75% of UKCS projects late, 35% over schedule

March 3, 2017

A review of UK North Sea projects between 2011-16 has found that fewer than 25% were on time and 35% were over their original estimated budget, at field development plan submission.

The review, carried out by the UK regulator, the Oil and Gas Authority (OGA), covered 58 developments, costing £40 billion in total to development. 

It found that, during the reviewed period average delays were about 10 months. This was at a time when spending was at an all time high, averaging just over £12 billion annually, compared to £3-6 billion a year through the last decade. 

Gunther Newcombe, the OGA Operations Director, said that one of the key findings was that there was no correlation found between the size and complexity of projects and delay, with the key factors being non-technical in nature.

The research has been revealed as the OGA set out its expectations for "robust future project delivery." The organization said: "The successful development of new oil and gas fields is a vital part of ensuring the maximum economic recovery of hydrocarbons from the UKCS."

Using the data from the review, the OGA has held a series of lessons learned events, with 11 operators and three major tier 1 contractors, to develop good practice and areas for improvement. These are highlighted in a report and were used to develop one of the 10 Asset Stewardship Expectations focused on robust project delivery (SE-05). 

Newcombe said: “There are also encouraging signs that the ability to deliver projects in line with cost and schedule commitments has been improving recently. This is aligned to the effort we have seen industry making in the areas of production efficiency and operating costs over the last 18 months.  

“The OGA will continue to work with operators using our asset stewardship processes to ensure learnings are transferred and value is maximised to deliver our principal objective of MER UK.”

Following publication of the report, Oil & Gas UK and the Engineering Construction Industry Training Board (ECITB) Offshore Project Management Steering Group are working together to deliver industry guidelines, including recommendations and good practice, for robust project delivery. 

One of the key steps is to hold a one-day, cross-industry workshop in March, to gather input from industry and key stakeholders to frame guidance for project optimization guidelines. Following this, a workgroup will be formed to develop the project guidance content, before issuing a draft for industry review with the aim of final publication before the end of 2017.

Chris Claydon, CEO, ECITB, said: “There are a lot of valuable initiatives being examined in support of MER, but making real change will come down to people, culture and behaviours. To make the step change necessary to improve project performance will require innovative leadership and a truly collaborative approach. This thought-provoking report highlights how much there is still to do and the issues raised will be considered by the Offshore Project Management Steering Group.”

 

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