 52% two years ago. Forty-four percent of upstream companies said they would standardize operations in 2016.
Michael Utsler, Chief Operating Officer of Woodside Energy, named blowout preventers and processing vessels as examples of specific types of equipment that operators have moved to standardize.
“Even valve design is becoming more standardized, despite the hundreds and thousands of different valves being used across the value chain,” he was quoted as saying.
Confidence in digitalization was a little more subdued, with 14% saying it had high potential to transform operating efficiency in 2016, and a further 59% seeing it having either solid or some potential to positively impact efficiency. DNV GL’s position is that better understanding of all the data being produced by the oil and gas industry could boost operational efficiency by up to 20%.
DNV GL surveyed more than 900 professionals and executives across the global oil and gas industry, most of them representing suppliers, services firms and operators, and a small number made up of regulators and trade associations.
More than half of companies said their capital expenditure would continue to decline in 2016, although 17% said capex would increase – compared to just 12% who foresaw rising expenditure in last year’s survey. Capex cuts are most likely to be seen upstream, the survey found, with 62% of respondents saying spending would decrease on operations and just 10% saying it would increase.
DNV GL surveys operators every year on intentions to increase capex, with responses correlating almost perfectly with the oil price (Image: DNV GL)
North Sea operators to be told to use it or lose it
Offshore oil and gas operators will be obligated to pursue maximum economic recovery or divest those assets to a party that is able to achieve maximum recovery, under a draft strategy to be presented to the UK parliament.
This obligation will extend to cases where operators decide not to pursue maximum recovery due to financial constraints, expectations of poor returns, or technical or other non-economic reasons.
If, after a reasonable period, the operator is unable to secure alternative funding or to divest themselves of an asset that would still deliver a satisfactory commercial return, they will be ordered to relinquish their licenses, the draft strategy proposes.
Once in force, the strategy would be binding on holders of offshore petroleum licenses, operators appointed under those licenses, operators of upstream petroleum infrastructure, and anyone planning and carrying out the commissioning of upstream petroleum infrastructure.
About 42 million barrels of oil equivalent (boe) have been produced from the UK Continental Shelf, and a further 12-24 billion boe could be produced, the Wood Review of the UK’s oil and gas industry concluded in early 2014. Sir Ian Wood concluded in his report that the problem was not the UK’s licensing model, but that “the light tough regulation applied in the early days of large fields and large operators, must now be evolved to take account of a basin with over 300 fields, much smaller new discoveries, many marginal fields, and much greater interdependence on exploration, development and production".
GE, BP join forces on digital solutions
GE Oil & Gas has announced the creation of a new digital-solutions business for oil and gas, aimed at driving asset and operations optimization across the industry. Alongside this, it will develop a pilot program with BP and a business partnership with subsurface software company Paradigm.
The pilot program with BP will aim to reduce unplanned downtime for offshore operations, by introducing new process surveillance and predictive-analytics tools to provide early warnings of potential facility issues. This solution will enable process engineers to alert offshore teams to the need to take action, based on having underlying insights available when needed, GE Oil & Gas said.
Separately, GE Oil & Gas and Paradigm have partnered to deliver Reservoir Driven Production Optimization (RPDO), which GE said was formed from a combination of Paradigm’s subsurface knowledge and its own production intelligence.
Improvements in problem detection and treatment design alone can reduce operational costs by 10-25% through fewer interventions and more efficient resource utilization, GE Oil & Gas said. RPDO enables production engineers to make use of real-time production data such as pressures and flow rates and to conduct nodal analyses and evaluate diagnostics vial inks to a 3D model of the subsurface it said. The result, it concluded, is a better understanding of the impact of interventions before taking costs and potentially adverse actions.