The high cost of working offshore in ever deeper water keeps operators searching for ways to cut costs. Shell Exploration & Production Europe has a new approach that it says saved about 11% in the development of two remote fields.
It involves a new approach and a new way of thinking - not always welcome changes among large oil companies.
AsJeremy Beckman, Offshore’s Editor - Europe, explains in this month’s special report on Offshore Europe, two virtually identical unmanned platforms will soon deliver first gas from separate sectors of the southern North Sea. Both are ultra-minimal facility Trident T6 Monotowers, a new low-cost, low-maintenance design conceived largely in-house by the field’s operator, Shell Exploration and Production Europe.
“Two years ago, we would have had two separate project teams in two countries, two different platform designs and two execution campaigns,” a Shell spokesman explained. With one team, we expect to save around 11% on the costs of the facilities through synergies in procurement, installation, and project management.”
Meanwhile, the advance of independent operators into the North Sea continues to expand, with positive results. Here again, cost cutting and improved efficiencies are key factors in their success. Independents, Beckman reports in a related story, are using partnering and outsourcing to bring production onstream quickly and generate early revenues. His report begins onpage 30.
MWD/LWD new developments
The technology of measurement while drilling/logging while drilling, though long established, continues to evolve. In this year’s annual listing of MWD/LWD equipment, Drilling/Production Editor Frank Hartley looks at some of the new developments. There are a surprising number, including:
• Ultrasonic standoff and an azimuthally focused density measurement
•MWD system specifically designed for high-pressure/high-temperature drilling operations
• First seismic while drilling tool that delivers time/depth/velocity information
•Real-time gyro measurement in applications where magnetic interference is a problem
•First slim hole rotary steerable system
• A new probe-based dual-spaced propagation wave resistivity tool.
And more. Don’t miss his report, beginning onpage 53.
Guessing the cycle length
Finally, if you think the run-up in oil service earnings is going to be short-lived, take two aspirin and call Raymond James Energy Associates in the morning. The belief in most cyclical businesses is that “earnings will peak as new-builds begin.” As it relates to oil service companies, they explain, the thought is that as drilling companies build new rigs, boat companies build new supply boats, and service companies begin to add capacity, the increased infrastructure will lead to more oil and/or gas supply and ultimately, falling commodity prices will kill the cycle.
According to Raymond James, the problem with this theory is that it can take the energy industry a decade or longer before rig and other capacity additions add any meaningful energy supply increases.
The company discusses the phenomenon in a recent report, with this conclusion: “This is exactly what happened in the 1970s. Following a 17-year energy industry downturn (from the late 1950s through the early 1970s), the U.S. energy business finally reached a pricing level that allowed new drilling rig additions in the early 1970s. Was
that the peak in earnings? Not exactly. Looking at earnings of the five publicly traded drillers from 1971 to 1981 shows that annual earnings grew an astonishing 46% per year. Keep in mind that this annual growth occurred for a full decade AFTER ‘new-build’ economics or so called ‘peak’ earnings were reached.”
Raymond James is probably right, disruption to world economies excepted.
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