This page refects viewpoints on the political, economic, cultural, technological, and environmental issues that shape the future of the petroleum industry. Offshore
Magazine invites you to share your thoughts. Email your Beyond the Horizon manuscript to David Paganie at email@example.com.
BEYOND THE HORIZON
Over the past 100 years of developing the world’s hydrocarbon
reserves, the petroleum industry has found that no single entity
possesses all the technology, skill, and expertise needed to safely
and productively tap into these reserves in the most effcient and
cost-effective way. From the early days of Drake, through the formative years of rotary drilling, then to the hyper-challenging move
to develop offshore and subsea reserves, success has been based
on a sometimes uneasy relationship between the oil companies and
their teams of contractors and suppliers who provide the goods and
services necessary to access reservoirs and produce reserves economically.
During the ’60s, ’70s, and even into the early ’80s, oil and gas companies spent huge amounts of money to develop their own technologies for exploring and producing in the deep oceans. These technology pioneers forged relationships with key individuals and their
contracting companies, and worked tirelessly as a team to prove to
the world that hydrocarbons could be safely and economically produced in deepwater, which at that time was only around 3,000 ft (914
m). These tremendous pioneering accomplishments were made
possible through collaboration and good partnering behaviors with
the entire team of operators, contractors, and service providers acting seamlessly as a single entity.
The ’80s brought a changing of the guard in the offshore technology arena. After the bust of the mid-1980s, oil company R&D budgets were slashed, and their management was no longer focused
on developing enabling technology. Survival of the business became
the highest priority, and professionals in various business disciplines
were brought in to help the oil companies focus on their commercial
practices. Corporate procurement departments were set up to take
over the responsibilities that the projects and technology centers
once had for working with contractors. The term “three bids and a
buy” became the mantra of the day, and the result was that much of
the contractor base stopped developing technology and focused on
the cost side of the equation with well documented results.
Though the ’90s saw the widespread application of horizontal drill-
ing and strides in reservoir simulation technology, very little prog-
ress was made in developing technology for the next generation of
offshore subsea installations, even though many oil companies had
spent millions on leases in water depths of up to 10,000 ft ( 3,048 m).
In the mid- to late-’90s, however, a few key oil company executives
noted that their portfolio of prospects would require investing in the
development of a new generation of subsea equipment to access
their deepwater reserves economically and safely. Independently,
Shell, Oryx Energy (now Anadarko), and Statoil, with the leader-
ship of their key executive and management teams, quickly came to
the conclusion that the most effective way to meet their needs for
new technology development, total cost reduction, and dramatically
improve production uptime was to work directly with selected key
contractors in a partnership much the same as in the early days of
The difference this time was that the focus was on the life of the
feld, not just on the initial installation and functionality. It also fo-
cused on designing a class of equipment for a portfolio of prospects,
not custom kit for each one. This enabled standardization, which
has proven over many years to reduce hardware cost and installa-
tion time, and to maximize uptime and serviceability once installed.
Nobody likes to install “Serial #1” of anything, but in order to ad-
vance the technology that will produce lower total cost of ownership
and higher lifetime well production, a close partnership between op-
erators and key contractors is absolutely essential. By working and
behaving as a seamless portfolio team, from drilling through instal-
lation, production, and abandonments, the entire value chain can be
optimized and the next generation of challenging deepwater felds
can be developed and produced more economically.
Forming a true partnership is hard work. The behaviors must be
consistent and collaborative. The commercial aspects of an opera-tor/contractor relationship make things challenging, but innovative
contracting and an understanding of what drives each others’ success has proven to work. Partnering between an operator and contractor is time-tested, the benefts are clear and demonstrable, and it
may be the only way our industry will make the necessary progress
to meet the challenges of tomorrow.
Vice President, Technology
A necessary partnership