“The industry understands that operations teams need including early in new projects, when decisions will influence full lifecycle costs,” said Trond Winther, head of the operations department, DNV GL – Oil & Gas. “It is also about meeting commitments on start-up dates and the first cycle of production. It can be a challenge to achieve, however. How early is early, and in what capacity and with what competences should operations teams be included?”
Value of integrated teams
Some experienced operations people recommend inclusion as early as feasibility studies and concept selection. They argue that this will ensure that operations perspectives are clear and included in the commercial framework for a project. This was the consensus among operations experts from new exploration and production (E&P) players at a roundtable briefing in Norway.
French global energy player ENGIE, formerly GDF Suez, faced these challenges in preparing to become a first-time production operator on the Norwegian Continental Shelf (NCS) in November 2010, when the Gjøa gas field, developed by co-owner Statoil, would go on stream.
ENGIE drew on Statoil’s model for transitioning between project and operations phases, drafting in operations technicians before the final design decision. “People who would operate the platform day-to-day became even more heavily involved in the engineering phase,” said Per Langhaug, head of health, safety, environment and quality (HSEQ), ENGIE E&P Norge.
Early involvement: The lifecycle cost
The UK’s Centrica established its NCS exploration and production business in 2006. It has since become a solid, midsized upstream enterprise in Norway with about 50 exploration, development and production licences, about a third of them Centrica-operated.
“It is crucial to consider the full lifecycle costs of an asset rather than focusing narrowly on the phase for which a project team is responsible,” said Tom Haldorsen, operation readiness lead for Centrica E&P Norway. “Amid low oil prices, a project organization will naturally work to cut all capital expenditure (capex) costs to the minimum. For example, they may choose pipeline material that is fit-for-purpose from a safety perspective, but which could require quite a bit of maintenance and barrier management in the operation phase; so total lifecycle costs could be higher.”
A view sometimes heard is that barriers prevent including operations people early on. The argument is that project teams may feel that operations will want to ‘gold plate’ everything to maximize efficiencies in operations phase, thus driving up capex. Haldorsen suggests that this is perception rather than reality.
“Any such tension usually arises if operations is not included early, and requests late changes not budgeted for by the project manager,” observed DNV GL's Winther. Integrating teams can overcome challenges when operatorship shifts between companies, Langhaug stressed. “Initially, project teams for Gjøa referred to colleagues as ‘ENGIE ops people’ or ‘Statoil capex people’. As we organized as one team, we quickly started behaving like one.”