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www.assetdev.com
Production Efficiency
A former operator’s view
5 November 2014
Agenda
History
Evolution
Current conclusions / observations
An approach
Critical success factors
Results
2
Production efficiency - history
Developed 2002 / 2004 in collaboration between industry
and DTI
Intent was to create a measure of how well operators
were maximising production from their operated assets
Objective: to increase production
3
Production Efficiency (PE) = Perfect day production
Hydro-carbons delivered to market
Not perfect
Numerator was sales – i.e. Bbls, Boe – the stuff we
should be increasing
Denominator was ‘perfect-day potential’
• Nothing broken, everything in development plan operating,
ready when planned
• Open to interpretation
Designed so a PE of 100% was highly unlikely
• No trips, no shutdown or blowdown tests for a whole year?
Does not adequately capture IOR
• Water injection 4
Production efficiency - history
Evolution – genetic mutation
‘Operating efficiency’
• No standard definition
LIP (Locked in Potential).
• Good useful metric but little to do with PE
A wide range of interpretations of SMPP
• One recent test provided a 27% difference in calculated PE
between one operator’s method and another for the same
data
5
Average UKCS PE trends over time
6
50%
60%
70%
80%
90%
100%
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Current conclusions / observations
It is hard to conceive any other industry that would tolerate a 63% efficiency from its revenue producing facilities
The focus on looking good is distracting from being good (i.e. high PE vs producing more barrels)
The economics of the older areas of the UCKS are very sensitive to PE
• The barrels not the absolute number
• There needs to be urgency
PE does not capture IOR performance e.g. Water Injection
To improve, transparency and honesty are required• PE was not designed as a motivational tool 7
An approach
SMPP set/agreed by multi-disciplinary team
Losses tracked to a five choke model and cause
determined, not just location
Transparency and data
Bow-tie applied to the root cause
Address root causes - often does not require CapEx
8
Production efficiency
9
Reservoir
WellProcess Plant
3rd Party Processing
3rd PartyTransportation
Export
Utilities Plant
5 Choke Model
Identify Plant capacities
Identify Losses
Determine Root Cause
Identify and implement Solution
Assess suitability of solution
Review Asset Performance
Data
Gather raw data (not adjusted data) and then process
SMPP
• Do not be judgemental or exclude data that you don’t like (e.g.
LIP, fuel gas, planned maintenance, etc)
• SMPP ≠ production forecast in the budget
• SMPP ≠ highest production over last 4 months
• SMPP is a theoretical production figure for a perfect day,
agreed with a multi-disciplinary team
Do not stop at ‘what / where’, carry on the investigation
into ‘why’
10
Bow-tie
Production
efficiency
Opex
Revenue
Time
Culture
Motivation
Reputation
Facility/equipment
availability
Facility/equipment
capacity
Operating
practices
Reservoir fluids
3rd party services
Integrity
Operating
documentation
Capability
Competence
Operating discipline
Goes out 4 levels – reduces in number of “legs”
Critical success factors
Remember that the objective is to increase the numerator (Boe)
• Reducing the denominator (potential) gives a better number but produces no more barrels
Do not set a target of 100%• 100% is not sustainable and demonstrates you don’t
understand the metric
• Shutdown/TARs are investments and should be treated like every other investment (kept to an economic minimum)
Address root causes - which may not be equipment
If possible use barrels as a target, not PE, avoid the temptation to play with the numbers
12
More conclusions / challenges
It’s not about age, but how the facility has and is being
operated
The focus on looking good is distracting from being good
(i.e. high PE vs producing more barrels)
Adopt a robust system of PE improvement and address
causes not symptoms
13
Some results – gas hub
14
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
PE programmecommences
• Gas asset
• Declining production had resulted in the
compression requiring less power
• Originally 3 x 50% Power Gen sets
• Now 1 set could keep the platform running at
steady state
• 2 required for start-up at the same time as
crane use
• Decided to mothball 1 GT (leaving 2x 100%
sets)
• Frequent Power Outages (MTBT <5 days)
• 2 x GTs running on 30 – 45% load
Results – story continued
15
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
PE programme commences
MDT increases SMPP
Results – Story continued
16
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
PE programme commences
MDT increases SMPP
Addressing operating practices
Identified physical mods
required
Results- Final result
17
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
PE programme commences
MDT increases SMPP
Addressing operating practices
Identified physical mods
required
Shutdown to replace obsolete control system
Conclusion – It’s all about the barrels
Thank you for listening
18