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COST-CUTTING THROUGH NEW TECHNOLOGY

Technology has been imperative for the Norwegian oil adventure.  With high expenses and a focus on cutting costs, it may become even more important in the fight to secure the future of the Norwegian Continental Shelf. 

The last few years have been tough in the oil and gas industry. Not only in Norway, but throughout the world. Oil prices have plummeted from more than a hundred dollars a barrel to less than forty. Now prices are in the sixties. Figures from SSB (Statistics Norway) show that more than 40 000 jobs have been lost. On a global scale, numbers are even more alarming. Because of this, Norwegian companies have been through a substantial restructuring process. The consequences are many. It has become harder to acquire contracts. The production of oil has decreased. Expertise has left for other industries, just to mention a few.


But this brutal, and as some would say, necessary transition has not only been negative. On the contrary, it has given the Norwegian supply industry a chance to shine.   

Innovative technology

 

The costs have been – and will continue – to be cut dramatically. The same tasks will be performed, but to a lesser cost than previously. The industry has, for years, worked on innovation and technology, but with the last years’ downturn, the focus on development of technology has increased. This works hand in glove with the Norwegian national OG21 strategy document from 2016. The document points to innovation and technology as important priorities for the oil and gas industry for the years to come.


- Norwegian supply industry has traditionally been first-rate at developing technology to solve challenges on the Continental Shelf. The main challenge for the future is the high costs, says Gunnar Hjelmtveit Lille, CEO of OG21.


He adds that the future for the Norwegian Continental Shelf looks bright. It is estimated that Norway still has 50 percent of recoverable reserves. In other words: The Norwegian oil & gas industry still has a lifespan of several decades. However, new technology is necessary to find the reserves and extract them. 


Lille mentions a few areas with considerable future potential in the years to come:


- The big trend is digitization. There are tremendous opportunities in autonomy, automation, remote controlling and monitoring, just to mention a few areas. The discovery portfolio at the Norwegian Continental Shelf is dominated by small and medium sized discoveries. To start production of these finds, we need to utilize the old infrastructure, which can be challenging. In order to have cost-effective production, we must develop cheap and good technology that is capable of exploiting these finds, while simultaneously maintaining the infrastructure. Here technology plays an essential role, the CEO explains.

Hamera
Hydra Well technology is being used for plugging over 200 oil wells globally. Source: HydraWell



Great potential 

 

The common denominator for the new technology is that it must be cost effective.  This is either by doing the job simpler and faster, or by extracting more oil without any halts in the production. The overall potential is substantial. What many forget is the fact that abandonment of oil wells and fields is costly. Plugging oil wells entails immense cost both for the operators and the Norwegian society at large. Both in Norway and globally, there are great business opportunities in developing cost-saving plugging technology. The Norwegian company HydraWell has realized this and has developed a technology that plugs wells both cheaper and more simply than previously.


Simply put, HydraWell has developed a solution where it is sufficient to enter the oil well only once to perform all the steps of plugging. The process is to perforate the casing, flush the holes and the back side clean and fill it all with cement. The entire job is usually completed in less than 48 hours. In comparison, when using the traditional method one has to enter and exit several times to remove debris before cementing. This process can take several weeks.

 

Proven results 

 

- The alternative is to remove the casing through drilling. This is time-consuming and generates several tons of steel shavings to be dealt with afterwards. Without the steel shavings, we can complete a plugging job in two or three days rather than weeks, says Arne G. Larsen, HydraWell´s CEO of business development. 

HydraWell can point to great results. 


- The numbers prove that we have saved 1500 rig-days, which equals more than four rig-years. That makes for a sound economy, especially considering that the cost of one rig is 300 000 dollars a day. We are talking about savings in the order of 3.5 billion Norwegian kroner, Larsen says.


The high cost of leasing rigs has made HydraWell develop a technology to plug oil wells without using a rig. The company is still at the start-up stage, but the ambition is to secure contracts with various operators in early 2018.

 

- Use of new development not keeping pace

 

As already mentioned, there has been a considerable development in innovative technology over the past few years. Critics still feel that the focus started too late, that Norwegian operators have taken high oil prices for granted. OG21´s Lille only partly agrees. 

- It is important to emphasize that we have always been proficient at technology development, but we could have utilized the technology earlier. I feel that it often takes too long from development to utilization, the CEO says.

 

Great faith in Norwegian solutions

 

Statoil has, on several occasions, been a great supporter of several small technology companies. The oil giant has therefore established Statoil Technology Invest to get the products to the market.


- Norwegian technology has brought about the adventure on the Norwegian Continental Shelf. We depend on further innovation and new technology to continue to deliver, says Eskil Eriksen, Statoil´s media spokesperson. 


Eriksen uses the Johan Castberg field as an example. The project´s original cost was estimated at 100 billion Norwegian kroner, but was reduced to 50 billion. Innovation and technology played an essential role in the cost reduction. 


- The potential is enormous, especially within digitization. That is why we will be investing between one and two billion Norwegian kroner in digital technology over the years to come. Statoil has been – and will continue to be – an important part of the Norwegian supply industry by contributing to development of technology. 

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