Topic: P&A

Innovation: A trivial novelty or a pragmatic solution to decommissioning?

Region: North Sea
Content Types: Analysis
Date: Jan, 2017

What is innovation?

Innovation, along with ‘collaboration’, ‘standardisation’ and even ‘strategy’, is a buzzword of the day. But what does innovation even mean in the Oil & Gas industry? For some, it is enough to produce trivial novelties and label them ‘innovative’. At OFS Partners, we believe true innovation is deeply pragmatic and creates value.

Emphasis on value returned, not R&D expenditure

True innovation requires a depth of understanding that finds patterns and trends, bridges interfaces and connects previously unconnected dots. Without these outcomes, it is nothing more than speculative R&D expenditure with a slim chance of providing sustainable economic benefit. The real litmus test of a decent innovation is not based on its bells and whistles, its ‘digital’ nature or even its novelty, but instead is based on whether or not it has yielded a sustainable economic or social benefit above and beyond what has gone before.

Don’t let your valuable R&D spend get scoped out

Take decommissioning as an example: it is one of the greatest challenges we face as an industry, but also a great opportunity for the North Sea to pioneer solutions that can later be exported around the world. Here we face a chasm, missed by many, between the oilfield services supply chain and operators. While the supply chain is focusing on a technological solution, operators tend to approach it as a challenge of managing, optimising and where possible eliminating scope. In many ways it is a top-down vs bottom-up dichotomy that could see the hard working supply chain develop solutions that end up offering negligible gains because the scope it can impact has been reduced.

Specific investment for specific solutions

For example, prior to the DNV-GL risk-based guidance to well plugging and abandonment (P&A), there were only very prescriptive guidelines (written by bodies of operators) that dictated equivalent treatment to all wells in terms of P&A. Put simply, there needs to be a permanent barrier to prevent release of hydrocarbons. However, not all wells are equivalent, so why should the treatment of a Southern North Sea depleted gas well (relatively benign) be the same as a High Temperature High Pressure minimally producing oil well in the Central North Sea (very hazardous)? How can innovation come into play most usefully here? One way is taking the operator’s well stock, engaging and understanding what it really needs instead of zooming in on specific technologies for specific applications (for example, milling, lifting, cutting or pressure testing). Once the impact on optimising and changing scope is known, and informed by the engineering and expertise or track record of the supplier, then R&D dollars can be valuably spent on identifying a solution relative to that sub-segment of well stock – therefore investing in an already highly developed client relationship against a specific, actionable, known need.

Understanding and engagement dictates success

Those best poised to make gains through innovation are those who understand what operators really need, instead of making assumptions based on static information or using analysts’ assertions as to what is out there. Above and beyond engineering expertise, it requires investing in relationships and developing and demonstrating understanding, before R&D, technology and cutting steel come into play.

Powerful returns

By approaching innovation in this way – by first and foremost engaging and understanding – returns are guaranteed, as at a very minimum you are on the front foot building relationship capital with your client. With that comes greater clarity on the future in general and the opportunity to use innovation powerfully to shape the future of decommissioning in the North Sea and further afield.

OFS Partners: Using insight to counter the downturn

We are actively working across the sector in specific cases to help bridge the understanding gap and safeguard the future of companies aspiring to make the best of current market conditions. We go above and beyond the simplistic approach of finding and analysing data to determine how specific actions can lead to value delivery. If you are interested, we would be keen to hear from you.