[PART 2] Optimising oil and gas operations: when to decommission or modernise

Dec 09, 2022
  • IT
  • operations
  • engineering & projects
  • data

How can you make accurate, timely decisions that maximise the value of your assets today and in the future?

In Part 2 of this series, Stuart Querns, Director of Enterprise Asset Management (EAM) at Delaware UK, discusses the various factors needed when deciding when to decomission or modernise an oil and gas company's assets, as well as disclosing the importance of the role technology plays in giving total visibility when making these decisions. 

Have you read part 1?

Check it out here:

Many factors at play

Many large organisations have reached the stage where they are aware of the problem they face, but they are struggling to put in place a solution. 

It is difficult, not least because of the sheer range of factors playing into the choice. It is a very turbulent time within the energy sector now. Prices are volatile, and there is regular merger and acquisition activity. If you divest an organisation and then bring another in, it is difficult to do that quickly. The business is dealing with a lot of dynamic activity while at the same time trying to turn large transformation programmes around.

The current geopolitics we are seeing around the world also play into this situation. Less than a year ago, for example, many oil and gas companies were decommissioning assets in the North Sea. Now they are reconsidering this and looking at options to extend. The single phrase resonating more than any other in the industry now is energy security: the ability to keep operations up and running and secure the supply of energy.

Governments are increasingly putting pressure on national companies to help secure energy for the country for the next ten years. They will then put them in a position where they need to say that they must invest their assets in the right way to make sure production is staying on stream. They will have to be thinking ahead in terms of keeping the current assets running or expanding and investing in them to get the most from them and drive efficiencies. That is especially key in this new environment, where we are seeing a move away from decommissioning and a move towards extending the life of refineries.

The single phrase
resonating more than any other in the industry now is energy security: the ability to keep operations up and running and secure the supply of energy.

Previously, refineries were being shut down because fewer were needed for supply. Today, that is no longer the case. Organisations are looking for security of supply and to extend the life of assets.

It is critically important that refineries can focus on this and keep their operations up and running. Any refinery downtime because of poor asset performance is likely to have significant negative impacts. There are very slim margins for error here. But again, it raises the ongoing question: how does the refinery know where to invest and what to do?

Technology is key

Technology will undoubtedly play a critical role in delivering this. 

Having one view of the truth across not only the asset but multiple dimensions, including cost, reliability, performance, and resource efficiency, is key. Overlaying all these areas, safety, compliance, and environmental performance are highly important too.

Each of these activities must be done safely and in a way that does not adversely impact the environment. All the large oil and gas companies are looking to reduce carbon emissions and energy consumption. Together, these pressures put even more emphasis on the quality of information and highlight just how important a goal it is for oil and gas companies to achieve.

The importance of simplicity

Ultimately, the technological solution that is delivered needs to be simple. There is a need to land on one digital core, one enterprise solution, and to use one supply chain that supports resource management and finance, for example.

All these different aspects are interlinked, and when it comes to looking at asset performance, they must be harmonised. The only way businesses will be able to do that is to simplify the technology that supports these processes. Many large organisations still have disparate technologies or processes in place. These need to be rationalised. Otherwise, they will struggle to have that quality of information or the ability to drive efficiencies.

Of course, that becomes even more difficult for companies if they are going through mergers and acquisitions, for example, bringing in different technology sets from various organisations and subsequently having to harmonise them.

But oil and gas companies, including refiners, increasingly know that they need to do it to be successful in the future. They know they need technology to help them transform their business without impacting operations.

Zero downtime

Oil and gas companies need technology to help them reach as close as possible to zero downtime. 

That is the problem statement (if you like), but underpinning it is the need to drive simplification and harmonisation from a technology point of view. All this has led to the need for technology to support reliable information that can help improve performance and decision-making.

In technology terms, it is about harmonisation on a common platform, followed by simplification of processes. That is about technology, of course, but the results of the approach also depend very much on the quality of data provided.

Typically, there is no lack of volume here. Organisations have access to a raft of different data sources, whether from maintenance or finance processes, for example, or even from the equipment itself, given that most assets today are smart and hold a great deal of information.

The success of this process in delivering quality information for the refiner is critically important, of course. But even beyond that, if it isn’t governed and managed efficiently across an organisation, there will be very little chance of getting the level of information it needs. It may well be too difficult or too disparate to gather.

The key point
is that different kinds of information will be needed, depending on the kinds of people who are likely to be using it.

Data is key

Therefore, data must be high quality, but it also needs to be easy to use. Critically, too, it needs to be easy to distribute and disseminate to the ‘right people’ within the organisation. Typically, that involves those taking the big decisions of the company’s strategic direction (on the one hand) or, at a more granular level, those responsible for keeping the engineering department or the IT team running efficiently.

The key point is that different kinds of information will be needed, depending on the kinds of people who are likely to be using it.

Ultimately, all this data is key for informing the choices that refiners and other oil and gas companies need to make regarding the best approach to take with their assets moving forwards. In the current climate, that is less likely to be around decommissioning of the asset and much more likely to be concerned with security of supply and how to maximise the value of the asset today and in the future.

To make accurate, timely decisions capable of supporting and driving future strategy forward, refiners and other oil and gas companies need quality of data, and they also need harmonisation and the simplification and optimisation of service delivery. Those companies that get all this right will be well placed to effectively combat the multiple challenges they face today and drive positive outcomes for their businesses long into the future.

Stuart Querns

Interested in finding out how Delaware can help your energy business?

Stuart Querns 

Director of Enterprise Asset Management (EAM)