* Services firms compete for late life assets
* $335 billion prize still up for grabs
* More "wrench time", less form filling
* Streamlining processes and better planning are vital
By Claire Milhench
LONDON, April 25 (Reuters) - Smaller oil producers areteaming up with engineering and oil services companies inBritain's North Sea to squeeze extra drops from ageingfacilities before rising costs force them to close.
Improving "wrench time" - hours spent at worksites ratherthan on assessments and form-filling - and bringing inspecialist teams to boost recovery rates, will help preventearly decommissioning, industry participants say.
Oil services companies are competing to take on "late life"asset work, providing the expertise that smaller producers lack.
"There's more of a reliance on our engineering andconstruction project management knowledge to fill the void thatmay be there," said Alan Johnstone, managing director,brownfield and asset management at oil services company AMEC.
The prize is substantial, with as much as $335 billion worthof oil and gas output still up for grabs in Britain's North Sea.By overhauling veteran platforms that are operating beyond theirdesign life, producers can hold off decommissioning for anotherfew years.
"This approach is gaining traction again because over thelast few years we have seen assets changing hands," said WalterThain, senior vice president for Europe at oil services companyPetrofac.
EnQuest, Talisman Sinopec , IthacaEnergy and Fairfield Energy are all extending the lifeof their North Sea assets by bringing on new crude streams withtie-backs to existing platforms, or by adding pumps to wring thelast oil from a depleted reservoir.
Talisman Sinopec is in the midst of a major project toextend the life of the six oilfields at the Montrose/Arbroathcomplex - one of the oldest in the UK.
New fields Shaw and Cayley will come onstream via subseapipelines, requiring modifications throughout the existingplatform and the installation of a new bridge-linked platform.
But major platform refurbishments are only part of thechallenge. The industry also has to address a rapid fall inproduction efficiency, down from 80 percent a decade ago to anaverage of 60 percent in 2012. And that means making changes today-to-day operations.
"Some of the assets in the North Sea could be 50-75 percentbetter in terms of production efficiency - it's aboutstreamlining processes and better planning," said Neil Bruce,president, resources, environment and water at SNC-Lavalin. "It's not unheard of for operators to get five to sixhours of productive work in, over a 12-hour day."
The industry has wrestled with this challenge for years, butis under more pressure to address it following the publicationof the Wood Review in February. This stressedthe need to maximise recovery from the basin, and argued thatboosting production efficiency would help achieve this.
RISING COSTS
Part of the problem is that rising costs have encouraged oilmajors to focus on more competitive projects elsewhere. Theaverage operating cost in the UK North Sea is now 17 pounds($28.56) per barrel, up from 13.50 in 2012, trade body Oil & GasUK said.
Not surprisingly, older facilities producing less oil falldown the priority list or get sold off. Royal Dutch Shell recently put three of its North Sea interests up forsale and more could follow.
"As we go forward we have to look at asset integrity," SimonHenry, Shell's chief financial officer, said at the annualearnings presentation. "Which assets justify ongoing investmentand which would others be more prepared to put the resource andthe new investment in to sustain the life?"
Smaller producers are more willing to invest because theproduction volumes are more material to them, but running anelderly platform or field poses challenges.
"Operating a mature field is a different animal - you needto optimise small incremental changes, and move from reactivemaintenance work to preventative maintenance work," said JuanCarlos Gay, a partner at consultants Bain & Company.
This is an area where oil services companies believe theycan make a big difference. Outsourcing the day-to-day operationof a mature asset to one firm avoids a situation where engineersare turned into managing engineers as they try to co-ordinatethe work of different contractors.
It also means the operator's attention is not split acrossseveral assets. "Oilfield services companies like Petrofac havea dedicated delivery team which is just focused on thatfacility," said Thain.
But how to resolve that problem of wrench time, so thatengineers spend more time on the manual tasks? AMEC's Johnstonesaid it is all about advance planning. After all, platforms aremiles offshore and can't be resupplied with materials at shortnotice - especially in bad weather.
"You need to look at the supply chain and make sure that theperson who is doing the job has the right tools and materials,"he said. "And if they haven't got something they need, is thereany fallback work they can do? When you're offshore you can'tjust pop out to B&Q (a UK home improvements retail chain) for anut or a bolt."
($1 = 0.5953 British Pounds) (Editing by Veronica Brown and Keiron Henderson)
