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Efficiency Exploration in the Gas and Oil Industries

Chris Woodhams, Managing Director at Argenta, commented that "Collaboration is something that is imperative to Argenta and working in the Aerospace industry has shown us how beneficial this can be. If the Oil and Gas sector were to adopt this collaborative approach, the advantages would be significant. In this article it’s great to see NIs CompactRIO platform being used to reduce costs, improve efficiency and increase accuracy of measurements. Argenta has first-hand experience of implementing monitoring systems with this platform and the improvements that can be seen."

When the price of oil plummeted last year, the economic impact was felt around the world. There are winners – ask the UK motorist whose petrol is returning to £1 a litre for the first time in years – and there are losers – ask the shrinking Russian economy.

One of the clearest losers is the oil and gas sector itself. While many moaned that the industry had become profligate, with sustained prices above $100 a barrel, the new reality of around $40 a barrel has prompted job cuts and cancelled projects.

The Lloyd’s Register Energy annual Technology Radar survey garners replies from around 450 senior executives in the oil and gas sector. John Wishart, energy director at Lloyd’s Register, says the survey has picked up on the impact of the low oil price in several ways.

One of the most worrying effects is cuts to research and development budgets. More than three-quarters of respondents to this year’s survey said that they were either slowing down or halting completely their innovation and technology development activity. However, the survey also revealed that engineers are shifting the focus of technology development.

Focus on Cost Cutting

“Before the price drop, the focus was on accessing more challenging reserves, in deep water or the Arctic. This activity is costly. The last thing you want to do if you are bringing your costs down is drill in deep water or the Arctic,” says Wishart.

“Now there is a focus on cost reduction, improving operational efficiency, better automation, getting better access to reserves.”

The shift in technology development is likely to be a lasting one. The industry almost unanimously believes the latest low price is different from previous dips, and will be a more sustained reduction. “In the past, people would talk about peak oil, and demand outstripping supply. This is the other way around. Peak oil is no longer an issue. Supply is abundant and way above the demand point. Carbon emissions are also a fundamental shift in the energy debate. The idea that oil will scuttle back up to more than $100 is unrealistic,” he says.

Projects Abandoned

Most challenging new oil and gas projects have been cancelled, notably the controversial Shell Arctic project off the coast of Alaska. The oil and gas sector globally has lost hundreds of thousands of jobs this year. Yet sacking people and cancelling projects do not comprise a long-term business strategy. Eventually, the technology and operations have to change. But change in which way?

Oil and gas engineers must look at technology trends in other sectors, says Wishart. There are developments in 3D printing, and automated vehicles and drones have clear applications in the oil and gas sector, which is often remote and hazardous in nature. There are also technologies such as Big Data and the Internet of Things, which not only provide big short-term gains but can also make a lasting change to the way a company operates. Sectors such as aerospace, automotive and medical are making good progress on ways to collect, analyse and use data better.

Although condition monitoring and predictive maintenance already happen in the oil and gas sector (see box on page 50), the concepts need to be embraced further, he says. “The bit we’re not so good at it is the holistic part, cross-company benchmarking and applying across entire systems. Engineers need to look across the whole oil and gas process – ask ‘what are the key parts?’, ‘how can we improve them?’ There needs to be a broader view.”

Andy Hollins, principal consultant at power and automation technologies company ABB, is part of the team there who have helped oil and gas operators reduce the cost of operations and work out how to carry out maintenance more cheaply. He says that plant equipment failures and unplanned shutdowns account for almost half of all downtime on the UK Continental Shelf. But immediate measures to increase efficiency don’t have to require large investments. “Our idea is to take bites out of each problem – small, incremental wins. There is no install on the ground or putting in new systems. You can get worthwhile gains from not much investment. Other industries have been doing this for years.”

ABB focuses on identifying, and then stopping, the low-value engineering activities that happen too frequently or can be done remotely online. Often, the first reductions can be achieved by looking at plant failures, and getting to the bottom of why a fault is occurring. For example, if an installation has an issue with compressor reliability, the problem often isn’t the machine itself but the seal and the lube, or an ancillary system, says Hollins. In a recent case, better watch-keeping of equipment realised an increase in compressor uptime by a factor of 10.

Inspection is another area ripe for review. Upgrading technology, or changing inspection techniques, can yield gains. Around 85% of vessel inspections are done using internal access, he says. ABB is now using non-invasive technologies to inspect 700 vessels on nine offshore platforms. Of these, 60% use non-invasive technologies that involve online reporting, massively reducing the maintenance workload for operators.

Pressure safety valves are a good example, says Hollins, as in many cases they are looked at either too much or not enough. By considering the criticality of the duty, the fluid, operating conditions and previous test results, a more timely inspection interval can be defined. A recent client’s average interval time between inspections was increased from 48 to 62 days in this way. In addition, it may be possible to handle ATEX inspections differently, by moving to a regime that tests samples of equipment.

Between 10 and 15% of maintenance work is carried out on redundant equipment that is due for decommissioning. “The guys doing the inspection aren’t the guys doing the isolation and managing the change,” he says.

Better management of redundant equipment can therefore pay dividends in terms of lowering operating costs. A recent project removed as many as 5,000 hours of maintenance work this way, worth around £300,000. “Removing equipment can also provide space to include newer, better equipment that will improve operating costs,” says Hollins.

Longer-term, an integral part of improvement will be increasing the levels of collaboration in the oil and gas sector. Technology partnerships can help mitigate risk at early stages of development, with the sharing of knowledge potentially generating ideas and improvements.

Time to Work Together

Other sectors, such as aerospace or the pharmaceutical industry, are better at collaboration. But the oil and gas sector is different in many ways from big pharma or the Boeing/Airbus airliner market, where collaboration is embarked on more easily. However, the industry is capable of more collaboration, says Wishart from Lloyd’s Register. During the 1990s when the price of oil fell to just $12 a barrel, forced collaboration was common and helped many firms to weather the lower price, he says.

Guarantees that preserve commercial advantage would help more collaboration, as would the standardisation of equipment and plant across the sector. Broader regulatory frameworks, rather than the regional approaches that permeate the industry, would also help. Engineers with new skills will also be needed to meet the latest challenges the sector is facing. Here, Wishart is hopeful. “I’m enthused by the younger generation of engineers entering the industry,” he says. “They work and play in a more shared environment, and also have the problem-solving skills that benefit engineers and science graduates throughout their career.”

Whatever times are approaching for the oil and gas industry, it is apparent they will be tough and different from recent history. Calling the sector a loser is to do it an injustice though – the sector is resilient and will adjust, as long as engineers can adapt too.

Chevron Upstream Saves £9 million on Well Operations

Chevron Upstream Europe (CUE) has improved the efficiency of its well operations and saved more than £9 million in six months by creating distinct operations and performance teams and making more effective use of data.

The initiative the company launched a year ago aims to eliminate inefficient practices and non-productive time to deliver well operations within the time and at the cost predicted.

It has involved reorganising the drilling and completions group to ensure a consistent well-planning structure. For all future wells, the performance team carries out extensive historical benchmarking to identify where ‘performance gaps’, leading to non-productive time, have occurred. Each service provider must also carry out root-cause analysis on past issues, and then work with CUE to develop a well-performance plan to resolve them. Progress through the plan is monitored in collaborative meetings, and service providers are held accountable with the help of key performance indicators.

Improving how data is used has also been key. Simpler methods of analysing data, and realtime benchmarking of mudlogging data, allow areas of lost time to be understood and captured more quickly.

The efficiency drive is not only focused on CUE’s existing fields, but also applies to new projects such as Alder, Rosebank and Captain, as well as non-rig operations.

Andy Mayeux of CUE says: “The first three wells of 2015 were completed early. We have accrued savings, and service provider non-productive time has more than halved. Most importantly, by reducing well days, wells are being brought online sooner and additional wells can be added to the rig schedule.”

In Focus: NI helps firm to monitor pumps' condition

One of the most widely accepted ways of reducing maintenance costs is through remote monitoring and control. However, efficiency improvements will be affected by the level of automation that can be achieved, and the use of data in preventive maintenance scheduling.

One company that can support the supply of embedded systems for condition monitoring is National Instruments (NI). The company’s CompactRIO system can be used to monitor assets, says Erik Van Hilten, marketing engineer at NI. “The complexity of systems is increasing, but it still has to be done in a couple of months. A control engineer who has a great idea can design and install it and test in a short time. We provide the interface with the controls, system and electronics. You can start prototyping quickly,” he says.

One company that has benefited is Norway’s National Oilwell Varco (NOV), which was supplying hex mud pumps to lubricate the drilling on an oil platform. NI helped NOV to develop a condition-monitoring system for the pumps to detect valve leaks, which is saving offshore operators money.

The hex mud pump has six pistons, six suction valves, and six discharge valves. The six pistons are driven by a rotating, asymmetric cam. “Before the automated monitoring, a technician would have to visit and listen to the pumps,” says Van Hilten. “The solution includes sensors, such as accelerometers, on each cylinder to detect motion. Opening and closing phases create different levels of vibration, and the system has been automated to detect only during these phases. The system can tell different cylinders and even inlets/outlets apart. Audio can be recorded and played, and the anomalies detected.” CompactRIO was added to the pump controls to acquire high-frequency data and power the sensors, along with signal processing software and alarm logics using Labview software. NOV can now remotely monitor the pump’s performance and schedule maintenance more appropriately.

Accreditation: Institution of Mechanical Engineers, Ben Sampson, 2015. The original article can be located here.

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