Focus on Discipline Integration is as Important as Ever
Recent development projects in Norway have experienced difficulties with installations and subsurface reservoirs, with significant budget overruns as a consequence. It is more important than ever for partners to make sure that they fulfil their duty, ensuring high quality and confidence in both technical work and the economic scenarios that form basis for future decisions to develop discoveries.
The changes in Tax Regulations following the combined Covid-19/OPEC+ oil price drop have made it financially attractive for energy companies to make concrete development plans for existing discoveries, provided that the plans are delivered to Norwegian authorities before the end of 2022.
In 2020 ExploCrowd supported clients evaluating Development Plans in order to strengthen their confidence in the basis for making decisions, enabling them to ask operators the right questions and challenge the technical work and economics of the Development Plans. We foresee that we will continue to do so in 2021 and 2022 and are looking forward to make a difference.
The post continues below the photo of Sidsel Lindsø and blog author Mads Willumsen, ExploCrowd.
HOW TO GET IT RIGHT:
Integration between disciplines has for decades been known to be a key factor for getting development planning right. This is valid for all involved disciplines, and even between closely related disciplines this is not achieved by itself. As an example, we may look at the disciplines within subsurface, where most specialists have a pretty good appreciation of their neighbour disciplines.
Subsurface staff generate the basis for the likely range of possible production profiles from the uncertainty in all input data. The range must represent the relation between parameters derived by different disciplines and the scaling issues arising as various disciplines work with one parameter at very different scales.
To have focus on the integrations has become as important as ever, as the industry right now faces a potentially dangerous cocktail consisting of three factors:
1. Layoffs and new constellations
Oil price drop in early 2020 has (again) led to significant layoffs. One consequence is that many technical specialists now work in new teams and new constellations, as remaining staff is reshuffled or individual specialists are hired on consultancy basis. With new ways of working, we may not be specific enough in our communication. As a result, derived data and parameter relationships may be used in ways that do not reflect the underlying assumptions.
2. Cutting corners on communication and collaboration
Focus on digitization and automation, may limit the ability to model creative scenarios and risks normally identified in collaboration situations. This poses a significant risk to the clarity of which technical assumptions and misunderstandings can occur, which can have a significant impact on the economic scenarios of the development planning.
3. Letting go of risk averse approaches for Low Case Scenarios
On top of these two factors, the recently implemented Norwegian tax incentive to fast-track development, obviously drives high pace delivery. Since it almost eliminates economic risk, it stimulates prudent operators to take less risk averse approaches to low case scenarios.
A significant reputational risk
If those risks are not properly considered, it is possible that underrepresented low case scenarios and underperforming field developments turn out to be the reality when the field is finally put on production, and that can impact the reputation of our industry.
This is where significant experience from Operator development planning projects and overview of the integrations of subsurface disciplines become as important as ever. Even if the industry does not experience significant uneconomic developments arising from this, there is a significant reputational risk for the whole industry in times where reputation is already under pressure.
Learn more about the opportunities we offer: Contact us for more information about ensuring high quality of technical work while reducing of reputational risk.