Standardization—sounds promising, but what exactly should be standardized and would it hinder innovation?
On the opening day of Bergen’s Underwater Technology Conference (UTC) 2013, Kristian Siem, made a striking remark. The chairman of Siem Holdings and subsidiary company Subsea 7 said: “The industry has a cost level that is astronomical and Norway is the high-cost leader.”
While he may have been singling out his home nation, his comments were aimed at the oil and gas industry, globally, and the subsea industry in particular.
Increasing costs can have a damaging effect on the viability of subsea projects. According to Jannicke Nilsson, senior VP for technology excellence, Statoil, cost pressures can mean standard, “old-fashioned” facilities are the preferred option for developments, pushing out subsea alternatives that are often complex.
One solution to the increasing costs and increasing complexity of subsea production systems, is greater standardization—a topic which dominated this year’s UTC. “We need to do more standardization,” Nilsson says. “If we can push that, we can make the subsea solution the better alternative.”
It is an area in which both operators and suppliers agree, but not necessarily on what should be standardized.
A need to standardize
Werner Menz, VP technology, subsea systems, Cameron (now part of OneSubsea) said problems arise because operators “too often” make general specifications for API and ISO standards, but then add additional operator-specific specifications, driving suppliers to build systems which meet the most onerous standards.
Remi Eriksen, CEO, DNV Maritime and Oil & Gas, calls the practice “preference engineering,” where operators do not want to trust a standard product.
The effect is that suppliers must stock all the different tools required to meet multiple standards, each with their own spare parts and procedures, increasing risk.
In addition to multiple product and tooling specifications, there are also QHSE, documentation, and technology qualification requirements, says Dave Wilkinson, senior subsea systems consultant, Exxon Mobil.
“These are the things that really make it hard for the suppliers to deliver what operators want,” he says. “It is the operators that keep changing the requirements and upping the bar.”
Bill Cowan, Subsea engineering advisor, ENI Petroleum, based in Houston, says: “It comes down to a matter of trust. The very large oil companies do not trust the manufacturers to do the right thing and to get it right. As a consequence, they have what amounts to parallel engineering staff that propose their way to manufacture. So you have duplicate engineering staff. Is the interest in standardization genuine and does it take into account this need for ‘do it my way, or not at all’?”
Patrick O’Brien, CEO, the Industry Technology Facilitator, says: “The reality is you have a standard against which you design, but you have things that go wrong and you have to fix it.
“So then the operator adds a specification to cover that problem not happening again. That is when you get the build-up in company-detailed specifications.”
A quick win, perhaps
A quick win could be to standardize interface connections and tools, which are the interface to connect systems, but are sometimes used only once or twice, suggests Rune Mode Ramberg, chief engineer subsea technology and operations, Statoil.
“This [the standardization of interfaces] is something the supply chain and operators need to do together,” he says, “because it is not really the interfaces we should spend much time on, they do not add any value. We should look in to what type of interfaces we should have in the future.
“We should agree on how to connect the product to the system and then [the supply chain can] compete on the best product.”
Helge Sverre Eide, business manager, Blue Logic, agrees, especially for intervention on subsea processing systems. “Interface standardization is a simple way of moving quickly forward,” he says. “If you look at the electronics industry and the USB, it was produced as an interface and has created an explosion of products.”
Standardizing core components would also create repeat orders, enabling suppliers to invest in stock, which would improve lead times, create a buffer during execution, and therefore improve schedules.
Involve the supply chain
For standardization to be a success, Jarand Rystad, managing partner of Rystad Energy, says the supply chain needs to be involved in setting the standards. A basic component could be standardized to 90mm, but unless the supply chain is consulted, those involved might not realize the existing mills able to make the component are only set up to work at 80mm, he says.
Tim Crome, sales and business development manager, Technip, says this already happens. “Current standardized [subsea] tie-in systems are so big that they don’t go down the ramps on the back of the pipeline installation vessels,” he says.
“That is a complete lack of interface between the developers on the subsea processing systems side, the client and ourselves as the installation contractor.”
Standardization does not just apply to the product, system, component or interface, however.
Jerome Lesgant, from FMC Technologies, says documentation, technical requirements and quality requirements should be standardized before anything else.
Werner Menz, VP technology, subsea systems, Cameron (now part of OneSubsea) and Wilkinson, of Exxon Mobil, also say standardization should be applied to materials and welding and qualification requirements, respectively. Eriksen, from DNV, says there are opportunities to standardize work processes too.
Most important, is that the operators who set standards cooperate on those standards, says Rystad. They should also make sure the standards do not go so far as to lock-in technology—locking out new innovation, he adds.
Nilsson, from Statoil, agrees: “We need to have more focus on standardization than we have today,” she says. “But we cannot make everything into a worldwide standard. We probably can, but it take a long time and I think we have to realize we have different regulations in different countries and that we still want suppliers to be competitors.
“And we cannot just have standardization, we also need new technology and new ways of doing working. It has to be a balance.”
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