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Anyone who has taken the wheel of a top-of-the-range Audi after driving around in the family Seat will tell you that the (often substantial) price differential is reflected in every aspect of the experience. It can be hard to believe they are manufactured by the same company. Harder still is the fact that somewhere between 60% and 80% of the component parts are standardized across all marques and models. These range from the aforementioned Seat, thought to Porsche, Bentley and even Bugatti. Product structuring at its finest!
The auto industry has been driving efficiencies into the manufacturing and supply chains for decades, setting benchmarks for just-in-time, lean processes that are enthusiastically emulated by other manufacturers. However, similar cost and resource efficiencies have eluded the oil and gas industry, which has equipment manufacturing processes that have evolved far more gently.
There are, of course, glaring differences between engineering equipment to order for a unique project and the assembly-line production of consumer goods—regardless of how highly specified and engineered they are. Nonetheless, there is something to be gained from looking at the auto sector: the use of structured products and a system approach.
This is an idea that is being adapted to the subsea sector by Baker Hughes and others to help optimize field viability, efficiency and lifetime productivity. It is also an approach that more and more operators are asking for as they move farther offshore and into deeper waters to find exploitable fields while their margins tighten.
Standards, systems, structures
The defining features of a system-led approach are optimizing the procurement of an entire end-to-end system; engaging early with projects partners to de-risk the technical and commercial solution; exploring ways to enable the system with structured products; and developing standardized ways of engineering and manufacturing systems.
Standardized, structured and bespoke products all have a role to play. Despite a general preference for bespoke, there are plenty of operators, projects or development types for whom a standardized system, product or group of products provide low-cost, readily available components when needed.
But whereas standardization, or refining to a universal set of archetypes, creates commoditized off-the-shelf offerings, structuring is more flexible for enabling customization for field-specific requirements. The pivot to structuring builds on the advantages of a standardized approach and makes it available as part of a bespoke system. This is relatable when configuring a new car build with Audi; the core is controlled based on the archetype (i.e., A6), with inter-configurability available within that still, to refine to customer demands or budgets (i.e., power system, interior, audio, sensors, etc.).
So an operator looking to extract from a newly discovered reservoir will still be offered a system-led solution based on an assessment of the field and the operators’ objectives. Structured systems and products will fit into that system, increasing both speed and readiness from tendering to delivery, thus enabling the project to proceed quickly at all areas of its lifecycle.
Rather like a basic brick of Lego that can help build a racing car one day and a spaceship the next, structured products follow a repeatable design, based on controlled interfaces, but do not constrain the system outcome in any way.
Time and totex
The impetus for deploying a system approach will differ with each project. For some operators, the time to deliver first oil or first gas will always be the primary concern, in which case a non-bespoke or fit-for-purpose product-structured solution, procured with a focus solely on capex, can be the best option. For others, it is opex or local logistics that determine the precise mix of standardized, structured and selective-bespoke within the confines of the archetypal system (remember the configured Audi A6).
However, operators are increasingly looking at total expenditure (totex) and how best to pre-invest in capex so the overall operating costs are reduced and total cost of ownership is controlled. To achieve this, the structured product approach depends on two key factors.
The first is an essential understanding of the drivers behind any individual project. In turn, that requires a wider industry view that places the current project into the context of broader design and development trends, likely technology requirements and optimal installation methods.
The second is having a modular family of systems and sub-products that are built in line with operators’ qualification, technology and readiness needs, and they can slot easily into this bigger picture as soon as they are required. Therefore, structured products are intimately linked to potential opportunities. This is what makes it possible to engineer and deliver them quickly—and even accelerate manufacturing schedules where necessary.
As an example of what can be achieved, one major operator wanted to reduce the time from award to first hydrocarbon from a typical 24 months to an extremely rapid nine months. Having ready-made products and subsystems available enabled the project to meet the specific challenges presented by the site, while ensuring that its ambitious time-to-first oil goal could be met.
More generally, the use of structured products makes future intervention easier and more efficient. For example, workover requirements are more cost efficient and effective. The ongoing development of technologies to extend the longevity of current systems and products looks economically viable. Operators can account for eventual decommissioning and retrieval of objects, components, and equipment in their economic projections. Components are more open to reuse. And the overall carbon intensity of a given project more easily calculated and consequently reduced.
Fit for the future
The structuring ethos is all about identifying and understanding common themes to increase repeatability and predictability.
This plays to the strengths of oilfield service (OFS) providers. Although larger operators have built up significant internal product engineering capacity, that expertise can only be built on one company’s experience and internal preferences. That highly focused style and capability may be deep, but it is not wide. Instead, breadth comes from the diverse, global experience typically residing within OFS companies.
It also suggests a wider range of use cases for structured products in the energy sector as a whole. The move into carbon capture and sequestration requires equipment that is modeled on oil and gas production infrastructure, albeit with differences in design, operational life and constraints.
Our own ambitious plans for the new energy frontiers, including renewable energy sources, will rely on existing design and engineering experience built up in the oil and gas development ecosystem, especially the most recent, but still product-structured, all-electric evolutions.
Subsea pumping for dense hydrogen, interchangeable flexibles, and trees and wellheads used in injecting are all set to appear in the near-term future—a future that can be accelerated by the more logical, structured system design approach.
The subsea sector is accustomed to reinventing the wheel. It has done so for every new field and every new project for as long as there have been subsea operations. But it doesn’t have to repeat this pattern forever. It can’t be successful if it does, ether economically or environmentally. We certainly don’t have to pass the habit on to emerging sectors. Instead, by embracing the system approach, it can provide a degree of consistency, certainty and cost control—all valuable commodities at a time of rapid change as we march on to new horizons.
About the author: Matt Lamb is Baker Hughes' SPS systems product leader.
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