Ken ArnoldTechnological development in our business is a good thing. Through new seismic, drilling, and production technologies, we have made quantum leaps in being able to exploit reservoirs which just a few years ago were considered uncommercial, even at the higher "real" oil prices that existed in those far away times.
Paragon Engineering
The same also can be said for facilities engineering and construction technology. During the span of my career, I can remember when 350 ft of water was considered deep for a platform, and we were wondering if it would even be possible to install a platform in greater than 600 ft of water. I can remember when instrumentation and ROVs were so unreliable and limited in capabilities, that Shell had a program to install wellheads and a manifold center, complete with three phase test separator, in a one atmosphere chamber.
In the 1960s, the US industry took the position with the US Geological Survey, that surface controlled downhole safety valves were too unreliable to be mandated, and if we installed all those surface safety devices they were contemplating, we would have so many false shutdowns we would never be able to stay on production. We were also worried when the EPA went from "no discharge of free oil" to the current 42/29 mg/1iter standard in several steps and some in the oil industry thought it would be impossible to operate an oilfield in the South Louisiana marshes without a burn pit.
Well, thanks to new technology we have come a long way. We have not only solved these problems, but have pushed the frontiers far beyond what any one of us would have thought imaginable 20 years ago. We have compliant towers, TLPs, and Spars. I hesitate to put a water depth limit on ROVs, subsea wellheads, and wet manifold centers for fear it will be out of date before this magazine is published.
We have installed multiphase pumps and meters for well testing subsea. Normal downhole and surface safety systems have become so reliable that, with the specific exception of downhole safety valves for certain deepwater wells, there is no technical argument left against their installation. We have voluntarily extended our safety efforts from a focus on hardware to the softer science of managing behaviors by establishing a system of safety and environmental management programs. In the field of water treating, we have introduced a whole array of water treating equipment, including flotation units, plate coalescers, hydrocyclones, pipe coalescers, and other devices.
The story is far from finished. We, as an industry, are working on many major efforts to further push the frontiers to deeper water, more difficult to produce reservoirs, and better economics of construction that will permit the development of marginal and more isolated fields at whatever the price regime we are handed by the fates.
Recently I was honored to be chairman of a Technology Transition Team put together by Brown & Root Energy Services (BRES). We had no trouble developing an extensive list of technologies that we felt BRES needed to continue developing, take the lead in causing to develop, or at least participate in the development by others if we were going to continue to provide the broad range of cost-efficient solutions which will be needed by BRES' clients.
There were so many challenges and opportunities that we could identify, that we were not limited by ideas but rather by personnel and financial resources. As individual companies, we must chose among these many ideas wisely. Surely the future calls for more cooperation between engineering and construction companies and operators than we have seen in the past. We are all going to do some exciting things in the years to come, and I can't wait to be a part of it.
My modest proposal is a little less radical and certainly not satirical. While I applaud the technology gains of the past and present, and am doing all I can to encourage those of the future, I would like to propose we employ them carefully and only where economically justified. Sometimes there is a tendency to use this new technology just because it is there.
A few years ago when Paragon was doing a value engineering review of a project for a major oil company, I suggested a simpler instrumentation scheme that would be more cost effective. The oil company engineer responded, "We can't do that. This is the 1990s." What a wrong way to look at technology.
New technology is a tool which can either be used or not used. Sometimes it takes someone who is very knowledgeable in the technology to be able to make the decision not to use it when this decision is appropriate. Let me give you an example.
We were asked to review an AFE supplement for one of our clients who is a small independent in the Gulf of Mexico. The project in question was a gas facility on a shallow water platform. A major oil company was the operator. The project's final cost, which was being AFE'd, was about $15 million. Paragon's generic cost curves said it should cost about $5 million. Our client's question was: "Is there something wrong with Paragon's curves, or is the operator of the lease doing something wrong?"
When we looked at the data, we found that about 70% of the difference was due to the operator's decision to use a highly automated electronic system with a full SCADA and remote control capability. This decision greatly increased engineering, procurement and hook-up costs, and extended project cycle time. Paragon's curves were based on a pneumatic system with instrument gas and remote hurricane evacuation shutdown capabilities. The question which had to be asked, was whether the extensive computer output and the ability to monitor sump tank levels, and change level and pressure settings on separators from Houston was really worth $7 million. In this case, I believe it was not.
I have been in numerous production facilities with elaborate, expensive control rooms which monitor and allow remote control of all operating control valves. Often these are justified, but just as often I wonder who was paying the bills. The processes we deal with in most production facilities (as opposed to gas process plants) are simple and, quite frankly, a well designed system is fairly insensitive to small changes in level, pressure and temperature. There are only a few times during the life of the facility that it is necessary to make a set point change. Is it that much of an imposition to do this at the separator rather than from the control room?
Often we tend to look for new technology to fix a problem, when a good understanding of existing technology may actually be what is required. A $1MM AFE had been approved to replace a flotation unit with a hydrocyclone. We were able to show that by making a $2,500 change to instrumentation, an existing separator could be used as a slug catcher to allow the flotation unit to work as designed with a steady-state feed. The correct answer had nothing to do with the need for new technology but everything to do with the correct use of current technology.
Ten years ago Paragon did a study for Shell on the differences between Gulf of Mexico designs and typical North Sea designs. This was published as an OTC paper, and I have been asked on many occasions to address various audiences on this subject. A large part of the difference is of course due to different weather and environmental conditions, and the risk and life support problems created by these differences. The CRINE initiative tries to address the remaining differences but it focuses on a small part of the overall difference. The major part of the problem (or opportunity) has to do with differences in design and construction philosophies which are too complex to address here. But the proper use of old technology, where warranted, must be included in any analysis of differences between GOM and NS designs.
So my modest proposal is that we do everything in our power to push the frontiers of technology so that we have a tool box of technologies we can employ to make cost efficient decisions. But let us not lose sight of the fact that proper application of current, and in some cases, even old technology isn't necessarily a bad idea under the proper circumstances.
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