Efficiency issues in North Sea

March 13, 2014

Wrench time has been highlighted as one of the key areas the UK offshore oil and gas industry needs to address to improve production efficiency levels.

Average wrench time - the amount of time spent working on a mechanical project, either repairing or assembling from the ground up - is four hours in the UK North Sea, based on a 12 hour working day.

Best practice is six hours and, in some cases, it can reach nine hours, Ronan Ferguson, senior business analyst, economics, Oil & Gas UK, said, outlining research by an industry working group, at the NOF Energy conference in Newcastle, UK, today (13 March). 

The working group was set up under industry body Oil & Gas UK to address production efficiency issues on the UK Continental Shelf (UKCS), after production efficiency rates dropped from 80% to 60% since 2004.

Other reasons the working group found for the low rates were turnarounds and unplanned outages, with most of the latter caused by unplanned compression plant failures. 

Turning to the UK's production rates, some of the key reasons for the UKCS' recent dramatic fall in production - 38% in three years - were political, economic, and environmental, said Ferguson.

In 2010, BP's Rhum condensate field was shut in, due to sanctions against Iran, a stakeholder with BP on the field, which accounts for 2% of UKCS production and is expected to be back online later this year, after a recent easing of sanctions against Iran.

In 2011, severe weather saw two floating production units, Maersk Oil's Gryphon and CNR International's Banff, come off station, damaging subsea infrastructure.

In 2012, a supplementary charge, or tax, on UK North Sea producers damaged some field economics, and resulted in Centrica delaying restart of production on its South Morecambe field, Ferguson said.

Also in 2012, the Buzzard field, which came on stream in 2007, and is responsible for about 10% of UKCS production, went through its first major turnaround campaign. 

Oil & Gas UK predicts production will increase, as all these issues pass and new fields - a result of recent record investment in the basin - come on stream, said Ferguson.

Recent start-ups include Breagh, Huntington, and Jasmine, which, together, are equivalent to a new Buzzard field, said Ferguson. 

However, while the production decline is expected to slow, operational costs are still increasing, Marshall said, with the number of facilities operating at a unit cost over £30/bbl having doubled in the past year, and average costs at £17/bbl.

One of the reasons for this is the ageing infrastructure, with many platforms now more than 30 years old and operating beyond their design lives. 

"A key driver is fabric maintenance," Ferguson says. "This is hoovering up a lot of free capital, and reducing capital for other activities, such as exploration drilling."

Also speaking at the NOF event was former Energy Minister Charles Hendry. Addressing the broader energy landscape, he said, strategically, the UK should look at the fundamentals of energy security again, to underpin any drive towards a low carbon future. This would include using indigenous energy resources, including tidal and wind energy, as well as nuclear energy, which has seen a renaissance in the UK since 2007, with recent agreements with EDF Suez seeing new plant in Somerset being built.

The UK should also look to develop carbon capture and storage technology, which it would be well suited to deploy, and which it could then export. 

As for shale, Hendry cautioned the UK first needed to quantify its potential reserves, not just resources, and then assess it's potential for extraction, citing the excitement about Polish resources, which has since waned as firms struggled to find ways to exploit them. 



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