Part II: The demand for standardization

May 12, 2015

In the second installment of a two part series, Elaine Maslin takes a look at what all the clamor about standardization is, what the industry is planning to do about it and what the results have been to date. 

Image from DNV GL.

Standardization has for some time become a buzz word in the industry – in the North Sea, especially Norway, at least. Last week we looked at some of the reasons for that – the increasing costs, long lead times and concern about reliability, as well as the more recent low oil price environment, which has brought added impetus to the push to standardize.

  • Progress to date

It’s not all been talk. Norway-based international certification body and classification society DNV GL has been leading a number of standardization projects.

A recently completed Subsea forging JIP is one of 5-6 JIPs being undertaken at DNV GL around subsea standardization. The project aimed to standardize steel forgings – the building blocks of subsea components – which are usually tailored to meet specific requirements, resulting in longer than necessary delivery times. The JIP involved 21 companies, from steel manufacturers to subsea contractors and oil and gas companies. The result was a Recommended Practice containing requirements for qualification, manufacturing and testing, all complementing existing industry codes for subsea equipment.

DNV GL is also working on a subsea documentation standardization JIP. Jarl Magnusson, JIP Project Manager, DNV GL, told OE that a typical subsea project can involve more than 10,000 documents (with up to 80,000 in a complex project) over a life cycle of 30 years.

Since Macondo, documentation requirements have increased, he says. The JIP was initiated in 2013, by Norske Olje og Gass, which said: "The preparation and provision of client documentation can be a significant element of overall project cost. The major cost driver is the lack of standardization of the industry approach to documentation." Giving an example, Magnusson says a supplier has said, on a piping project, 92% of the project cost related to documentation.

“Through the standardized subsea documentation JIP, it is hoped a 30% cost saving could be made, across three phases of the JIP project,” Magnusson says. “Phase one will aim to make documentation more predictable. In 2015, the goal is to reduce the amount of documentation and to enable the contractors to become the hub for documentation. The ambition for phase three is to show you can share information between operators, contractors and suppliers and to make the process more efficient.”

Image from DNV GL.

At the start of the project, 200 different document types were identified. So far that's now been reduced to about 46, Magnusson says. A draft recommended practice will be published in 2015 with formal recommended practice publication expected in 2016.

Norway-based operator Statoil, which has been a leading proponent of standardization efforts, is also putting its money where its mouth is. At its behest, the Norway based umbilicals unit of France’s Nexans has already developed, produced and deployed standardized umbilicals. The contract, part of Statoil’s “fast track” development program, was signed in 2012 and the first of four standard umbilicals was installed at the Oseberg Delta field in the Norwegian North Sea in summer 2014. The aim, according to Nexans, was to standardize technical and administrative procedures so save time, cost and materials across all four projects.  

Statoil also has two Subsea power JIPs underway and it is due to launch a subsea processing JIP, says Rune Mode Ramberg, chief engineering subsea technology and operations, Statoil, told OE. The firm also recently completed a project to create a completion and work over system, now based on one rig, able to operate on multiple vendor subsea Xmas trees across multiple, instead of having to stock a number for each field and for each type of tree within those fields. For Statoil, which has 538 subsea wells on the Norwegian Continental Shelf, this could bring big savings – estimated at NOK4 billion ($534 million) over 5-10 years by Statoil.

Statoil is going further. Ramberg says: "At Statoil we have said we are putting our subsea solutions standards on the table. We are also taking a bare bone ethos. We need to question if we need any added functionality. Every added item should have its own business case. That is where we are going with strict compliance, you don't need to design the envelope every time.”

The ethos is also transferring to full field development projects. Harald Eliassen, Tanzania Offshore Project Director for Statoil, told Subsea Valley that Statoil’s subsea to shore development of the 22 Tcf of gas found to date in Tanzania’s offshore Block 2 would be based on already proven equipment and technologies as far as is feasibly possible. “We don’t want to go into any technology development programs or technology qualification programs that we don’t absolutely have to do,” he says. (Read more about Tanzania’s Block 2 development plans in June’s OE.)

This type of approach pays off, says Kristin Faerovik, Managing Director, Lundin Norway. She told Subsea Valley that Lundin's success around project execution has been through putting contractors in control and minimizing the standards and requirements - "by not having a cook book of requirements." A slide she presented said: "Reduce use of company and project requirements. Robust contractor specifications early and no change orders.” This approach meant that on its Malaysian FPSO project, Bertam, it went from development plan approval to first oil in 18 months,” she said.

  • Still more to be done

Image from Statoil.

But, despite the progress, not enough has been done yet, says Michael Sequeira, principal consultant, deepwater practice lead, OTM Consulting told the Subsea Valley conference, told the Subsea Valley conference in Oslo in April. "The hard truth is that it holds no value until it is adopted and used by everyone,” he says. “It is also political - individual companies don't want a standard because it goes against their particular product."

That more hasn't been done sooner is perhaps a reflection of the conservative nature of the industry, perhaps also skepticism, Anders Husby, Head of Department for Well, Subsea and Risers, DNV GL, told OE "Everyone wants a standard and are reluctant to give up their own standard. For the suppliers it is easy to claim it is the operators but also the supplier wants to standardize his equipment and to supply it to all operators."

The operators still stand by their own specifications and it is they who need to work together to align where they can. "Statoil, Chevron, etc., could ask for the same product in a similar way, which would mean not having to have different testing etc., because they would have alignment," says Sequeira.

“We believe the most logical step is ensuring operators are asking for the same thing," says Sequeira. Having common qualification requirements is one thing. The next step is providing them early enough to enough. "The service sector doesn't wait for standardization. They think differentiation," he says.

"We are proposing that operators work together on an identification effort to understand where the opportunities are to align, to reduce inconsistencies. But it is not just the operators. We would like to get direct feedback from service industry to pull out where there is duplication of effort. We want to get vendors to provide evidence on real cost of current custom build costs."

To make standardization work – reducing costs but also increasing reliability - a level playing field is needed, with the same requirements from project to project, to create predictability and reduce risk of errors, says Husby.

"This has been talked about a lot, about taking away requirements that don't contribute to functionality, but we need to understand what they are there for and understand what will happen if you remove them. It is not about making it simple, it is about predictability and we don't believe it will restrict innovation."

"We believe standardization is more than making identical parts. Predictability is important. We want the industry to use the best practice in the industry and not put additional requirements on top and to ensure safety in all parts of the process. Work processes and interfaces are important, perhaps more than the product." Focus also needs to be where there is more "bang for buck," he says.

Bengt Persson, senior VP, Quality, Aker Solutions, says: "In the marine industry it took 10 years to move in this direction. But they have now made a 400% improvement in productivity. At the start what you heard was ‘but we are different.’ That is what you hear (in the oil industry) now."

Time will tell.

Read more: 

The demand for standardization

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