GO DiGi - The future of offshore technology is both simple and complex

For decades, as oil exploration and production companies went farther and deeper into the world’s oceans, offshore technology meant developing, designing and building custom-made rigs and platforms that often were compared to spaceships, each unique to the particular drilling project and each costing many billions of dollars.

But today, oil and gas companies are taking a vastly different approach, focusing relentlessly on increasing efficiency and lowering the costs of offshore production. It’s a focus requiring offshore technology to simultaneously become simpler and more complex.

As the 51st edition of the Offshore Technology Conference opens in Houston, the offshore energy sector is grappling with a existential crisis spurred by a shale revolution that is churning out oil and gas faster, cheaper and in ever-increasing volumes. The recent oil bust hit the offshore sector harder and for longer, with activity only now beginning to pick up, some three years after the price crash came to an end.

The increasing activity is a function not only of higher oil prices, but also efforts to lower costs through digital technologies, automation, standardized designs and smarter planning. Companies are bringing in projects at half — or even less — of initial estimates.

“The offshore sector globally has been challenged by cheap sources of oil and gas,” said Vaseem Khan, vice president of global engineering for McDermott International, the Houston engineering and construction firm. “I don’t like the phrase ‘cutting costs.’ What we’re doing is removing waste from the industry.”

That can mean adopting digital technologies that ensure all the important data — from employee shifts to detailed drilling and well results — are available in the same place so operators and contractors can access the information in real time from anywhere. They’re borrowing automation and digital technologies from the aerospace and automotive industries to enhance oil and gas operations. McDermott is focusing on keeping costs down through an offshore development’s entire life cycle, from the early design and engineering to a rig’s eventual retirement decades later.

To help achieve this, McDermott creates and maintains a “digital twin” for each project and its components, so oil and gas companies can conduct computer simulations to better understand and improve how everything works.

“We do digital project delivery. It’s not just a phrase to make an old-fashioned industry seem sexy,” Khan said. “One of the banes of the industry has been tons of information residing in all these different databases.”

Off the rack

Another way to cut costs — or remove waste, as Khan put it — is to standardize designs and components of offshore projects. Khan compared it to choosing a men’s suit. Rather than buying an exorbitantly expensive bespoke suit from London’s Savile Row, a customer can opt for a suit off the rack from Brooks Brothers. He’ll still look good, but at a much lower cost.

In offshore terms, custom-built air compressors used to power automated machinery might cost about 30 percent more than top compressors bought off the shelf. But either will do.

The industry also is also moving — albeit at a slower pace — to standardized specifications. Every oil and gas operator has its own set of specifications for almost every component of an offshore project. A BP valve is different from a Chevron valve which is different than an Exxon Mobil valve, for example. If each of these companies used the same valves, manufacturers could produce them in larger volumes and a lower costs.

“They won’t always get exactly what they want,” Khan said, “but they will get functionally close to what they want.”

The British oil major BP adopted that standardization approach for its Mad Dog Phase 2 project in the Gulf of Mexico. By downsizing — drilling fewer wells — and using existing designs and engineering, BP cut the cost by more than half from $20 billion to $9 billion. BP plans to replicate the designs of offshore platforms and underwater setups at multiple projects.

“We’re not going after every barrel of oil,” said Ahmed Hashmi, BP’s chief digital and technology officer, arguing that it’s better to be efficient than to suck every available drop of oil out of the deepwater reservoirs.

Another cost-saving approach that’s gaining popularity, particularly in the Gulf of Mexico, is so-called tieback projects. Rather than build new multibillion-dollar platform projects such as Mad Dog 2 in nearby oil and gas fields, many companies are connecting new wells to existing platforms using underwater umbilicals and pipelines.

BP recently completed its Thunder Horse tieback expansion, connecting two new wells to the platform from two miles away. Next, BP will spend $1.3 billion for another Gulf tieback project, the Atlantis Phase 3 development authorized earlier this year. Both developments are about 150 miles south of New Orleans.

Seismic breakthrough

The project involves building a new subsea production system that will tie eight new wells into the existing Atlantis platform, which first start producing oil in 2007. BP will elect to spend just more than $1 billion for a tieback expansion every time over building a nearly $10 billion project from scratch.

But for BP, the Gulf’s largest oil producer, new technology is still king, Hashmi said. BP credits its recent breakthroughs in advanced seismic imaging that revealed an additional 400 million barrels of oil in place at the Atlantis field and made tieback projects possible and practical.

For decades, salt domes have hidden the details of oil and gas reservoirs in the Gulf, adding to the myriad challenges of drilling many thousands of feet deep underwater. BP is using ultra low-frequency sounds with a series of sensors on the ocean floor to record the data and essentially see through the salt. Previous seismic technology provided much more muddled images below the thickest layers of salt.

“We’ve been on this journey to make salt almost irrelevant to seismic,” Hashmi said.

BP and other companies also are putting more fiber-optic cables in wells to gather much more data that companies can analyze to adjust well operations to achieve peak production at any time and in any conditions, he said.

Not being there

They’re using drones for inspections to cut man hours and costs. The next step: unmanned, automated platforms remotely controlled from onshore locations.

People will still be needed, Hashmi said, “but they’ll be running the offshore fields from the office.”