- Operators urged on cost-saving processes
With the global oil price slump leading to cancellations of significant projects and delays put at $600 billion, oil and gas industry players have been urged to adopt cost-saving processes to remain in business.
The Managing Director/Chief Executive Officer, First Exploration and Petroleum Development Company Limited, Ademola Adeyemi-Bero, who gave the advice, said the over-supply and oil in storage are still at record levels, which is about three billion barrels.
He said global demand growth for oil would continue steady at 1.2 million barrels per day (bpd) per year.
He noted that the global over supply has been driven by the United States shale play and Canadian oil sands mines, despite the fact that United States oil and gas drilling experiencing a historic drop, well below 1990’s levels.
Adeyemi-Bero said US oil shale reservoir declined by 6.8 per cent monthly, but that these factors don’t have visible impact because of market over-supply. He said most private players were driven by major budget cuts and shortages and that Brent oil price has reached bottom level while Henry hub gas price touched below $2 per million standard cubic feet (mscf) with the US exporting its first liquefied natural gas (LNG) cargo in over four decades.
According to him, the global supplier with untapped fields (wild cats), are Iran and Iraq, while the primary energy demand drivers are China, Organisation for Economic Co-operation and Development (OECD) countries and India, and all are yet to pick up.
Besides, he noted that all producers (Organisation of Petroleum Exporting Countries (OPEC) and non-OPEC) that are able to grow production are increasing supply despite the oversupply, adding that highest cost tar producers – Venezuela and Canada – are still showing production growth.
To counter oil price volatility and instability, Adeyemi-Bero said smart solutions must be deployed to derive maximum value during project development and execution and throughout asset lifecycle operations.
He canvassed the use of low unit technical cost (UTC), such as maximising hydrocarbon recovery and reservoir development and reservoir and facility management.
He said industry players had to minimise project delivery timeline and lifecycle development costs, that is, project delivery (wells and facilities) and operating costs, ensure enabling environment while eliminating third party interference.
To address the problem, Adeyemi-Bero said approval and contracting cycle should improved, adding that the Joint Venture (JV) contracting and procurement and approval processes significantly erodes project value.
He also noted that JV cash call processes in the last 10 years has killed growth. He said hydrocarbon recovery has to be maximised, wells and facilities development costs minimised, and also minimise deferments through efficiency in operations and maintenance of equipment.
He said production losses and decline can be minimised through efficiency in export operations, production metering and reconciliation, eficiency in wells, reservoir and facilities management.
Source: The Nation