Charles Jillings, CEO of Utilico, energized by strong economic momentum across Latin America. Watch the video here.

Less Ads, More Data, More Tools Register for FREE

Pin to quick picksBP Share News (BP.)

Share Price Information for BP (BP.)

London Stock Exchange
Share Price is delayed by 15 minutes
Get Live Data
Share Price: 524.80
Bid: 525.20
Ask: 525.30
Change: -1.50 (-0.29%)
Spread: 0.10 (0.019%)
Open: 529.30
High: 530.70
Low: 522.30
Prev. Close: 526.30
BP. Live PriceLast checked at -

Watchlists are a member only feature

Login to your account

Alerts are a premium feature

Login to your account

RPT-INSIGHT-Oil majors experiment with technology to weather crisis

Mon, 17th Oct 2016 06:00

(Repeats story published on Sunday)

* Drones, drill design, data software, robot cleaners

* Among technologies oil majors using to make savings

* More cost cuts to come as companies shield dividends

* Graphic on industry investment: http://tmsnrt.rs/2cG4Dj9

By Karolin Schaps and Jessica Jaganathan

LONDON/OSLO, Oct 16 (Reuters) - Oil majors includingStatoil, Shell and Chevron are experimenting with varioustechnologies, from drones and drill design to data management,to drive down costs and weather a deep downturn.

Crude prices have more than halved since mid-2014, forcingcompanies to cut billions of dollars in costs. Determined toshield dividends and preserve the infrastructure that will allowthem to compete and grow if the market recovers, they areincreasingly looking to smarter tech and design to make savings.

French oil and gas major Total said it was nowusing drones to carry out detailed inspections on some of itsoil fields following a trial at one of its Elgin/Franklinplatforms in the North Sea.

Cyberhawk, the drone company that led the trial, said thiskind of work was previously carried out by engineers whosuspended themselves from ropes at dizzying heights. It said themanned inspection used to take seven separate two-week tripswith a 12-man team that had to be flown in and accommodated onsite.

The drones do the work in two days and at about a tenth ofthe cost, according to the Britain-based firm's founder MalcolmConnolly, who said it had also worked with ExxonMobil,Shell, ConocoPhillips and BP.

Total declined to comment on how long the manned or droneinspections took, or specify how much money was saved.

Statoil's giant Johan Sverdrup field, the largestNorth Sea oil find in three decades which is due to startproduction in 2019, is a leading industry case study for cuttingcosts in the era of cheap oil.

The Norwegian company has cut its development costs for thefirst stage of the project by a fifth compared with estimatesgiven in early 2015, to 99 billion crowns ($12.2 billion).

The savings have largely been made by focusing on the mostefficient technology and designs from the beginning, Statoil'shead of technology Margareth Oevrum told Reuters in aninterview.

Executives say the growing attention on technologies thathave been around for some time shows how wasteful the globalindustry had been in the years before the downturn when - withcrude at above $100 a barrel delivering bumper profits - oilcompanies' had little incentive to develop fields efficiently.

For example, simply finding a more efficient route for theoil pipeline that would carry the crude from the Sverdrup fieldto the onshore refinery cut 1 billion crowns, Statoil said.

ROBOTS, FOAM

Statoil has also developed a drilling "template" that isacting as a guide for the first eight wells to be drilled at thefield. It said it had reduced the overall drilling time by morethan 50 days, saving about 150 million crowns per productionwell compared with what it would have cost with 2013 techniques.

"By far the biggest driver (of savings) has beensimplification," said Oevrum. "To think much simpler and startfrom the bottom, or the bare bone, and then rather add to that,instead of starting very big."

The company could not give a figure for its group savingsmade from improved technology and design. But it said that,partly because of such innovations, projects set to startproduction by 2022 would be able to make a profit with an oilprice at $41 a barrel, down from $70 in 2013.

Global upstream - exploration and production - oil and gasspending has fallen by more than $300 billion across theindustry in 2015-16, according to the International EnergyAgency (IEA), roughly equivalent to the annual GDP of SouthAfrica. Around two-thirds comes from cost cuts, rather thancancelling or shelving projects, it said.

Shell, for example, has developed a new type of pipe, calleda steel lazy wave riser, to carry oil and gas from its deepwaterStones field in the Gulf of Mexico for processing. It bends toabsorb the motion of the sea and the floating platform, whichthe company says boosts production at extreme depths.

The Anglo-Dutch major could not say how much the pipescontributed to increased efficiency, but said innovations atStones had played a significant part in cost savings of $1.8billion in its projects and technology division last year -equivalent to the 2015 core profits in its upstream division.

The fall in oil prices has led to the introduction of othernew engineering and maintenance techniques.

Chevron is using a robotic device to clean and check theinside of pipelines on their Erskine field in the North Sea morequickly. The improvement has helped raise the field's dailyproduction rate to the highest in two years.

Oil services firm Amec Foster Wheeler, working forBG Group which is now part of Shell, has applied a new techniqueto remove the pillars of an old platform, a procedure that isoften dangerous because corroded elements can slip off.

It pumped in expanding foam to hold the pillar's elementstogether, allowing workers to safely cut the metal away. Thiswork took just over seven weeks instead of the 22 weekstypically needed using traditional methods.

Alex Brooks, oil and gas equity analyst at CanaccordGenuity, said tech innovation in the industry was about "100tiny things", adding: "The bottom line is you end up with a muchlower cost."

The downturn has presented opportunities for some servicesfirms that can offer cost-saving innovations. Inspection dronefirm Cyberhawk, for instance, said its revenue from oil and gashad doubled from mid-2014 to mid-2016, while the widerinspection market had shrunk.

VAST DATA

Another way oil companies are looking to cut costs is byusing their vast amounts of data to better predict their needs.

Since the price slump, companies including Shell, ExxonMobiland Statoil have started using software that can better managetheir data to cut wastage in the ordering of constructionmaterials.

Stuck with excess material, some companies suffered hugelosses because the resale value was much lower and in some casesthey even took to burying unwanted material, according toIntergraph, a unit of Swedish tech firm Hexagon thatdevelops such systems for oil industry clients.

"Previously, it was industry standard to order 3-5 percentmore materials than needed, which in a billion-dollar project isa lot of money," said Patrick Holcomb, executive vice presidentat Intergraph.

Better managing data has helped oil firms understand exactlyhow much material is needed and when it will be delivered,cutting excess to one or two tenths of a percent, he added.

Gunnar Presthus, Nordic energy lead at consultancyAccenture, who advises oil majors and national oil companies,said the downturn had led to the industry waking up to thepotential of the data they store.

"The oil industry, to some extent, is one of the mostdigitalised industries," he said. "Companies are now able to usethis wealth of data to make changes that will save money."

($1 = 8.0919 Norwegian crowns)

(Additional reporting by Stine Jacobsen and Gwladys Fouche inOslo; Writing by Karolin Schaps and Gwladys Fouche; Editing byPravin Char)

More News
24 Apr 2024 19:30

Trans Mountain oil shippers raise concerns about risk of delay to full service

April 23 (Reuters) - Some shippers on Canada's Trans Mountain expansion project are raising concerns that the long-delayed oil pipeline will not be fully in service by its projected start date of May 1, according to a letter to the Canada Energy Regulator on Tuesday.

Read more
24 Apr 2024 13:24

Pressure on gas and LNG prices to help switch from coal, says J.P. Morgan

LONDON, April 24 (Reuters) - Global natural gas prices will come under pressure through the end of the decade as supply and shipping infrastructure grow rapidly, particularly in Qatar and the U.S., J.P. Morgan said in a report.

Read more
24 Apr 2024 09:58

Aker BP Q1 beats forecast as costs fall, Tyrving to start sooner

OSLO, April 24 (Reuters) - Norwegian independent oil company Aker BP on Wednesday posted higher-than-expected net profit for the first quarter as costs fell, and said its Tyrving field development could start production sooner than previously planned.

Read more
24 Apr 2024 05:38

Aker BP Q1 beats forecast on record output, lower cost

OSLO, April 24 (Reuters) - Norwegian independent oil company Aker BP on Wednesday posted a higher-than-expected net profit for the first quarter as production hit a record while costs fell.

Read more
18 Apr 2024 14:45

BP's gas and renewables boss steps down, as CEO shrinks leadership

LONDON, April 18 (Reuters) - BP said on Thursday its head of natural gas and low carbon energy Anja-Isabel Dotzenrath will step down after just over two years, while CEO Murray Auchincloss announced plans to simplify its management structure.

Read more
18 Apr 2024 14:12

UK shareholder meetings calendar - next 7 days

Friday 19 April 
Murray International Trust PLCAGM
Quantum Exponential Group PLCGM re delisting or potential investment in company
Monday 22 April 
Renalytix PLCGM
Travis Perkins PLCAGM
Tuesday 23 April 
AIQ LtdAGM
NatWest Group PLCAGM
Taylor Wimpey PLCAGM
Wednesday 24 April 
abrdn PLCAGM
abrdn Equity Income Trust PLCAGM
AssetCo PLCAGM
Breedon Group PLCAGM
British American Tobacco PLCAGM
Bunzl PLCAGM
Coro Energy PLCAGM
Croda International PLCAGM
Entain PLCAGM
Greencoat UK Wind PLCAGM
Primary Health Properties PLCAGM
Serco Group PLCAGM
Synectics PLCAGM
Thursday 25 April 
AFC Energy PLCAGM
Admiral Group PLCAGM
Beazley PLCAGM
BP PLCAGM
CLS Holdings PLCAGM
CRH PLCAGM
Dalata Hotel Group PLCAGM
Develop North PLCAGM
Drax Group PLCAGM
Everest Global PLCAGM
Greencoat Renewables PLCAGM
Hammerson PLCAGM
Helios Towers PLCAGM
Hikma Pharmaceuticals PLCAGM
International Biotechnology Trust PLCAGM
London Stock Exchange Group PLCAGM
Manx Financial Group PLCAGM
Mattioli Woods PLCGM re Pollen Street Capital Ltd takeover
Persimmon PLCAGM
Premier Miton Global Renewables Trust PLCAGM
Relx PLCAGM
Schroders PLCAGM
Smithson Investment Trust PLCAGM
Tissue Regenix Group PLCAGM
Weir Group PLCAGM
  
Comments and questions to newsroom@alliancenews.com
  
A full 21-day events calendar is provided each day with a subscription to Alliance News UK Professional.
  
Copyright 2024 Alliance News Ltd. All Rights Reserved.

Read more
18 Apr 2024 12:02

LONDON MARKET MIDDAY: FTSE 100 up despite hawkish Fed rates outlook

(Alliance News) - Stock prices in London were higher on Thursday afternoon, despite the prospect of higher for longer US interest rates hanging over stocks.

Read more
18 Apr 2024 09:04

IN BRIEF: BP trims executive team in operational restructuring

BP PLC - London-based oil and gas major - Announces organisational restructuring. Intends to keep its three businesses - production & operations, gas & low carbon energy and customers & products - enabled by trading & shipping. Plans to integrate the current regions, corporates & solutions organisation into the businesses and functions. BP will now be supported by five functions: finance; technology; strategy, sustainability & ventures; people & culture; and legal. BP explains these changes will "reduce duplication and reporting line complexity".

Read more
18 Apr 2024 08:11

BP cuts size of executive team, shakes up structure

(Sharecast News) - BP has trimmed its executive team as part of a shake-up of its organisational structure, it was confirmed on Thursday.

Read more
17 Apr 2024 18:58

Shell urges investors to reject shareholder group's climate demands

LONDON, April 17 (Reuters) - Shell on Wednesday urged shareholders to vote against an independent resolution, co-filed by a group of 27 investors, that called on the energy company to set tighter climate targets.

Read more
17 Apr 2024 17:36

Sustainable Finance Newsletter - Republican AGs look to limit climate groups

April 17 (Reuters) - In prior newsletters I have reported on the ongoing review by U.S. energy regulators of top asset managers' big utility holdings.

Read more
17 Apr 2024 13:55

Shell urges investors to reject shareholder group's climate demands

LONDON, April 17 (Reuters) - Shell on Wednesday urged shareholders to vote against an independent resolution, co-filed by a group of 27 investors, urging the energy company to set tighter climate targets.

Read more
17 Apr 2024 10:38

Carbon Done Right advances Sierra Leone rewilding project

(Alliance News) - Carbon Done Right Developments Inc on Wednesday said it has received the fourth disbursement of financing for its reforestation project in West Africa.

Read more
15 Apr 2024 17:10

LONDON MARKET CLOSE: Investors show nerves after Iran launches drones

(Alliance News) - Stock prices in London closed down on Monday, as tensions in the Middle East weighed on investors, with resources sliding as commodity prices fell.

Read more
15 Apr 2024 15:39

London close: Stocks slip on renewed geopolitical tensions

(Sharecast News) - London's equity markets markets experienced a downturn on Monday, with losses particularly notable in the mining and oil sectors, as investors remained cautious amid to escalating geopolitical tensions in the Middle East.

Read more

Login to your account

Don't have an account? Click here to register.

Quickpicks are a member only feature

Login to your account

Don't have an account? Click here to register.