POINT OF VIEW: Shell VP Sharpe sees safer operations, continued success

Jan. 7, 2008
Supermajor Shell is spending record sums, said Peter J. Sharpe, allocating more than $20 billion/year in capital for new projects and more than $2 billion/year for exploration.

Supermajor Shell is spending record sums, said Peter J. Sharpe, allocating more than $20 billion/year in capital for new projects and more than $2 billion/year for exploration. Shell’s well engineering and well services budget was $7 billion in 2007 and will continue at the same level until the end of the decade.

As vice-president of the Wells function and chief well engineer for Shell International Exploration & Production BV, Sharpe oversees the activities of 2,300 company staff, more than 160 actively drilling rigs, and hundreds of operations in more than 30 countries. Wells activity in Shell has increased by about 50% since 2003, obliging the company to recruit more than 650 new engineers over the last 4 years.

Shell’s overall priority is safety and Sharpe says he will never consider himself successful in his job until all operations under the Wells function are incident-free. He believes that this is achievable, while at the same time achieving his second goal of beating the competition in operational performance.

Business environment

Sharpe noted that cost inflation across the industry has been significant over the last few years. “We’re writing bigger checks for almost everything we do.” While the service sector has struggled to maintain standards, “it is certainly easier to build new hardware than it is to develop experienced people.”

A leader in deep water, Shell anticipated the market and made a series of long-term commitments for rigs in 2005. This has resulted in Shell’s deepwater fleet costs being about 30% below the current market average. Sharpe said that Shell had good coverage on deepwater drilling capacity through 2010-11, at which time he believes the market for deepwater rigs will soften.

Shell’s first new “Bully” rig, now under construction in a 50-50 joint venture with Frontier Drilling ASA, will be completed in early 2010 (OGJ, Nov. 26, 2007, p. 39). The two companies have also committed to build a second Bully rig, which is also expected to be ready in 2010. The sister ships will have artic hulls and carry 8,200 ft of riser, although capable of operating in conventional mode (subsurface BOP) in 10,000 ft of water and capable of operating with a surface BOP in more than 12,000 ft of water.

Looking at the overall market situation, Sharpe commented that higher operating costs require greater innovation, an increased focus on technology, and improved “technical prowess,” which he defined as staff capability to successfully integrate and implement the complex technical solutions required to develop an increasingly demanding range of projects.

A key focus area for Shell through this period of intense business growth has been people. Sharpe believes that Shell’s industry recognized proprietary “Round I/II” staff development program gives them a real competitive edge in this critical area. Shell recently expanded the curriculum to cover all areas of completion and well intervention. Every year, the company starts more than 100 graduates from around the world in this multiyear program. Upon completing the program, the work can be credited as a MSc. with a leading UK university.

The Wells function in Shell also has a well developed “technical ladder” which ensures that people who want technical careers can progress through positions such as principal technical expert and chief scientist to reach the most senior job grades without having to move into general management positions.


Sharpe said that Shell classifies technologies as either evolutionary or revolutionary. “If the technology is key to what we’re working on, we’ll take it on ourselves,” he said.

Shell has invested heavily in research, development, and deployment of new technologies. It took directional drilling along a new path, successfully drilling snake and dragon wells in Southeast Asia. Sharpe is confident that surface BOP systems, as planned for the BC-10 development in Brazil, and monodiameter expandables, as recently trialed in the Gulf of Mexico, together with the new Bully rig design will all play a part in Shell’s plans for efficient deepwater drilling.

Another deepwater technology enabler that Shell recently worked on with Noble Corp. was the aluminum riser on the Noble Clyde Boudreaux semisubmersible, now on the Perdido project in the Gulf of Mexico. Sharpe told OGJ that Charlie Williams, one of Shell’s chief scientists, had been instrumental in troubleshooting welding procedures. The new riser was successfully deployed in early December 2007.


Shell’s revitalized “Drilling the Limit” program (rDTL), is based on Ferrari’s approach to optimizing performance and using the technical limit methodology has significantly improved drilling performance in several key projects in 2007, such as Pinedale (OGJ, Oct. 15, 2007, p. 52). The rDTL program is currently being implemented across all of Shells major drilling projects. Sharpe said that Shell’s target is to have 75% of its wells benchmarked in the top quartile by the end of the decade.

About 20% of the E&P industry’s capital expenditure on drilling is lost to nonproductive time. Shell uses its system of worldwide real-time operations centers (RTOCs) for well planning and optimized drilling. This also leads to improved safety and efficiency because it depopulates offshore facilities and allows scarce expertise to cover multiple projects. For example, vibration-related problems on an operation in Inner Mongolia were addressed in real time by experts in Shells research center.

Contractor performance

Shell has been collecting key performance data on drilling contractors for more than 5 years, using a series of KPIs to construct contractor performance league tables that it can use in rig tender evaluation. Sharpe said the data show that the performance of most contractors has been deteriorating over the last 2 years, as they have struggled to cope with business growth, but are now starting to show signs of improvement.

The company also collects performance statistics on key services such as directional drilling, logging services, drilling fluids, and cementing.

Sharpe said he wants to see greater value alignment and value transparency in the contracting relationships with service companies.

Well control, integrity

Well control and well integrity have been key focus areas for Shell in 2007, with global multi-year programs “to ensure that these critical area of the business are being controlled to the highest standards.”

Sharpe told OGJ that well control, in particular, worries him because of “falling experience levels in the industry due to business growth.”

Safety—’Goal Zero’

“Looking back on my career, the only things I’ll truly remember, other than my colleagues and the friends made, are the accidents that have occurred on my watch,” Sharpe said. He stressed that they want no one to get hurt, and expect all vendors to meet the company’s ambitious safety standards.

The Wells group aspires to reach “Goal Zero” and Sharpe wants to “integrate safety into everything we do” by focusing on the risk, listening carefully to contractors, and simplifying standards. Sharpe believes “simpler is always better but is usually more difficult” and that people want to do the right thing but need clear rules so that they can comply. He felt that most people know that rules and compliance save lives but that in many cases the rules have become so complex that they are impossible to follow.

Sharpe stressed the importance of investigating near-miss incidents the same way serious injuries are investigated in order to share what is learned. Reviewing the company’s high-potential near-miss incidents, his team found that dropped objects were “far and away the highest area of risk” in 2007.

Sharpe has spent 2007 ensuring that his teams distill the key learning and action and then tailor the communication so that the right people get the right information in a way that they can understand. He explained that giving the same incident investigation report to an HSE professional, a manager, and an OIM was hardly the best way to ensure that they all got the information that they needed to take action and make a difference.

Improving the cascade of key learning from incidents is still an area that Sharpe feels can be improved in Shell. He questions whether the same level of intensity and urgency goes into the follow up and verification of action close-out as went into the initial investigation. “Leaders who set clear safety expectations, but then don’t ensure that they are met, are poor leaders.”

Sharpe makes at least one HSE trip/month and recently visited an operation that had experienced several high potential, near miss incidents. He wanted to understand what needed to change and what could be learned. Among other things, an overload of distractions during start up, a new crew, and new operation had reduced the focus on safety. Rig start-up is a high-risk activity, he said, and we must do a better job in ensuring that we have the right level of supervision and sufficient time to ensure we do it incident free. Another trip highlighted the difficulty of communicating incident learning. Sharpe discovered that the crew believed the key learning from an incident was around hardware while management was convinced that communication failure was the root cause. Sharpe believed that nobody was completely clear on the key action to prevent reoccurrence, which in his own view was that during lock out and tag out “the person or people at risk must also be in control of the lock out.”

Visiting a rig in Qatar with no incidents, Sharpe attributed its success to “committed leadership and an experienced long serving crew with a strong intervention culture.”

Keeping operations safe requires discipline and clear consequences; if you cannot find the responsible person for safety failures, you have a leadership problem.

In Q3 2007, 46% of the rigs working globally for Shell had been free of recordable cases for more than 12 months, i.e., had achieved “Goal Zero.”

Sharpe believes “we need a fundamental change with regard to visibility of leading HSE indicators—total recordable case frequency is a horrible way to talk about people being hurt and it does nothing to stop the next accident. Why isn’t training plan compliance a key HSE metric made visible on a rig?”

Program focus

Under the “Goal Zero” program, Sharpe said Shell will be simplifying HSE standards, making safety an even more important factor in contractor selection and ensuring that safety leadership is key in the staff appraisal and promotion process. The Goal Zero message is to elevate safety from a priority to a core value and to convince everyone that harm is avoidable and continued safety demands urgent action. Sharpe explained that Goal Zero also contained specific plans for high risk focus areas such as road transport, contractor HSE management, process safety, and worksite hazard recognition.

Sharpe believes that Shell can work with anyone, anywhere, and achieve Goal Zero. He cited the company’s work in China on the Changbai project in Inner Mongolia, where Shell is drilling 6-km multilaterals for tight gas with three rigs from local contractors. The operation has been running for 5 years with only two people hurt and with nobody hurt for the last year. Sharpe attributed the success to extensive training; highly experienced supervisors, and the time spent building a strong safety culture with the local companies prior to the start of operations.

Shell International E&P recognized KCA Deutag for their safety performance in 2007. KCA Deutag operates 15 land rigs for Shell in Brunei, Siberia, Oman, Saudi Arabia, and Nigeria, and 10 of them were free of recordable cases in 2007. Sharpe said, “KCA Deutag’s focus on safety is excellent, as demonstrated by this achievement with a rig fleet spread across many different countries and operating environments. The company’s continuous nurturing of a safety culture among all its crews, combined with a robust set of safety tools and systems have resulted in significant progress towards Goal Zero.”

Looking ahead

Sharpe feels that Shell has led the industry in many new technologies and deepwater project developments and considers the company a global leader in deploying new technologies, citing managed pressure drilling and highlighting the recent use of this technology on an Algerian tight gas exploration venture for reservoir characterization.

Sharpe believes that while finding technical solutions, working with key stakeholders and with service providers are key factors for Shell, ultimately it is “people that make it happen.” He’s therefore focused on seeing that Shell staff are the best trained in the industry. This is, in his view, what will put Shell Wells in the best position to address the future energy challenges of the E&P business.

Career highlights

Peter Sharpe
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Peter J. Sharpe is vice-president of Wells and chief well engineer for Shell International Exploration & Production BV, based in The Hague.

Since joining Shell in 1990, Sharpe worked in the Netherlands as a senior drilling engineer, in Albania and China as operations manager, in Brunei as head of well delivery and later, as an asset manager. He was appointed regional wells manager for Shell’s Asia-Pacific region in 2003 and was promoted to his current position on Jan. 1, 2007.

Sharpe began his career in exploration logging in Southeast Asia. He went on to work as a consultant for numerous operators in Thailand, Indonesia, Philippines, Sri Lanka, Pakistan, and Denmark before ending up as consultant for Shell in Syria and deciding to join them when he realized “that they had the best-trained people in the business.”

Sharpe holds a BSc in geology (1980) from Hull University, Kingston upon Hull, England. He has since attended myriad training courses, classes, workshops, symposia, and meetings within Shell.