Restoring production efficiency

A three phase asset management strategy could help counter costs, says ABB’s Will Leonard.

In mid-December, the price of oil fell further after the International Energy Agency (IEA) forecast weaker demand in 2015. Brent crude fell to around US$60 a barrel, its lowest price since July 2009. Meanwhile, US crude was down even lower, its weakest since May 2009.

Asset management strategies could counter costs. Photos from ABB.

On top of that, IEA cut its forecast for global oil demand growth next year by 900,000 bo/d -- 230,000 bo/d less than the prior month’s expectations -- to 93.3 MMbo/s, on the expectation of lower fuel consumption in Russia and other oil-exporting countries.

There is hope. According to a report from professional services firm PwC, found falling oil prices, declining production and the rising costs of decommissioning could end up tackled by operators by making 40% efficiency savings over the next five years.

But, says the report, a “back-to-basics” approach is needed to address “unsustainable” capital expenditure and operating costs, not a short-term “knee-jerk reaction.”

“By better understanding the issues of performance, risks, resource etc., and sharing this knowledge internally and externally we can start to deliver a long-term cost reduction program for the North Sea which reduces capital and operational costs while maximizing resource extraction. We need to move away from the short-term approach of reducing headcount and overheads, and start to embed cost-reduction principles into all parts of the industry.”

That is where automation comes into play. Some $18 billion/yr is lost purely through poor production techniques, such as badly structured maintenance on aging infrastructure, skills shortage and over-runs in turnarounds. The biggest contributor to production efficiency decline – 46% – is unplanned downtime. A lack of long-term strategic approach to asset life is clearly starting to take its toll.

Three-phase approach

One idea to increase performance is to implement a three-phase program to help restore production efficiency.

Phase 1 starts with a high level overview where a provider can come in and analyze and assess the asset life strategy of the platform, which can provide clarity on what the producer can achieve. While assessing the impact on operational reliability, consideration goes out to the condition/health of existing equipment, as well as operating and maintenance procedures.

Phase 2 identifies actions that will reduce equipment downtime. Using the asset life plans developed in phase 1, everything from the existing applications and people competency through to installed products and systems and lifecycle services end up examined to discover the options available for improving production efficiency.

Phase 3 implements the improvement projects identified in phase 2. It eliminates defects before they have an impact on production. Continuous feedback ends up being a priority to ensure a higher level of performance. Services for any products or systems that need installation and commissioning, maintenance, replacement, upgrade or retrofit are a part of this phase.

Buzzard complex.

Reducing manning levels

Estimates show that every person working offshore costs an operator about $1.5 million/yr, when all training, safety, and wage costs come into consideration. And much of that labor ends up working on maintenance to keep the platform running.

For operators with multiple facilities or platforms, it may be possible to centralize the control system such that it controls the process across several platforms. Alternatively for single or multiple assets, providing a remote support center onshore that supervises offshore assets helps address the shortage of highly skilled experts by allowing them to work across the platforms.

This can work for platforms operating as a hub, where several connected platforms feed production through a central facility. Many of these aging hubs, even if their own production life is on the back end, could benefit by updating automation and electrical equipment to retain the production capability and asset life of the entire network.

Asset management strategies

Electrical, instrumentation, control and telecoms systems are becoming more complex as technology evolves. Their performance and operational availability remain critical for production consistency.

Yet over time, the condition and performance of this technology will degrade, which can have a negative impact on production. Asset management strategies aim to counter this impact by systematic condition monitoring of equipment, helping to avoid unplanned production downtime and reduce operational expenses by optimizing maintenance planning.

Will Leonard is the Head of Marketing for ABB’s Chemical, Oil and Gas business in the UK & Caspian region. Leonard has a dual honors degree in Business and Law at Keele University. He has worked in the industry for the past 10 years.