Written by Rita Brown – 09/02/2016
The industry is in the crux of its own renaissance as it grapples with job losses, low oil price and lagging efficiency, according to Shell’s project & technology director.
Speaking at GE’s annual meeting in Florence, Harry Brekelmans said: “Florence is the birthplace of the renaissance, the time of exploration of discovery and great inventions and of course the oil and gas industry is in need of its own renaissance.
“This will be how we collectively respond to the tough business environment we find ourselves in.
“Shell and the whole industry needs to do much in the face of current realities.”
Realities include development plans taking double the time to produce, wells taking 50% longer to drill and subsea costs rocketing by almost 300%.
Brekelmans credited a dizzying amount of specifications for slowing the industry’s pace.
“Every accumulating specification informed by sometimes unique incidents as well as individual engineering preferences has resulted in a proliferation of company specific requirements and this is on top a multitude of industry standards for virtually any piece of equipment,” he said.
“Hundreds” of standards for valves represent the layers of complexity and duplication found in the industry today, according to the Shell boss.
“As a result, we are defeating the purpose of an industry standard, as suppliers and service providers strive to meet the needs of their customers through bespoke solutions,” he said.
“At our project sites and in our processes, we see many examples of “waste” such as rework throughout the supply chain and low time on tools, caused by a large number of interfaces, fragmentation, less experienced workforce and unwieldy owner-team set-ups.
“The aerospace and automotive industries managed to put together much more systematic and rigorous ways of managing requirements.”
He added: “In our own industry, we haven’t been able to get to grips in the steady upward trend of cost and delivery time, so this world we now find ourselves in.”
His sentiment was echoed by BG’s EVP, Jon Harris.
Harris referenced Southwest Airlines’ bid to peel back practices and reveal a more simplistic core.
“It has one type of plane, one maintenance programme, one suite of spares, one training programme,” he said.
“Anyone can work on any plane.”
The vision for the industry should be to standardize the specifications for procurement, materials and packages that have “high-degree” of commonality, according to the BG leader.
However, the mountain to climb towards simpler solutions isn’t insurmountable event at $30 oil, according to the pair.
Brekelmans added: “Now it’s not all doom and gloom even with the price of oil where it is. In fact it’s this low oil price where we can find some hope.
“It compels us to make our companies efficient, more competitive and in so doing so secure our places in the industry for decades to come.”
RELATED ARTICLES
- Shell’s CEO says industry must create ‘brave new world’ of energy
- Shell needs to repay investors who backed its biggest ever wager
- Offshore Europe 2015: Oil show visitors have to face ‘new normal’
- Opinion: Rising to the challenge of the ‘new normal’
- Shell stock cheapest in six years for buyers braving takeover doubts
