By Sebastine Obasi
INTERNATIONAL oil companies, IOCs, appear to be experimenting with various technologies, from drones and drill design to data management, to drive down costs and weather the low price regime being experienced in the sector.
Crude prices have traded below $50 per barrel for over a year now since the price decline started mid-2014, as against more than $100 per barrel before then, forcing companies to cut billions of dollars in expenditure. Determined to shield dividends and preserve the infrastructure that will allow them to compete and grow when the market recovers, they are increasingly looking to apply smarter technology and design to make savings. Statoil, Norway’s national oil company, stated that its giant Johan Sverdrup field, the largest North Sea oil find in three decades which is due to start production in 2019, is a leading industry case study for cutting costs in the era of cheap oil. The company explained that it has cut its development costs for the first stage of the project by a fifth compared with estimates given in early 2015, to 99 billion crowns ($12.2 billion).
“The savings have largely been made by focusing on the most efficient technology and designs from the beginning”, Statoil’s head of technology Margareth Oevrum said. Anglo-Dutch Shell paid to get over 200,000 airborne images from manned aircraft in 2012. Marine mammal surveys based on these images were said to have influenced Shell’s multi-billion decision to drill for oil. The company paid LGL Alaska Research Associates to analyze the images. Manual image analysis took over three minutes per image,so long that the LGL team ran out of time and money. Product evaluation and refinement studies since then, commissioned by LGL and Shell, have shown that automated triage reduces analysis time to less than one second per image and yields detection rates up to 84 percent.
Shell has also developed a new type of pipe, called a steel lazy wave riser, to carry oil and gas from its deepwater Stones field in the Gulf of Mexico for processing. It bends to absorb the motion of the sea and the floating platform, which the company says boosts production at extreme depth. The company, however, could not say how much the pipes contributed to increased efficiency, but said innovations at Stones had played a significant part in cost savings of $1.8 billion in its projects and technology division last year, equivalent to the 2015 core profits in its upstream division.
Also, Total, French oil and gas major said it was using drones to carry out detailed inspections on some of its oil fields following a trial at one of its Elgin/Franklin platforms in the North Sea. Cyberhawk, the drone company that led the trial, said this kind of work was previously carried out by engineers who suspended themselves from ropes at dizzying heights.
It said the manned inspection used to take seven separate two-week trips with a 12-man team that had to be flown in and accommodated on site.
The drones do the work in two days and at about a tenth of the cost, according to the Britain-based firm’s founder Malcolm Connolly, who said it had also worked with ExxonMobil, Shell, ConocoPhillips and BP. However, Total did not comment on how long the manned or drone inspections took, or specify how much money was saved.
United States of America’s Chevron is said to be using a robotic device to clean and check the inside of pipelines on their Erskine field in the North Sea more quickly. The improvement has helped raise the field’s daily production rate to the highest in two years.
There is no indication that these technological innovations have so far been tested within the Nigerian or the African region. Global upstream exploration and production oil and gas spending has fallen by more than $300 billion across the industry in 2015 to 2016, according to the International Energy Agency (IEA), roughly equivalent to the annual GDP of South Africa.
Around two-third comes from cost cuts, rather than cancelling or shelving projects, it said. The fall in oil prices has led to the introduction of other new engineering and maintenance techniques.