Skills shortage, well productivity are other concerns voiced at conference in The Hague
Dr. Don Henery, left, Offshore Engineering Manager at Shell International Exploration and Production BV exchanges views with Larry Schilhab of Schlumberger Sedco Forex at DOT'97. Dr. Henery was the Chairman of DOT'97.Deepwater is definitely a global pursuit. Virtually every nation with a maritime exposure is striving to explore and develop oil and gas resources as far out as international treaties will allow, and this means to whatever water depth that boundary extends.
Last month's ninth Deep Offshore Technology conference (DOT'97) in The Hague attracted a record number of deepwater specialists and managers from around the globe. They were addressed by practitioners from all the world's emerging deepwater arenas, as well as key innovators in floating production, well management, and seabed facilities.
DOT'97 Advisory Board Chairman Dr. Don Henery, Deepwater Development Consultant at Shell International Exploration and Production BV, gave his views on the value of the industry exchange to Offshore Magazine.
OFFSHORE: The bandwidth for deepwater operations seems to be getting wider and wider. How would you define the starting point?
DON HENERY: Reflecting back over the last three days, it's interesting to ponder - what is deepwater? We had a suggestion that deepwater counted as 200 meters in the West of Shetland area, 300 meters around Troll, and 500 meters in the Gulf of Mexico. Leading on from that, if you go to the Far East, you find the production sharing contract (PSC) terms are onerous, but lo and behold, they get better for deepwater PSCs - classified as 200 meters.
OFFSHORE: Most of the majors are building a solid track record in deepwater operations. Do you see the ranks of participants growing?
DON HENERY: There was a statement made that deepwater finding and development costs are pretty robust now and that this industry can even tolerate an oil price lower than today's level. I would suggest that the future does look buoyant. However, to get into deepwater requires competency from the players. It's one thing to play in shallow water, but deepwater is completely different.
We've all got a reputation to maintain. My advice to people thinking of dipping their toes in is - don't rush in. We've already seen people rushing headlong into FPSOs in shallow waters and losing their shirt. Some companies have lost as much as 50% on projects due to schedule and cost overruns. We certainly don't want that happening in deepwater. If you want to come in, come in carefully.
OFFSHORE: How can the industry avoid these types of overruns?
DON HENERY: Technology advances are helping to bring down deepwater costs, but as far as goods and services are concerned, these costs are going up. We need to get more efficient with our work processes and relationships. Both sides need to cut costs to mutual benefit. It's vital that everybody in this industry succeeds and stays healthy - if we all improve, we can help keep each other in business.
I think the appeal from John Westwood for more data to be released is quite right. The operators are sitting on a lot of data, and it must be extremely difficult for the deepwater goods and services sectors to decide where they're going, how many rigs to provide and so on. As operators we should open up so that they can provide the services we will need in the future.
OFFSHORE: Are there any other barriers you can foresee to the progress of deepwater activity?
DON HENERY: A big problem we've got is human resources. We've got to rejuvenate and strengthen our aging and declining workforce. We need to attract new talent - but is it a case of too little, too late?
Recently, Cambridge University in the UK invited the industry to mount a recruitment campaign. Representatives from six oil companies made presentations, and they had an audience of just five students. That's a sad indictment of the position we're in. We haven't got a very good public face, we need to improve it.
Dick Frisbie of Oceaneering hit it very well in his presentation - deeper means more talent. Remotely operated vehicles (ROV) have been flying down to the seabed for two to three hours work. Now, for deepwater you're looking at seven to eight hours. And you're not thinking in terms of two people per ROV, but three or possibly four.
Moving on from there, of course, if we're not careful we're going to get into a dog-eat-dog situation, which we've seen before. We are building rigs, but at the present we haven't got the people to run them. Meanwhile, Shell is expanding, Elf is expanding - you name it. We then start poaching staff from each other. But, all that is negating what we've got and causing disruption. The only solution is to work harder to get new people in to the industry and get them trained. But it does not come cheap.
OFFSHORE:Surely it's not just a case of working hard, but also striking the right chord?
DON HENERY: We need to be proactive, not reactive, about public relations. That's clear from the Brent Spar. We've got a fascinating industry out there. You can see that by the size of our audience this week - over 600 people - which is an all-time record for DOT. It is a stimulating industry. What we're not doing is projecting that fact.
OFFSHORE: Do you think there's a danger that the industry is ignoring its limitations?
DON HENERY: We need to avoid the boom-to-bust mentality. We've got to make measured progress. The proposal put forward by a couple of the speakers for a Deepwater Operators and Service Industry Forum was, I think, an excellent one. Clearly, this will require some investment and good public relations, in terms of HSE and others. Where this is done and by whom, for example the E&P forum or the SPE - is open to debate. But, the aim must be to stimulate debate.
This week, we've covered numerous issues such as life cycle management, cost reduction, and integrated teamwork. A lot of good work has been done here, and things are moving very quickly. One area where I suggest there is room for further improvement is drilling and well engineering. Contractors in these sectors are rising to the challenge.
As operators, I think we are prepared to pay higher costs for much more efficient rigs. By looking not just at the rates for drilling, but the final completed cost of the well, you can then start justifying higher costs for drilling units - provided that they are efficient.
Another point that has emerged very clearly over the last two to three days is the move to put more equipment into the well - such as downhole compression and downhole separation. As time goes on, we're going to see a move to leaving more in the reservoir, producing less water, and that will have a knock-on effect on the facilities.
OFFSHORE: Do you think the industry is getting to grips with problems related to production from the remoter areas of the world?
DON HENERY: One thing that's become very clear is that what's really paying for the operation is flow assurance and how much we get out. It's also an understanding of wax, emulsion, hydrates, along with reliability and uptime. I think deepwater work in these areas is now starting to come to fruition.
Gas disposal is a big issue. We've got to look at that from two points of view - putting associated gas back into the reservoir or converting gas to liquids. Offshore, we need something cheap and cheerful for gas-to-liquids. The sort of process that Sasol has developed in South Africa is starting to show promise.
As for floating LNG, it may sound preposterous, but there is a market out there for big gas. LNG is a completely different market to oil, involving high uptimes, and very heavy commitments to take or pay. But I think it's beholden upon the operators to take an interest in this. There are one or two little battlers out there producing ideas, and they need our support.
OFFSHORE: Are there any other new approaches you'd like to see implemented?
DON HENERY: I would suggest that there is a need for greater standardization and interchangeability, rather than customization. Now that the industry is looking, for example, all along the West African coast, from Cote d'Ivoire down to Namibia, could we not deploy interchangeable equipment all the way down there, so that we're not having every operator with their own equipment, every contractor with their own equipment?
As for the ultra-deep - 1,500 meters and beyond - you can see innovative ideas coming through such as Spar systems and changes in mooring systems. There's more than enough out there in the deep and ultra-deep to keep a lot of people interested for a long period of time.
DOT '97 proceedings available; call for papers set for DOT'98
- Technical proceedings from DOT'97 (Deep Offshore Technology Conference) held in The Hague in November are available for $360. For proceedings information, contact DOT Coordinator Frances Leon (Fax: Paris (33) 1-47-17-62-10; Houston (713) 963-6296.
- A call for papers on deepwater topics will be issued soon for DOT'98, scheduled to be held in New Orleans on November 16–18, 1998. This is the first time the major deepwater conference and exhibition will be held in North America.
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