New methods: Statoil has run pilot projects on Lean-work methods, with good results. Lean is now being rolled out on all Statoil-operated fields on the Shelf. (The photo shows SNORRE B). Photo: Harald Pettersen - Statoil
EFFICIENT DRILLING – BIG SAVINGS BUT NOT ENOUGH
Drilling and well efficiency in Statoil has increased by 30-40 per cent the last two years, and there is still more to be done. Geir Tungesvik is almost hoping that oil prices don't rise too steeply.
The world market is largely characterised by decline, across the board. Statoil drilling and wells is one of very few exceptions. "We actually drilled more wells last year, than the year before. So to those who say we are not spending enough: not us. We're drilling more than ever before," says Statoil head of drilling and wells, Geir Tungesvik.
There were few who comprehended the gravity of the situation, when Tungesvik raised the alarm about drilling costs in Statoil in 2013.
The price of oil was around 100 dollars per barrel, but profitability was waning. Drilling wells had become too expensive. It could not continue. Tungesvik started cleaning his own house, with improvements, streamlining and standardisation. When it was time for the suppliers to get involved, oil prices were falling and the industry had already acknowledged that the cost level was excessive.
Tungesvik admits that this has been a tough path. At the same time, he is impressed by the pride and the competitive instinct he has seen on the part of suppliers and shipping companies. The search for cost savings has yielded results. On average, Statoil is now 30-40 per cent more efficient than in 2013. And it's going to get better. The company is attacking the problem on several fronts.
MORE FOR THE BEST
A project the company is already working on is to look at models where the best suppliers are prioritised and receive a larger volume when new contracts are awarded. The companies will then be measured according to a number of parameters, such as efficiency, safety and how rapidly they exploit new technology. There are opportunities here, as several contracts will soon expire. Another area is the fight against downtime.
"Throughout the years, downtime has been 15-20 per cent. That's almost embarrassing. No other industry would accept numbers like that," says Tungesvik. He believes that logistics is another area where the potential for savings is significant. The industry generally has backup for practically everything. We can save substantial sums if we trust more in our equipment.
Statoil has also run pilot projects on the Lean methodology, with good results. This means that the people actually doing the work make a critical review of their own work tasks and processes, and continuously propose improvements. Lean is now being rolled out on all Statoil-operated fields on the Shelf.
"Looking a bit further ahead, we also want automated drilling," says Tungesvik.
Among other things, he wants to see an autopilot down in the well that sends signals to the surface, and software that makes the machine react correctly – like the automation in an airplane when it encounters a strong crosswind. Work is being done on this on the Mariner field on the UK Shelf, and on Johan Sverdrup.
"You are drilling more than before, while more rigs are laid up. How does that make sense?”
"We're more efficient," says the toolpusher.
In some wells, we drill 50 per cent more meters per day. Everything is measured against the perfect well, which is composed of ideal sections from multiple wells. Statoil has spent a lot of time learning from the best teams, who have long lists of improvement items. The poorest ones had none. Now everyone is doing better.
NOT UP AGAIN
Another area that will yield long-term savings are new, market-adjusted rig contracts. Current contracts reflect the fact that they were signed when the price of oil was at a peak. The price can account for as much as 50 per cent of the cost of a well.
"We have many projects we want to implement to achieve lasting change. I am concerned about what will happen if oil prices rise, and we follow. The question then: Have you learned nothing?” says Tungesvik.
“Drilling and well costs must continue to come down if we are to defend more wells – particularly on mature fields.”