Smarter ways to deliver projects

Operating more efficiently, optimising resources, smarter working – all very familiar terms in the modern-day oil and gas industry as operators continue to face tight economic conditions while seeking to increase reservoir recovery.

They need to be more than industry buzz words, however. They need to mean something tangible – and for service companies across the supply chain they need to be reference points against which their market offering is tested.

It is generally acknowledged that the market is still bumping along the bottom and, while there are encouraging signs that we may see some degree of pick-up later this year, the lessons learned over the past two years or so will remain central to the long-term prosperity of our industry.

Those lessons are all about efficiency. ClerkMaxwell’s Directors recognised the need for a more efficient project delivery model prior to the company’s launch in September 2008. The requirement for a new method of project delivery was only heightened as the oil price began to drop and spending was rapidly curtailed.

Our business development, therefore, was based on a close examination of what was required to safeguard the future of the North Sea, and a need to tailor our services offering accordingly.

What may in some circumstances have proved to be bad timing instead provided us with the opportunity to show a straitened market that innovative approaches to old problems could provide the basis for progress and growth.

From my perspective, the bottom line is that, as an industry, we need to get costs down, keep them down, and be more efficient in everything we do.

We need a step change in the way projects are delivered, overcoming resource shortages and quality issues that have become increasingly apparent in recent years and adopting a new strategic approach to project execution. That step change will, I believe, be pivotal in ensuring the North Sea market survives, especially when subjected to low oil prices.

To focus upon one issue which I believe is now a key theme in our particular area of activity, greater emphasis needs to be placed upon bringing greater operational and detailed design knowledge into the front end of projects.

Most if not all operators will have had the painful experience of projects that run late or over budget – or both.

Often that has been attributable to issues such as insufficient attention being paid to the front end of projects, a phase where the greatest positive impact can be achieved with relatively little investment. That is in contrast to the potential aftermath: spending a great deal more in the detailed design and implementation phases to fix projects that have gone wrong.

That switch of emphasis in effect is all about making changes at an early stage in a project life cycle, when the opportunities to do so are high and costs are comparatively low.

Integrating detail design knowledge into the front end of engineering projects and ensuring asset-specific knowledge is contributed to the process – these are the cornerstones of a new approach that facilitates a smooth transition into detailed design and implementation phases, and serve to help avoid the potential operational and economic pitfalls that may subsequently be encountered.

Full and independent scrutiny of project cost estimates and schedules at the outset can also make the difference: sometimes success might take the form of identifying a project that shouldn’t get off the starting blocks.

These are all component parts of a fresh take on project delivery – in essence about greater communication and cohesion across all parties involved – that acknowledges the new financial realities of the North Sea oil and gas industry.

They’re also exportable, of course, continuing the tradition of moulding and refining good practices in this part of the world and using them as the basis for taking our experience and expertise into other provinces.

We are certainly looking to do so: we have, for example, recently put our business principles to work in Vietnam, performing a successful alternative development study for a client.

They represent just one form of innovation, relating as they do to organisational delivery. Technological development within project engineering is also key. We are presently delivering a pilot project for a major operator focused on chemical enhanced oil recovery.

And, crucially, this new project execution model is also about people. Much has been made of the skills shortages and demographic issues in our industry, and the extent to which they may compromise growth, but the key – and this continues the theme as it relates to project delivery – is in working smarter. How people are deployed is the central point, not the number of people in an individual organisation.

A company’s business model needs to overcome the human resource constraint by making delivery more efficient, not by adopting the one-dimensional ‘employ more people’ approach. Having the right people and using their skills effectively should be the ultimate objective, and supports the step change in engineering delivery. It comes back to my original point – efficiency.

Combined, all these factors take into account the driving forces behind project execution in the 21st century energy industry. Further, they serve as key influences in prolonging the operational life of the North Sea, and in sustaining and enhancing our service industry as a hub of global excellence.

Click here to read this article on the Platform Oil and Gas Technology Review magazine website

By John Wilson, Managing Director, ClerkMaxwell on March 2010ClerkMaxwell News