Strategic changes

Dan Ibbetson takes a look at offshore efficiency, and how certain improvements can support falling exploration budgets

Whether they’re based in the North Sea or South America, oil storage tanks on platforms or Floating, Production, Storage and Offloading (FPSO) vessels require cleaning and maintenance once or twice a year. The 90 oC conditions are too hazardous, deadly in fact, for workers to operate in and even at 25oC after concentrated cooling, they can only work in the confined space for around 15 minutes.

The process would normally take three days; so reaching the required temperature in one day has significant financial benefits. The quicker a space is cooled to a safe temperature, the faster technicians can do their work and the operation can commence, and also reduce fuel costs. This mind-set should be adopted in every aspect of an operation.

Effective temperature control technology plays a major role in the health and safety of employees and an operation’s ability to function. Its level of efficiency and impact on energy demands however also have more underlying consequences for productivity, operational expenditure and a project’s bottom line.

While demand for fossil fuel grows in line with energy consumption, and the oil price falls, as global storage figures rise, producers are under increasing pressure to reduce overheads. Only those that can adapt will overcome this challenging environment and prove profitable in the long term – particularly those still bold enough to explore further offshore. Reviewing the efficiency of energy and ancillary services, and potential opportunities to cut costs, is vital to achieving this.

In spring 2015 Wood Mackenzie predicted that offshore exploration budgets would fall by 33 per cent by 2016 as a result of declining opportunities, with improvements to efficiency expected to contribute five per cent towards cost cuts. More recently, Oil & Gas UK has announced that in spite of a rise in production last year, the declining oil price resulted in revenues falling by 30 per cent, again creating a stronger need to implement more cost-effective operations.

The formation of ‘The Efficiency Task Force’ (ETF) in September 2015, which is driving attitude and behavioural change, demonstrates how high up cutting costs is on the industry’s agenda. While some companies are cutting jobs and extending operating periods, standardising processes and enabling shared resources, as well as simplifying complex operations, are emerging as significant strategic changes to save costs. Reducing fuel and energy costs is only one component of the wider issue.

Re-assessing energy generation needs and adopting efficient, cost-effective energy strategies is a smart solution to avoid high operational costs but these are not always obvious. Similar to cooling, minimising downtime by mitigating the risk of power loss is vital to the operation regardless of expense. Doing this efficiently cannot only save, but also prevent rising costs. Reliability and flexibility are the keys here.

One of the first priorities at the start of a project is adopting a reliable power supply that is tailored to the operation’s specific needs. On-site energy generation is typically provided by gas turbines, which can be expensive to operate and emit high levels of CO2. If a platform can be self-sufficient in its energy generation, there are obvious fuel consumption savings with reduced financial and environmental impacts.

The economic and environmental benefits of offshore renewable energy sources on platforms are clear and as a result, gas-wind hybrid generation is growing in popularity, as is using operational waste gas. Reliability, however, remains a crucial factor. Reducing fuel consumption is meaningless if disruptions caused by intermittency cause greater expense and inefficiencies.

Regardless of how energy is generated, having a contingency plan in place such as on-site back-up generators will avoid interruptions and help to maintain optimal productivity levels if this failed. It will also avoid the added expense of re-start costs and prevent potential litigation expenses associated with compromised health and safety.

Minimising disruption, and loss of productivity during maintenance of turbines, whether it is planned or unplanned, creates a smoother operation. The flexibility and relatively small footprint of modular power generation means that it can be easily integrated into a platform or FPSO’s generation infrastructure. They can also supplement the extra capacity demand associated with other operational maintenance needs, as and when needed.

Similarly, load testing of equipment plays a key role in mitigating the risk of disruptions. Powering FPSOs for example is a major ongoing cost for producers – carrying out load bank testing of power systems prior to completion is vital to ensure they will meet capacity needs when fully operational, hundreds of miles offshore. Not only does this process mitigate the risk of power loss and associated costs, it also ensures production levels are met throughout the duration of the production and voyage periods.

With energy consumption expected to rise by more than a third in the next 20 years, fossil fuels are set to supply around 60 per cent despite recent environmental policy changes. As a result, oil and gas operators can anticipate even greater pressures to meet demand while reducing costs.

As a result of diminishing deepwater exploration opportunities and the falling value of oil, firms are gradually moving their investment out of the sector into others in their portfolio. Some are coming out of the sector completely. Improving efficiency and reducing costs will support the cause for continuing to invest in these operations.

The landscape will undoubtedly see more dramatic changes in coming decades. As the global energy agenda continues to evolve and carbon emission regulations become increasingly stringent, more efficient and environmentally friendly oil and gas operations are essential. Until the renewables sector becomes more reliable and takes ownership of a larger proportion of capacity generation, the pressure on oil producers will continue.

Dan Ibbetson is Aggreko Managing Director for Northern Europe. Aggreko is the global leader in mobile power and temperature control solutions, operating in 204 locations worldwide. Its Power Solutions business operates in emerging markets, while its Rental Solutions arm is the market leader in oil and gas, petrochemical and refining, and mining industries, hiring equipment to customers to operate with the expertise and support of Aggreko technical teams.

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