UK offshore groups to work on improved project delivery

March 3, 2017
Britain’s Oil and Gas Authority has published a review of 58 major oil and gas projects undertaken between 2011 and 2016 on the UK continental shelf.

Offshore staff

ABERDEEN, UKBritain’s Oil and Gas Authority (OGA) has published a review of 58 major oil and gas projects undertaken between 2011 and 2016 on the UK continental shelf (UKCS).

Its main findings were:

  • Since 2011, fewer than 25% of oil and gas projects were typically delivered on time, with projects averaging 10 months’ delay
  • Projects delivered came in on average around 35% over budget estimates in the original field development plans (FDPs) which were approved by the Department of Energy and Climate Change and, more latterly, by the OGA
  • During the same period, capex levels reached an all-time high, and averaged just over £12 billion ($14.67 billion) in annual Money of the Day (MoD) terms since 2011
  • This compares to £3-6 billion ($3.67-7.34 billion) MoD/yr throughout the previous decade.

Following the review, OGA staged a series of lessons-learned events with 11 operators and three major Tier 1 contractors in order to develop a deeper understanding of good practice and areas for improvement.

Gunther Newcombe, OGA operations director, said: “In the last five years, over £40 billion [$48.9 billion] has been invested in new oil and gas projects. This brings considerable benefits in terms of financial contribution to the economy, supporting thousands of skilled jobs, and safeguarding the UK’s energy supply.

“The lessons learned outlined in the report have been derived from extensive engagement with industry, with focus on how major projects are planned and executed, rather than technical scope. One of the key findings was that there was no correlation found between the size and complexity of projects and delay, with the key factors being non-technical in nature.”

Newcombe added, however, that “there are also encouraging signs that the ability to deliver projects in line with cost and schedule commitments has been improving recently. This is aligned to the effort we have seen industry making in the areas of production efficiency and operating costs over the last 18 months.”

Following publication of the report, industry associationOil & Gas UK and the Engineering Construction Industry Training Board (ECITB) Offshore Project Management Steering Group are collaborating to deliver industry guidelines, including recommendations and good practice, for robust project delivery.

At a one-day, cross-industry workshop later this month representatives from the industry and key stakeholders will be invited to frame guidance for formulating project optimization guidelines.

A workgroup will then be established to develop the project guidance content, and will then issue a draft for industry review, with final publication anticipated by year-end.

Mike Tholen, Oil & Gas UK’s upstream policy director, said: “This report indicates that the industry is keen to learn from detailed reviews of past performance and is continuing to improve in its quest to deliver on time and on budget…”

Chris Claydon, chief executive, ECITB, added: “There are a lot of valuable initiatives being examined in support of MER, but making real change will come down to people, culture, and behaviours. To make the step change necessary to improve project performance will require innovative leadership and a truly collaborative approach.”

Newcombe concluded: “The OGA report presents common lessons harvested from various major projects and summarizes recommendations that, if implemented, should improve future project delivery in the UKCS.

“The audience for this publication should not be limited to project practitioners, but should also extend to key decision makers for future projects globally.”