ABERDEEN—Standardization, common components and industrial processes have led to increased efficiency and lower costs across many sectors, but until recently the oil and gas industry has continued down the bespoke engineering route.
It is irrefutable that the nature of oil and gas production often makes purchasing an off-the-shelf solution impracticable, but with the lower oil price comes greater demands to achieve some modicum of standardization to reduce capex and opex, which has led many operators to renew their interest.
The Statoil approach to subsea standardization is focused on three key areas: simplification, standardization and industrialization. Roald Sirevaag, chief subsea engineer for Statoil, explains how the company visualizes this concept.
“First, we had to attack it by simplification,” he explains. “We said, ‘OK, this is our 2014 model of subsea systems. How can we possibly make this simpler?’ We set cost targets for some components, we set weight targets, and we told our suppliers, ‘come back with a product that is cheaper and lighter.’ The suppliers worked hard on that, and they came back to us and they challenged us on our requirements.
“We had to look closely at the requirements that were driving the cost and backed off on some of the requirements that we found were not productive,” Sirevaag told SEN. “By doing this, we pushed the cube on one side. The scope to be developed was reduced.”
He went on to explain that Statoil is participating in most of the international standardization activities going on in the industry with a particular focus on work processes, standard components and configurable systems. “This has allowed us to push the cube from the other side,” he said. “It’s already been reduced by the simplification and then you standardize, and it gets even smaller.”
Armed with simplification and standardization, Sirevaag believes that suppliers can then industrialize the engineering, procurement, certification and testing. “By doing so, you push from the third side. You can only achieve good results if you can get volume on the same solutions. Then it’s simple [mathematics]. If you reduce 20% on each side, you have 80% remaining. You take 0.8 and you cube it and the scope of work is halved; this is [mathematics].”
When it comes to industrialization, Statoil is in the enviable position of having more than 80 wells out to tender at present. With that many systems, there is the possibility to get the volume and benefit from industrialization. To try to get the volume even higher, Statoil is sharing its specification with other operators on the Norwegian Continental Shelf to endeavor to garner even greater economies of scale.
Keeping It In Balance
Much has been spoken about balancing the requirements of the three-pronged drive for simplification, standardization or industrialization, and Sirevaag is adamant that they are all important and they all link into each other.
“I think we’ve done a lot of the simplification that we can do over the last three years, so now I think it’s more down to the standardization part, which is work processes, components and configurable systems,” he said. “We need to work more on the work processes, so that when somebody is delivering something to Chevron and Total or ourselves they can just do the same work process, material wise and documentation wise.
“Then, maybe, on the configurable systems we can generate regional standards. We feel we are establishing something in the Norwegian North Sea at least. The same configurable system that the suppliers have could be bought by any of us at the same specification, the same work processes, then you could get the industrialization possibility of efficient high numbers.”
There remains some question about how the industry ensures that standardization leads to a reduction in total expenditure, an increase in operating efficiency and reliability, reduction in intervention costs and an overall better approach to total expenditure and life of field costs, rather than simply reduced capex at the start of a project.
“When you make the system simpler, there are less things that could go wrong so simplification helps in that respect,” Sirevaag explained. “There are less things that could go wrong, less equipment involved. Beyond that, we are making sure that operations people, those who are operating it once it has been delivered by the project, are involved in the simplification process, so that we have that feedback loop running.”
A Win-Win Situation
Sirevaag talked enthusiastically about driving this standardization down the supply chain so that everyone can benefit. A key tool in this is the tendering process that always feature at least three suppliers.
“One aspect is that we always make sure that we have competition between suppliers. And, of course, if one of them over-specifies to the next guy, they will be out of business, because the product they are supplying to us will be too expensive. But obviously if all of them over-specify, we haven’t solved the problem. But we think we do solve it by having competition between the main suppliers.”
Sirevaag explained that the current drive, which has netted savings of 30% to date, is not just about making subsea production cost effective when compared to other sources of energy such as renewables, but against other technologies within the oil and gas sector.
Sirevaag spoke openly about the challenges that his subsea division face from within Statoil, particularly competing with the unmanned wellhead platforms team.
“Just recently, this summer, we installed our first unmanned wellhead platform,” he said. “The people working on those say we should be able to compete with subsea in these oil wells all the way down to four wells. We recently won one of those competitions in the subsea domain, so one of the projects constituting those 80 wells will move onto our side, but the unmanned wellhead people are telling me that they have a simplified, standardized, industrialized process and will be competing with us for the next project. I think they’re going to lose, but competition is good for all of us.”
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