The North Sea: Unique Opportunities, Major Challenges
After twenty years of strong growth.
February 2015 | by Robert Emmerich
North Sea offshore oil and gas asset production efficiency has fallen to record lows, costing industry and government billions in lost revenue and jeopardising the long-term sustainability of the basin. We propose three solutions to tackle this problem: fix the basics of reliability and maintenance; establish standards in common operating tasks; and regenerate critical infrastructure within prominent hubs.
The North Sea has been an enormously successful offshore oil and gas basin. To date, the industry has produced some 42 billion boe in the UK and 39 billion boe in Norway. Giant fields such as Forties in the UK and Ekofisk in Norway have gone far beyond their expected production lives and, more recently, have set regional efficiency standards despite their advanced years. However, sadly, not all fields today can claim the same.
Position on the Network Matters Enormously
Since 2000, indirect hubs and dependants (i.e., those fields that are tied to and rely on third-party hubs for export) have had consistently lower asset production efficiency than direct hubs, and the performance differential is widening. The North Sea is an increasingly interconnected system with most fields relying on a third-party platform for export. An outage at an installation housing a major export route can have severe knock-on effects on its dependants.
Capabilities are Critical and the Bar is Rising
Not all operators have seen their asset production efficiency affected in the same way. When we look at individual contributions to the overall decline in efficiency on the UKCS from 2003 to 2012 we see a wide range of performance. There are two operators, both new to the basin, who actually improved production efficiency for their assets during the past decade. Over the same period, five operators accounted for over 80 per cent of the decline in asset efficiency, despite operating just over a third of the production.
Regardless of company type, size and history in the basin, operator maintenance and reliability practices and approaches are the most significant differentiators between leading and lagging performers.
We looked at production efficiency correlated with reliability practices in 2005/06 and then again in 2010/11. Best or good practice operators had higher asset production efficiency regardless of the year of study. In fact, leading performers were further ahead of less advanced operators in 2010/11 than they were five years earlier, indicating that the bar for good performance is rising.