Oil and gas operators are shifting from a focus on capacity building to maintenance strategies in sustaining greenfields and revamping brownfields, writes David Manuel
A large number of oil and gas fields in the Middle East have now been operating for decades, with operators under increasing pressure to ramp up their output and pin down costs.
Currently, there are more than 6,700 platforms working around the world, with around 30 per cent of these having been in service for more than 20 years.
In the Middle East, some refineries have been operating for close to 50 years.
Many of these assets are operating beyond their original design life, but as more oil and gas discoveries have been made, operators are challenged to extend the life of these assets – without compromising integrity, reliability, productivity and importantly, safety of their plants and platforms.
“Maintenance remains critical for any producing asset in the long run to ensure operational efficiency and guarantee financial returns to operators,” says David Clark, director of Wood Group PSN for the Middle East, a company that focuses on brownfield (or maturing assets) maintenance and repair.
As ageing pipelines, offshore platforms, gas and crude process units become an integral part of the Middle East’s energy landscape, the spending for operations and maintenance (O&M) becomes essentially more significant.
The offshore O&M market, the major driver for all operational and maintenance activity, could be worth US$330 billion over the next five years, according to industry think tank Douglas-Westwood.
The global offshore energy industry produced nearly 17 billion boe since the downturn, which required huge capital expenditure – such as the contracting of mobile offshore drilling units.
But in addition to the construction and installation of production platforms, operating, monitoring and servicing an offshore network of more than 7,000 platforms (fixed and floating), 180,000 km of pipelines (export and infield) and 40,000 producer wells (subsea and platform completed) is an essential part of sustaining oil and gas production.
“Offshore drilling markets may have grown faster, but O&M spending for continuing production is important,” says Clark.
Robust growth
The growth in the O&M sector is mainly attributed to the development of new production capacity, which saw growth at a compound rate of around 12 per cent over the last five years, according to Douglas-Westwood’s Offshore Operations & Maintenance Market Report.
Despite the downturn during the last few years, O&M spending remained considerably less vulnerable than its capital-led counterparts like exploration and production. Douglas-Westwood saw the O&M market rise at 2.8 per cent between 2008-2009 despite widespread price deflation for equipment and services.
“It’s a multi-billion market. Operators here are now beginning to focus on their opex (operational expenditure) after using much capex (capital expenditure) in the recent years,” Clark says.
Over the last six years, operators in the GCC, particularly large national oil companies, have invested huge sums in boosting their greenfield production capacities in various areas, from drilling through to crude and gas processing.
In Qatar, this includes operators involved in LNG production and also pipeline supply, through companies such as Qatargas and Dolphin Energy. Further downstream, it has also significantly expanded its gas-to-liquids capacity with the opening of the Pearl GTL plant.
Saudi Arabia has also seen massive capacity building over recent, with Saudi Aramco spearheading a gas expansion drive, with new processing facilities due to come online in the coming years.
“There is indeed a growing importance in the O&M segment as these skills, services and capability will be critical for the safe and efficient running of these facilities in the years ahead,” says Clark.
In maintaining offshore assets, “fabric maintenance” is mainly used as an umbrella to cover individual services that are often carried out as part of one larger contract. This includes mechanical maintenance, specialist cleaning, painting/blasting and more.
Clark says there’s a significant market for turnaround and shutdowns, particularly within large complexes such as SATORP in Saudi Arabia and Qatargas’ megatrains.
Looking at Qatargas as an example, in August 2011 it carried out a successful Plateau Maintenance Project (PMP) on Qatargas-1 to ensure production capacity is maintained at 10 mta.
Brownfield shift
The regional industry shift from reaching capacity milestones to managing sustained operational focus is seeing a rise in maintenance-related activities such as shutdown and turnaround, engineering production services and brownfield maintenance.
“Advanced engineering, operations and maintenance skills and expertise are therefore critical to ensure the life span of these facilities can be extended further while maintaining and improving the safety and integrity of the asset,” observes Clark.
Brownfield services are directly associated with production levels from production facilities and are intensified as an oil or gas reservoir matures and requires additional effort to sustain production.
Solutions include cost-effective, lowrisk technologies with the ultimate aim of optimising production while enhancing, upgrading, maintaining and servicing a facility.
The inevitable maturation of offshore fields will drive growth to about 10 per cent in the production services sector as operators struggle to come to terms with decreasing downhole pressure and increasing water cuts, according to Douglas- Westwood figures.
Brownfield upstream maintenance includes stimulation or refracturing operations, completing additional zones and installing artificial lift equipment.
Asset integrity
The average lifecycle of a production asset is around 25 years before corrosion, overload and fatigue impact assets’ integral structures.
Operational changes or modifications as well as past incidents are among the factors that gradually take their toll.
“One of the market drivers in this sector is pushing forward life extension programmes where structural integrity is fundamental,” says Clark, referring to examples of programmes used in mature regions such as the North Sea, Gulf of Mexico and Asia.
Under the UK North Sea’s KP4 programme, which will run until Sept 201, operator’s assets will now be subject to scrutiny by safety inspectors. “The hope is that KP4 will stimulate a common industry approach to the management of ageing installations to ensure the safe operation of offshore installations,” says Dr Mohammad Nabavian, chief engineer at Wood Group PSN,
He highlights the role of structural integrity management, or routine inspections, in managing the risks associated with asset integrity and life extension programmes.
“Ageing is not about how old your equipment is, it is about what you know about its condition and how that is changing over time,” says Nabavian, a structural engineer with over 25 years oil and gas experience.
The Aberdeen-based PSN, which merged with Australian production engineering giant Wood Group last year, has introduced structural integrity systems over the years. In some cases its procedures have doubled the original design life of assets, increasing production facility lifespan from 20 to 40 years.
“The ability to develop and integrate inspection strategies and workscopes from day one is the optimal solution to managing structural integrity and reduce the risk of potential failures,” Nabavian explains.
Saving costs
Another key challenge for operators is to bring down the cost for operations. According to Clark, a lean, clear-cut maintenance strategy can help operators optimise costs.
An effective cost-efficient strategy that also maintains safety standards and quality is to roll out risk-based routine maintenance, where operators can effectively schedule and minimise shutdown durations.
“Shutting the plant down would mean losses of millions of dollars to operators,” Clark says. “This is a major concern among operators, ensuring the efficient turnaround of operations and minimising shutdown.”
Clark also highlights the importance of monitoring the stock of equipment to avoid a surplus of spares, which can add up to additional storage costs. In addition, he refers to aligning output operations with the production profile to maximise the workforce profile.
“There now needs to be a more proactive move to nationalise all levels of the workforce across the GCC countries, thereby creating significant employment opportunities and building a longer term approach,” Clark says, with Wood Group having partnered with Abu Dhabi’s Mubadala in expanding local capability.
Mindset change
There is also a shift toward more outsourcing.
“It’s not just the technical aspect, but the cultural as well,” he says, citing a growing mindset change in the region as operators increasingly outsource their maintenance and operations.
“The contracting landscape is transitioning in parts of the GCC and we’re starting to see that in the UAE, or Saudi, Oman, Bahrain and Kuwait,” says Clark.
“Though it’s not going to happen overnight by any means, we are aware that it’s going to take time.”
“What we’re pioneering now is a mindset in the contracting strategies that exist here He believes integrated contracts, in which hired services are technically aligned with the operator on a long-term basis, can cut costs for brownfield developments by up to 20 per cent.
“We try to have long-term relationships to become part of the asset team. Because ultimately, once we get embedded into the team, we understand how it works,” Clark explains.
“That’s when we can start to bring innovation and solutions to the customer more cost-effectively, more efficiently and train and develop national resources for staffing.”
Subscribe to this comment's feed
