Targeted maintenace could boost UK North Sewa production by 10%, equating to US$18 billion in annual revenue, suggests Alan D'Ambrogio, ABB Consulrung's vice president, oil and gas. Meg Chesshyre reports.
In 2013, the industry invested £13.5 billion (US$22.4 billion) in the UK Continental Shelf (UKCS) facilities. This figure is unprecedented, even during the boom years of the 1970s. Majors ConocoPhillips (the Jasmine project), BP (Clair and Sullom Voe), Total (Laggan-Tormore), Statoil (Mariner) are some of the companies pumping big money into their projects. With such a staggering level of investment, companies expect stellar production and performance rates in return.
However, the UKCS saw an estimated 22% drop in oil and gas production in 2013, which is the highest annual fall in North Sea oil and gas production on record (Fig. 1). It was only in 2011 Oil and Gas UK predicted production would start to increase by 2013 (2011 Production Outlook). This continued, record fall in production appears to stem from several factors, including:
- More than 50% of the platforms in the North Sea are at or beyond their design life. The industry has, to date, done little to address the requirement for life extension of these assets. The UK Health and Safety Executive’s planthaging initiative has been a wake-up call. The inspection program was designed to improve how these aging UK offshore installations were managed, especially given the growing demands to extend their use beyond original design life.
- The UKCS lacks a longterm strategic approach to asset life when compared to other oil and gas hubs use a more stringent approach to assets operating beyond their design life.
- The industry has suffered from several notable major accidents and incidents, which drives a far more cautious and conservative approach to the operations and maintenance of the assets. Most notably, the Deepwater Horizon disaster saw BP spend $42 billion.
- There has been unprecedented expenditure on asset integrity and interventions over the last five years. It is estimated that US$1.7 billion was spent in 2012 and 2013 on asset integrity. This spending requires downtime in assets to be implemented, which impacted 2013 performance.
- The global industry skills shortage and turnover in personnel is a key issue. However, the UK appears to be faring worse than other hubs, where oil lift costs tend to be higher and new discoveries tend to be small.
- There have been several significant overruns in platform turnarounds, which have resulted in lower annual production.
The UKCS’ major challenge is to see if it can restore production efficiency (a measure of overall availability and reliability of the platforms) back to 80%, its level 10 years ago.
This is still lower than what many other industries achieve and what most other oil and gas hubs achieve. BG Group’s 2013 strategy review places the UKCS at the bottom, globally, in production efficiency. That position cost the UK economy US$18 billion in 2012. This underperformance of assets is starting to threaten the viability of the UKCS maximizing hydrocarbon recovery from the basin.
To help restore North Sea production, ABB has worked with North Sea operators develop platform and asset strategy; maintenance targets; and delivery of good shutdowns and turnarounds.
Platform and asset strategy
Alan D’Ambrogio and his colleague Andy Hollins, lead principal consultant at ABB Consulting, presented ABB’s views on targeted maintenance at a meeting at the Institution of Mechanical Engineers in London earlier this year.
ABB has conducted a number of asset life studies in the UKCS, which examine how the operator targets its maintenance, to maximize medium term safety, integrity, availability and reliability. Those studies included oil and gas offshore platforms, onshore terminals and onshore gas processing, and they aimed to provide operators and shareholders with clear and justifiable maintenance spend on their assets that will mitigate the safety, reliability and aging issues they are experiencing.
The UK HSE’s plant-aging guide (RR509) stated: “Aging is not about how old the equipment is. It’s about what is known about its condition, and how that’s changing over time.” However, too many operators appear to have little strategic approach in how they manage the aging of their assets.
Challenging the maintenance
The second area of notable achievement is the prioritization and targeting of maintenance. With offshore platforms, the persons on board (POB) limitation is the biggest single bottleneck to the implementation of maintenance. It is difficult, if not virtually impossible, to economically increase the POB on an aging asset. Hence, the challenge and removal of low value maintenance work is essential. All assets in the North Sea would proclaim to prioritize maintenance using a risk-based approach. However, when this is challenged in more detail, less than half of the assets have a transparent and effective maintenance challenge process.
In a recent study for an operator–one of the top five producers on the UKCS–ABB was able to eliminate 50% of maintenance inspection work during a turnaround with no impact on the asset’s reliability and integrity. ABB used its newly-developed Risk Based Inspection Revalidation capability (RBI+ Reval). Of the 164 high-hazard pressure equipment studied, ABB reduced the number requiring intrusive inspection to 66, or 40% of the turnaround workscope. The asset had previously undergone an RBI study.
ABB’s operationally-led RBI+ Reval reduced the turnaround window for the operator and increased production efficiency. If this approach were to be repeated for the whole of UKCS, it could increase production by between 5% and 10% in the first year alone.
Delivering good shutdowns and turnarounds
The ability of the UKCS to deliver turnarounds on time and cost has not been good. The aging work force, combined with the entry of many more operators into the sector, and the skills shortage, there was a tendency to outsource some elements of turnaround planning and management. Decreased performance was a result across the sector. The introduction of turnaround preparation assessment and readiness reviews will help give senior managers and business leaders early indicators of the likely performance of the turnarounds.
There are several different approaches for these assessments in the UKCS, with the minority of operators having an effective and independent turnaround assessment. ABB advocates a unification of existing assessment methodology into an industry leading standard. This would enable early action to be taken on maintenance turnarounds that look like they will miss their objectives.
The fragmentation of the UK offshore sector is probably the single greatest reason why the above factors have had greatest impact on the UK. In fact when the coalition government came into power in 2010, its first priority was reducing the deficit. Additional taxation was imposed on the industry. The UK’s overseas competitors (Norway, Denmark and further afield) take a longer-term view of their oil and gas strategy.
Production efficiency and the UKCS’s ability to maximize the hydrocarbon recovery can be achieved by a more strategic and long term view by all stakeholders (Fig. 2). Too much focus has been placed in recent years on capital investment in the sector, and too little on the performance of existing assets.
It is estimated that $1,700 billion will need to be spent in the UKCS over the coming years to maximize hydrocarbon recovery. The industry will only commit to this, if the performance of the existing assets is improved. The reduced level of exploration in 2013 is a worrying indicator, where oil and gas operators have put the brakes on future investment before seeing value from their existing investments and assets.