On Oct. 7 Brian Ward finished a 4 year tour of duty as production director of Shell U.K. Exploration & Production (Expro), the 50-50 operating company for Shell and Esso Exploration & Production U.K. Ltd.
Before he moved to his next posting, Ward told how 1990-94 saw solution of a crisis within Expro. The crisis hit in 1989-90 when Expro suddenly realized its offshore infrastructure was old.
"Twenty-five years as a successful operator builds overconfidence," Ward said. "It is impossible to get 25 years of pats on the back for your performance without losing the ability to sharpen your knife."
The nominal life of much equipment on Expro's production platforms is 25 years, so rapidly rising operating costs should not have come as a surprise. It did, and Ward was brought in "...to do something double quick."
"We suddenly met certificate of fitness problems on equipment," Ward said. "With electrical equipment enclosures, for example, we found that if one box deteriorated we had to replace thousands just like it."
LIFE CYCLE LESSON
In overcoming this crisis, Shell learned lessons that immediately changed the way it thinks about developments anywhere in the world.
Ward set a target to return Expro's operating costs below $4.50/bbl. After initial work to replace obsolete equipment and install emergency shutdown valves in the wake of the Piper Alpha platform blast, Expro focused on maintenance.
"The experience taught us to think about life cycle costs rather than capital expenditure," Ward said. "The way oil companies do economics, capital expenditure traditionally has the upper hand."
Expro learned that maintenance philosophies are best built into front end designs for developments. it is better to spend more up front if operating costs are lowered as a result, Ward said, although finance people remain hard to convince.
"We no longer want maintenance intensive platforms," he said. "We want things to be reliable and simple and to run forever."
BROWNFIELD PROJECTS
Because the main platform structures in early North Sea developments were overengineered, many older platforms will last long enough to be used in further "brownfield" development projects, Ward said.
In the near term, Ward sees operators rushing to develop small fields near existing infrastructure. Expro has small development prospects near all its platforms, with extended reach drilling the development option of choice..
"If I were staying on," Ward said, "I would begin asking now if near field reserves were being tapped quickly enough to capture hydrocarbons before existing infrastructure has to be abandoned."
On Oct. 10 Ward began tackling a completely different problem, however. That day he began work as managing director of Shell joint venture Petroleum Development Oman, which plans a liquefied natural gas export project.
"There aren't enough proven gas reserves in Oman to support the planned LNG plant plus a planned export pipeline project," Ward said. "We are hoping to clarify which fields will be dedicated to the LNG project."
