maintaining focus in late life - oil & gas uk · oga call to action february 2015 2003 2015 $45...
TRANSCRIPT
The Golden Thread of an Integrated Asset Retirement Strategy
Frank SmitsAssociate Director
One6 Consulting Ltd
The Golden Thread of Asset Management
Frank Smits – Associate Director One6 Consulting Ltd
Oil & Gas UK Annual Conference
Late Life
18 Jun 2015
2015 One6 consulting Limited 5
Declining
Basin
Government
pressure for
MER
Capital
Project
Failure
North Sea Basin UKCS – An Environment for Change
High
Lifting
Cost
Brent price trend: 11 Jun 2015; source: CNBC.com
2015 One6 consulting Limited 6
Point of View on Decommissioning Strategy
• Published July 2013:
Decommissioning as
strategic opportunity
• Presented in Oct 2013
• … silence…
• June 2014:
… an operator calls…
No one size
fits all…
2015 One6 consulting Limited 7
Development Pre
Late Life
More than 10
years to CoP
10-5 Years
before
CoP
5-3 Years
before
CoP
3 Years before
CoP
Post CoP
CoPFirst
Oil
Leverage Planning and Budgeting process
2
3
4
5
7
1
Production / Asset Related Scenario
Production / Asset Related Scenario
Design Develop
Invest Acquire Integrate
Divest SellCarve
Out
InvestDevelop
Wells
Brown Field
Minor Mods
Operate OptimiseMaintain
Wells/
Facilities
Operate OptimiseMaintain
Wells/
Facilities
5
6 InitiateDecom
Programme
Pre-
Sanction
P&A Decom Remove
BD and Portfolio Related Scenario
Decommissioning / Removal Scenario
Development
Scenario
Asset Related Scenario (in parallel)
Related Business Scenarios – How the Work Gets Done
Asset Management & Retirement
Late Life
Asset Life Cycle model with business scenarios
2015 One6 consulting Limited 8
Development Pre
Late Life
More than 10
years to CoP
10-5 Years
before
CoP
5-3 Years
before
CoP
3 Years before
CoP
Post CoP
Golden Thread of an Asset Retirement Strategy
CoPFirst
Oil
Leverage Planning and Budgeting process
2
3
4
5
7
1
Production / Asset Related Scenario
Production / Asset Related Scenario
Design Develop
Invest Acquire Integrate
Divest SellCarve
Out
InvestDevelop
Wells
Brown Field
Minor Mods
Operate OptimiseMaintain
Wells/
Facilities
Operate OptimiseMaintain
Wells/
Facilities
5
6 InitiateDecom
Programme
Pre-
Sanction
P&A Decom Remove
BD and Portfolio Related Scenario
Decommissioning / Removal Scenario
Development
Scenario
Asset Related Scenario (in parallel)
Related Business Scenarios – How the Work Gets Done
Asset Management & Retirement
Late Life
Asset Retirement as
part of Integrated
Asset Plan
2015 One6 consulting Limited 9
A Leadership vs Functional Conversation
Wells Subsea
OperationsSupport
Functions
Decom &
other projects
Coherence
Regional leadership
conversation
2015 One6 consulting Limited 10
Tactics vs Strategy
“Strategy without tactics is the slowest route to
victory…
… Tactics without strategy is the noise before defeat”
Sun Tzu –孫子兵法 (The Art of War) – 6th century BC
Battle of Waterloo – by William Sadler
WHAT and HOW
at the same time
2015 One6 consulting Limited 11
Operating
Model
Business
Process
Fiscal &
Corporate
Structure
Organisation,
People &
Capability
Governance
Performance
Management
Technology
& Data
Risk &
Controls
Vendor &
Partner
Management
OLD
NEW
2015 One6 consulting Limited 13
How to set up and design your
transformation journey?
FoundationIntermediate
High
Performing
Sustainable
Performance
Decommissioning in the North Sea: The Influence of Major Oil Price Fluctuations
Richard HeardManaging Director
Strategic Decommissioning Consultants Limited
Strategic Decommissioning
Consultants Ltd
DECOMMISSIONING IN THE UKCS:
THE INFLUENCE OF MAJOR OIL PRICE
FLUCTUATIONS
Richard Heard, Managing Director Strategic Decom
Content
• Context
• Forecasts
• Influence on Key Stakeholders
• Operators
• Government (Regulators)
• Supply Chain
• Conclusions
Shaping the Decommissioning Landscape 1998-2015
Frigg Cessation
Plan Approved
First Derogation
under 98/3
End 2002
Decommissioning
Relief Deed
Finance Act 2013
Wood Review
March 2014
OSPAR 98/3
Comes into
effect
February
1999
NW Hutton Jacket
Removal
First SPJ
Derogation
2009
1998
20
00
20
20
2018
20
10
OSPAR 98/3
Review
March 2018
OSPAR 98/3
Review
March 2013
OSPAR 98/3
Review
March 2008
OSPAR 98/3
Agreed at OSPAR
1998
2002
2008
2013
2014
1999
OSPAR 98/3
Review
March 20032
00
9
Brent
Decommissioning
Announced
February 2006
2006
OGA
Call to Action
February 2015
2003
2015
$45 Oil
January 2015
Forecast End EPL – $60 Oil: NNS and CNS
Ref: Strategic Decom in-house analysis
0
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1,0
00
s To
nn
es
Tonnage at End of Economically Productive Life - 2019 onwards (CNS & NNS)
Jacket Topside
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Facilities at End of Economically Productive Life – 2019 onwards (CNS &NNS)
CNS Facilities NNS Facilities
• Shortening of economic life of assets
• Advancement of CoP
• Assets more vulnerable to operational issues
• Unprecedented number of decommissioning ‘candidates’
• Key infrastructure under threat
• Risk to MER
• Supply chain readiness
• Pressure to downsize due to project and budget cuts
• Should / can we maintain capacity to meet decommissioning demand?
• Should we invest in new decommissioning technology?
Implications of a Low Oil Price Era on
Decommissioning
• Operators
• Short and Long-term liability
• Technical know-how
• Government and Regulator(s)
• Tax policy/ Regulatory framework
• MER
• Compliance
• Supply Chain
• Expectation/Anticipation of the Market
• Technology development
Decommissioning – The Key Stakeholders
• Timing:
• Begin consultation 3-5 years pre-CoP (DECC)
• Decommissioning Programme approval can take several years
• Scope
• Defined by regulation, subject to regular review (OSPAR 98/3)
• Execution:
• Well P&A may drive the decommissioning schedule
• Post-CoP Operating cost will be significant
Operators: Focus on Cost and Schedule
• Timing
• Key infrastructure (MER Action 27, OGA Call to Action)
• Scope
• Policy and regulation (MER Action 29)
• Execution
• New business models (MER Action 28, OGA Call to Action)
• Cost effectiveness (MER Action 26, OGA Call to Action)
Regulators and MER: Focus on Policy and Regulation
Supply Chain: Focus on Supply and Demand
• Timing and Scope
• Requires visibility of scope and timing
• Execution
• Needs to be responsive to the call for cost-effectiveness
• Bring creativity and innovation
• Operators:• A strategic plan will provide readiness to ensure the timing, scope and (future)
execution of the decommissioning of their asset portfolio is optimised
• Regulator:• Needs a plan to ensure the timing, scope and execution of decommissioning
the UKCS is optimised for MER
• Supply Chain:• Needs visibility of the market to ensure it is able to support the North Sea
decommissioning programme and becomes the global leader in delivering cost
effective decommissioning solutions
The Time is Now …
Conclusions - In an era of oil price fluctuations:
A Blue Print for Maximising Economic Recovery in the UKCS?
John HargreavesManaging Director
Peak Global Consultancy
A Blue Print for Maximising Economic
Recovery (MER)
John Hargreaves, Managing Director, PEAK
Oil and Gas UK ConferenceJune 2015
Production Efficiency/ Operating Efficiency/ Life Extension
Hardening of ArteriesScaling and Corrosion
Heart attackLoss of Power
Kidney StonesBlocked Drains
Less PowerGas Deficient
ArthritisFabric Maintenance
DimentiaReservoir Depletion
Increased Sick Days (M)Unplanned Shutdowns
Recovery Program.
WindypopsLoss of Containment
A Blue Print for MER
The UKCS Challenges (1 of 4)
Wellwork (1)Reservoir (1)Annual Shut Down (2)Planned Plant (2)Unplanned Plant (2)Planned Export (3)Unplanned Export (3)
Three Key Areas:1. Reservoir / Wells (18%)2. Equipment: Process,
Power, ESD/Controls (70%)
1. Production Efficiency:Average only 65% Available:
A Blue Print for MER
The UKCS Challenges (2 of 4)
Wrench Time
Data Management
Tax
Basin 2014 UOP $/boe
NNS 40.3
CNS 25.4
SNS 19.4
IS 25.4
WoS 32.8
UK Ave 27.6
2. Operational EfficiencyOPEX Increasing 10% / yr
POB
Stewardship
Competency
Planning
Procedures
Leadership
Roles and Responsibilities
Collaboration
Logistics
A Blue Print for MER
InspectionMaintenance
The UKCS Challenges (3 of 4)
A Blue Print for MER
3. Ageing Assets
- OPEX
- Integrity
- Base Production- Field life
The UKCS Challenges (4 of 4)
0
20
40
60
80
100
120
0 5 10 15 20 25 30 35
OPEX
Life Extension
Production
Pro
du
ctio
n /
Co
st
Year
90%
$$$
Summary:Production / OPEX Profile
A Blue Print for MER
Approach (1 of 3)
2. LLX & Operational Efficiency
People: POB, Competency, Leadership
Processes: Wrench time, Stewardship, Planning, Procedures, Supply Chain, Logistics
Systems: Data Management, Inspection, Maintenance,
1. LLX & Production Efficiency
Wells: 2P Profile ; 2ndary recovery
Power: Power; Plant Availability
Process: Plant Avail, Export Route, Equip failures
Control ESD/FG: Safety, Plant Availability
Integrity: Equipment Failures, ageing assets, Safety, KP4
1. Simplify:
A Blue Print for MER
Approach (2a of 3)
Operating EffnProdn Effn
DATA GATHERING
– OPEX Costs– Production Logs– Future Profiles– Inspection &
Maintenance data.– Duty and Capacities
KNOWLEDGE GATHERING
APPRAISE
– Structured Operator Reviews
– Structured Sub Surface Reviews
– Site Visit
1.Generate Peak Improvements
2.Assess against Agreed Metrics
3.Cost the Options (Eng, proc, install & benefit)
4.Optimise solutions5.Recommendations
A Blue Print for MER
2a. Method
Enhanced Prod’n
Approach (2b of 3)
CLIENT REVIEW
– Sponsors– Stakeholders– Technical Authorities– Operators
SELECT DEFINE & EXECUTE
1.Further Develop Options against Metrics
2.PFDs, H&MB, Tech Notes
3.Develop SORs
– Define & Execute
– Rapid Implementation
Not taken to Select
A Blue Print for MER
2b. Method
0
20
40
60
80
100
Initial PE Improvements
S/D Impact
Design improvements
Further availability
improvements
Implementation Schedule
Forecast Prod Effn
Forecast $/bbl
Recovery
Revenue
Cost
Appraise
Select
Early Wins Detailed OE
Improvements Knowledge Transfer
Approach (3 of 3)3. Field Improvement Road Map
time
Effi
cien
cy$
/bb
l
Case Study (1 of 4)
A Blue Print for MER
Benefit: 5 mbd to 12 mbd
Project: LLX & Prod Effn1. Infill Drilling
2. Power Reliability
3. Process Simplification
4. Control /ESD Upgrade
5. Structural Integrity
Typical MER Study Benefits
3-6Month
Study length
10-20%*
Additional
Production
5-10%Reduced
OPEX
90%Of Facilities
Benefit
*depends on asset condition and reservoir potential
Case Studies (3 of 3)
A Blue Print for MER
Some numbers:10% Production improvementFor 10 mbd field = $ 60K /day
Management of maturing assets against the backdrop of low Oil prices
Tim WalshChief Operating Officer, Assurance Operations
Lloyd’s Register Energy
Working togetherfor a safer world
Asset ManagementTim Walsh
Chief Operating Officer, Assurance Operations
Lloyd’s Register Energy
Lloyd’s Register Energy’s Perspective
• 255 years experience in safety critical business
• Involved in North Sea from the outset
• Broad range of oil & gas experience
• Bring experience from other safety critical infrastructure industries
including marine, nuclear, rail, power and petrochem
Lloyd’s Register Energy
Asset Management Context
• Direct connection between business objectives, strategy,
Asset Management strategy, Asset Management plans
and Asset Management activities
• Circumstances change but the connection remains
• Management of asset portfolio & investment
• Role of asset stewardship
• Structured management process to pull all this together
Lloyd’s Register Energy
Risk Profiling & Operating Models (I)
• Changing risk profiles
- Probability
- Consequences
• Acceptable risk
- Safety/Environment
- Business
- Who decides and how?
Lloyd’s Register Energy
Risk Profiles & Operating Models (II)
• Required performance standards – change over time
• Operating windows
• Case by case approach linked to plans and portfolio
management
• Risk based approaches – getting the basics right
Lloyd’s Register Energy
Information Management
• Information management challenges
- Integrity and completeness
- Sources and systems – “single version of the truth”
- Information and data strategy linked to asset
management strategies and plans
- Data acquisition – increasing options –
but keep the end in mind
Lloyd’s Register Energy
Working Practices & Technology
• Challenging “how we do stuff”
• Some good innovative technologies
• Taking the risk
• Enabling different ways of working
• Silver bullets
• Shared experience collaboration
Lloyd’s Register Energy
Regulatory Change
• Threat or opportunity?
• Requirement of EU directive – 2015 SCR
• Safety case material needs to be reassessed
and resubmitted
• Opportunity to rethink risk and consider what
has changed and the impact on SECEs
and Performance Standards
Lloyd’s Register Energy
Culture
• Culture vs. process
• Leadership
• Empowerment
• Speed of decision making
• How to account for differences in performance between
similar organisations
Lloyd’s Register and variants of it are trading names of Lloyd’s Register Group Limited, its subsidiaries and affiliates.
Copyright © Lloyd’s Register 2015. A member of the Lloyd’s Register Group.
Tim WalshChief Operating Officer, Assurance Operations
T +44 (0)1224 267784 E [email protected]
Lloyd’s Register
Denburn House, 25 Union Terrace, Aberdeen AB10 1NN
Working togetherfor a safer world