In Focus: P&T’s improvement programme in deep water
A chronology of four deep-water projects in the Gulf of Mexico illustrates the effect that P&T’s sweeping capital-efficiency improvement programme has had since it was launched in 2015.
In 2015, when our drive for capital efficiency really got rolling, this project was already under execution. Even so, we were still able to make significant improvements to the project. A leaner approach in well engineering and execution, for example, reduced drilling times of deep and complex wells from 150 to 60 days. The oil-price drop provided the right backdrop to permanently transform the nature of Shell’s relationship with the suppliers involved.
- FID in 2015
- First oil expected in 2018-2019
- Expected peak production of 175,000 boe/d
The Appomattox project was sanctioned after a rigorous competitive scoping exercise; an exercise to critically reassess the functional requirements of a project. To this end, we systematically applied the accumulated knowledge from the design and construction of our previous floating production platforms, standardising topside equipment and well designs wherever possible. In doing so, we carefully balanced cost/value/risk trade-offs in the project’s technical specifications. Our efforts to enhance the project’s capital efficiency did not stop there. After FID, costs were reduced by an additional ~25% without compromising safety or quality. A significant part of the follow-on improvement has come through further competitive scoping, greater standardisation in well design and more efficient execution through speedy well-to-well learning.
- FID in 2016
- First oil expected in 2018
- Expected peak production of 40,000 boe/d
For this project, P&T and the deep-water business took a fully integrated approach in which innovative technology, competitive scoping and efficient execution were all brought to bear to achieve significant capital-efficiency improvements. For example, exploration and appraisal wells were adapted to serve as producing wells, and the designs of newer production wells and subsea facilities were simplified. These changes were matched with a rigorous assessment of how the supply chain could also contribute to the improvements. All these efforts combined have delivered a 30% overall cost reduction since the project was sanctioned. We expect this project’s cost and schedule performance to set the best-in-class benchmark.
- Project progressing towards an FID expected in 2018
When new information on Vito’s underlying geology came to light during the field-development planning, P&T returned to the design phase to extract greater capital efficiency from supply-chain collaboration, standardised structural design and new, compact equipment. It drew on the sustained improvements in performance it has achieved since 2015 in design, engineering, drilling and construction. The result is that the project’s wells and its new concept for the subsea and topside facilities are expected to cost 70% less than the initial estimates from the original design.