Optimising oil and gas operations – when to decommission or modernise. By Stuart Querns
The decision around whether to decommission or modernise ageing oil and gas assets is not always straightforward. As assets age, more oilfields face the threat of decommissioning. According to energy giant, Shell: “[the] Brent [oilfield] is just one of around 470 installations that will be decommissioned in the UK sector over the next 30 to 40 years. While some oilfields are now close to depletion, the decision around whether to decommission is never straightforward, given there are many facilities that could be modernised to extend their useful lives.
One major issue oil companies face when deciding is around visibility. Engineering operations teams need to rapidly access and leverage quality information to make an informed decision about whether to spend money on replacing or overhauling an ageing asset.
That information could come from the asset itself or be based on maintenance activities, or originate from multiple other data stores. Whatever the sources, all generated data will need to be integrated in order to support a decision on future strategy, or tactics to be employed. That’s critically important. If the data is disjointed, the operator may either fail to make a decision at all, or make the wrong one. That will in turn negatively impact the asset performance itself.
For upstream oil and gas companies it remains difficult to get this kind of overview from the data at their disposal. They need all the information there, but they also need it in a timely manner, so they can make fast decisions.
There are other factors at play here too. A large global business will often struggle to structure the information at its disposal. Often, different sites will have different processes in place; disparate data structures; siloed information sources and different ways of operating maintenance and assets. Reconciling across the organisation to better understand supplier efficiency, for example, is likely to be difficult.
In short, it is going to be challenging for operators to aggregate all this information to ensure they have a clear view around the performance of any asset across cost, reliability, efficiency and operations to then make the decision whether to spend more money on it or decommission it.
Multiple factors at play
Many organisations are aware of the problem but struggle to implement solutions, because of the range of variables at play. The energy sector is going through turbulent times. Prices are volatile. There are regular mergers and acquisitions to navigate. Businesses are dealing with all this while trying to turn large transformation programmes around.
Global geopolitics plays into this situation also. One phrase resonating currently is energy security: the ability to keep operations up and running and secure the supply of energy. Governments are increasingly putting pressure on national companies to help secure energy for the country over the long term.
In light of all this, it is key that operators can keep operations up and running. Any downtime is likely to have significant negative impacts. But again, it raises the ongoing question: how does the operator know where to invest and what to do to prevent this?
Technology is key
Technology can play a critical role here. Having one view of the truth across multiple dimensions including the asset, cost, reliability, performance and resource efficiency is key. Overlaying all these areas, safety, compliance and environmental performance are incredibly important also.
Each one of these activities must be done safely but also in a way that does not adversely impact the environment. All the large energy companies are looking to reduce carbon emissions and energy consumption. Together, these pressures are putting even more emphasis on quality of information and highlighting just how important a goal it is for oil and gas companies to achieve.
Ultimately the technological solution that is delivered also needs to be simple and straightforward. There is a need to land on one digital core, one enterprise solution - and to use one supply chain that supports resource management and finance, for example.
All these different aspects are interlinked – and must be harmonised to drive asset performance. To do that businesses must simplify and, where appropriate, rationalise the technology that supports these processes. Otherwise, they will struggle to have quality of information, or the ability to drive efficiencies.
In technology terms, it is about harmonisation on a common platform and then simplification of processes. That’s about technology of course but the results of the approach also depend on the quality of data provided. Most organisations have access to a raft of data sources, whether from maintenance or finance processes, for example, or even from the equipment itself, given most assets today are smart and hold a great deal of information.
The success of this process in delivering quality information for the operator is critical. Data must be high quality - but it also needs to be easy to use and to distribute to the ‘right people’ within the organisation. Typically, that means those taking the big strategic decisions on the one hand, or, at a more granular level, those responsible for keeping the engineering or IT teams running efficiently.
The key point is that different kinds of information will be needed depending on the different kinds of people using it. Ultimately all this data is key for informing the choices oil and gas companies need to make around the best approach to take with their assets moving forwards. In the current climate, that is less likely to be around decommissioning of the asset and more likely to be concerned with security of supply and how to maximise the value of the asset today and in the future.
To make accurate, timely decisions capable of supporting and driving future strategy forward, oil and gas businesses need quality data; harmonisation and the simplification and optimisation of service delivery. Those companies that get all this right will be well placed to combat the multiple challenges they face today and drive positive outcomes long into the future.
Stuart Querns is director for Enterprise Asset Management (EAM) at Delaware United Kingdom