Standardization Key During Low Oil Price

The Norwegian petroleum industry is focusing on standardized solutions, inspired by Formula One and Lego, to help tackle rising field development costs.

Standardization was one of the key topics at the 2015 Subsea Valley Conference (SSVC) in Oslo last April. Operators on the Norwegian Continental Shelf are concerned they will not be able to realize future field development projects amidst low oil price and high costs. Suppliers are worried that there will be less work ahead.

 

Norwegian company Statoil is just one of the many petroleum companies struggling to realize some of its projects profitably, particularly in higher cost places such as the Arctic and Canadian tar sands. Most recently, it postponed the development decision on the Johan Castberg oil discovery in the Barents Sea and Corner field at Kai Kos Dehseh oil sand project in Canada.

 

“At $50-$60 per barrel a lot of future projects are cancelled,” said Geir Sløra, Statoil senior vice president at an SSVC presentation.

Inspired by Formula One pit-stop crews, Aker Solutions in Ågotnes cut the time to refurbish and upgrade a subsea tree to 17 weeks from over 52. Source: Aker Solutions ASA
Inspired by Formula One pit-stop crews, Aker Solutions in Ågotnes cut the time to refurbish and upgrade a subsea tree to 17 weeks from over 52. Source: Aker Solutions ASA

 

Formula One Service

 

Statoil has been working on a number of initiatives to help standardize petroleum field developments. It is currently heading an improvement program called STEP (Statoil Technical Efficiency Program) that focuses on standardization and industrialization as one of its six high impact projects.

 

One example is its collaboration with Norwegian oil service company Aker Solutions to standardize subsea tree maintenance. Aker Solutions has developed a way to refurbish Statoil’s subsea trees quicker, cutting the time from one year to 17 weeks through a Pit Stop program inspired by Formula One racing.

 

The idea came about in 2011 after Statoil asked Aker Solutions to overhaul as many as 17 trees a year from its Troll and Njord fields. Aker Solutions only had capacity for four to six. It decided to mimic the rapid turnover techniques of pit crews in order to handle the volume.

 

Specialist teams work on individual parts of the trees. Statoil and Aker Solutions agreed ahead of time on a joint solution for all of the trees rather than treating the upgrade and refurbishment of each tree as a new, individual project. That enables them to order parts and schedule some six months to a year in advance.

 

Companies around the world have contacted Aker Solutions’ subsea facility in Ågotnes to learn more about the methods, according to Trym Atle Lien, Aker Solutions senior manager at Ågotnes. “In this particular area, we set the standard for the subsea industry,” said Lien.

 

Harmonization

 

Another bottleneck for the industry has been the massive amount of documentation related to projects. Tord Lien, Norway’s Minister of Petroleum and Energy highlighted during SSVC the ten-fold increase in topsides documentation in less than 10 years. According to Norwegian classification company DNV GL, a typical subsea project can involve more than 10,000 documents - with up to 80,000 in a complex project - over a lifecycle of 30 years.

 

“Everybody sees that the next 12-36 months will be challenging for the industry,” said Minister Lien. “There is a realization now that cost issues need to be addressed in a manner that is sustainable.”

 

DNV GL has been one of the companies instrumental in reducing the paperwork.  Together with Norwegian Oil & Gas Subsea Installations Network, it has established a three-year joint industry project (JIP) to develop a minimum set of documentation requirements for all subsea components. The JIP recently completed a draft recommended practice (RP) for subsea documentation that will first be applied on Statoil’s Johan Sverdrup project in the Norwegian Sea.

 

DNV GL also recently completed a JIP on subsea steel forging that resulted in a recommended practice with requirements for qualification, manufacturing and testing, and complements existing industry codes for subsea equipment. This could help oil-related companies in reducing lead times, enhance stock keeping, interchangeability of forgings and help improve and maintain consistent quality.

 

The standardization of steel forgings was a high priority initiative in a report issued by the Norwegian Oil and Gas Association in 2014 and also highlighted by the Society of Petroleum Engineers. The JIP involved 21 companies in phase one, representing steel manufacturers, subsea contractors and oil & gas companies.  

 

“We are pleased that this initiative, which has involved all players in the value chain from forge masters and subsea suppliers to end users, has produced a document that captures best practice and now enables the manufacture of forgings in a predictable and consistent way,” said David Llewelyn, Norwegian Oil and Gas Association facilitator for Norwegian Subsea & FPSO Industry Networks.

Subsea Factory. Photo: Statoil
Subsea Factory. Photo: Statoil

 

Lego Subsea Blocks

 

The next project will be a JIP focusing on subsea process modules, based on an initiative by Statoil, said Kristin Nergaard Berg, DNV GL principal engineer of subsea technology, during an SSVC presentation. The first case will start with subsea pumping. The second will deal with dry and wet compressors and the third with separation and injection. Together, this will standardize the interfaces for all subsea processing plants on the seabed, also known as the Subsea Factory.

 

The motivation is to reduce the cost-in-life perspective and improve costs, time and quality and qualifications for suppliers and companies. During the last 10-12 years, costs related to subsea developments have increased by 250%, according to Margareth Øvrum, Statoil executive vice president of technology, projects and drilling.

 

“Think of the modules as LEGO bricks,” said Øvrum. “By having standardized module dimensions, which may be assembled using standard tie-ins, we may combine technology from different suppliers and also cover several needs through subsea solutions. This will reduce costs and increase volume.”

 

A handful of operating companies have agreed to participate in the JIP. Simultaneously Statoil has contracted FMC, Saipem and Norwegian company Kongsberg to each conduct a feasibility study and propose the best ways to advance within the targeted standardization. The results will in turn provide valuable insight for the JIP.

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