Narrowing margins may put safety to the test. The PSA’s new main priority deals with what is required for safe operation – even late in life.
Safe in every phase
Everything comes to an end, even oil and gas production. It may cease after 10, 20 or 50 years not because the reservoir has been depleted, but because recovery is no longer profitable.
As fields and facilities approach cessation in the final phase, with volumes contracting, costs rising and revenues declining, maintaining prudent operation can be challenging.
“It’s important for us to emphasise that safety requirements are the same in every phase,” says Ingvill H Foss, one of the PSA’s directors of surveillance activities.
“Conditions differ, of course, and we see that the industry faces challenges in late life. But a sticking point does exist for safety.
“That’s why we’ve defined safe late life as a main priority for 2015, to help ensure that fields and facilities are operated prudently and in compliance with the regulations.”
She notes that a large and growing part of Norway’s petroleum sector is characterised by marginal profits as a result of reduced production and increased costs.
“We see that regulatory requirements and prudent operation are challenged in a number of areas. Great pressure is being exerted to maintain employment and production.
“Everyone wants operation to continue for as long as possible. When a balance must be struck between all good intentions, however, safety can be put to the test.
“The companies and the industry must demonstrate that they are able to pass this test. No quick-fix solution is available.”
The PSA’s follow-up of the industry is risk-based, Foss points out. “That means we concentrate our efforts where we believe the risk is greatest.
“We see clear challenges and jobs which must be dealt with in late life. It’s particularly important that the industry makes a commitment here in coming years.
“No compromise is possible with safe operation. Production can decline, revenues may diminish, but we can’t accept that this should affect safety.”
Safe late life builds further on the work done through the main priority on aging and extended producing life pursued by the PSA in 2006-09.
Important results were achieved during these years, including progress with knowledge, standardisation, development of common guidelines and methodology.
“Aging facilities and challenges related to operating beyond the original design life are also a key aspect in the new main priority,” says Eivind Jåsund at the PSA.
He and colleague Sigvart Zachariassen head the project for safe late life. “The approach now is more integrated than the earlier work, and covers the big picture,” he explains.
“That includes field planning, organisational conditions, the working environment, emergency preparedness, structural integrity, maintenance management, and drilling and well technology.”
Design life on the NCS varies in line with recovery potential and production profile, but many facilities were originally intended to last for 15-25 years.
New technology and methods have made it possible to improve recovery and extend production on many fields, with existing facilities staying operational longer than initially planned.
Roughly speaking, about half the installations on the NCS have now exceeded their original design life. But that does not mean they fail to meet requirements for prudent operation.
Late life is about residual value – the last barrels of oil, the last cubic metres of gas, the last cash into the bank. Reduced operating margins generate pressure to reduce costs.
Maintenance, investment and organisational resources can be subject to cuts in order to squeeze out the final drops of profitability.
“We’re concerned that the decision base for trimming maintenance, for example, isn’t adequate because not enough is known about the work needed,” says Jåsund. “We’ve seen tendencies for this in our investigations and other supervisory activities.”
He emphasises that the use of existing facilities on the NCS would be good economics for both Norwegian society and the industry.
“But that presupposes high regularity, which we know is closely related to good maintenance. Worryingly low regularity has been documented for late-life facilities in the UK sector. We don’t want similar conditions here.”
“Good planning as a key aspect,” says Zachariassen. “It’s important to think long-term and have plans ready for late life as early as possible – build robustly and maintain properly.”
He points out that a possible extension to producing life can be taken into account as early as the design phase for fields and facilities.
“Older facilities contain components and systems from various eras. So they’re very complex, and make special demands on the organisation’s understanding and management of risk.
“Investigations of serious incidents on older installations in late life have shown that expertise in this area is crucially important.”
Zachariassen says that late-life production can be demanding in motivational terms. “It’s easy to lose focus when a field moves towards cessation.
“Many employees may look for jobs with better long-term prospects. So companies must maintain and develop the working environment as well as focusing on safe operation.”
The regulations call for risk assessments and analyses in all activity phases. These provide a decision base and are important in maintaining acceptable and continually improving safety.
“That also applies to late life,” says Zachariassen. “The industry should note that the risk definition in the regulations has been amended to give greater emphasis to uncertainty.
“We’ve seen examples of risk analyses being used and perceived as an exact science, without taking adequate account of uncertainty in the underlying material and the methodology used.”
He adds that conditions in late life, with heavy pressure on maintaining production, could provide incentives to come up with the “right” analyses.
“The industry must ensure that the analyses conducted are suitable for the purpose and in conformity with the principles in the regulations.”
Setting the scene
An important part of the PSA’s work in its main priority on safe late life is to contribute knowledge and communicate this within a fact-based risk picture.
The focus will initially be on mapping the existing position, acquiring an overview of the challenges, systematising what is known and defining possible learning needs.
Many of the challenges are nevertheless already known, and these will be followed up by the PSA through specific supervisory activities.
Particular emphasis will be given in 2015 to the following topics:
- planning and management at field level to meet late life challenges
- company management of maintenance in late life
- drilling and well activities in late life, with the emphasis on plugging and abandoning wells
- planning, prioritising and executing late life modifications.
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Explanation of terms
No unambiguous definition exists for late life. In practice, a facility enters this phase when the relationship between earnings and costs becomes challenging. This means late life cannot be fixed at a specific age, but will depend on a range of factors related to reservoir conditions and the development solution.
Extended producing life
A PDO for a field must specify how long the planned facilities will be designed to operate for. Should the licensees want to keep these installations working longer than this, they must apply for consent to use them beyond their original design life.
How long a facility is designed to remain operational in terms of fatigue, corrosion and the like.
Expected producing life
Expected producing life is the length of time a facility is due to remain on stream. This can be both shorter or longer than the design life. An example is the concrete gravity base structure for the Troll A platform. This has a design life of 70 years, but structures in the topside it supports have a shorter operating span because they are easier to replace during the installation’s expected producing life.
This plan is approved by the Ministry of Petroleum and Energy or the Storting (parliament), depending on the project’s scale in terms of development costs. The PDO must specify the design life of supporting structures.
The PSA is responsible for assessing PDO applications in relation to the requirements in the HSE regulations, and for making a recommendation to the ministry on that basis.
Operation beyond the original planned producing life requires a new PDO.
The PSA must consent to using facilities offshore and on land beyond their producing life and the assumptions underpinning approval of the original PDO. An application for such consent must be submitted a year before the original producing life expires.
Challenges related to safe operation in late life make big demands on technological specialisations and cut across the PSA’s discipline areas.
Many complex issues are being pursued:
- could reduced maintenance in the wake of cost cuts boost risk?
- could organisational changes weaken the level of safety?
- do companies have a tendency to analyse risk away?
- could downsizing and a heavier workload for individual employees be deleterious for the working environment and safety?
- could a lack of expertise make it difficult to handle the combination of old and new equipment and systems?
- will work cease on maintaining and enhancing the level of safety?
- is enough being done to identify unknown risk factors?