Have Offshore Operators Cracked the Code on How To Successfully Run a Megaproject?

Abstract

_ Offshore oil and gas companies have been told for years that when it comes to delivering on megaprojects, they’re not doing that great of a job. The experts have pilloried piecemeal approaches to contracting and scheduling, blaming them for cost inefficiencies and delays. Analysts have raised concerns that the various teams involved are too siloed, or not brought into the fold at the right time. And lamented on from many a conference podium are the rarely realized benefits of standardization. However, two recent case studies from different sides of the Atlantic suggest that large offshore producers have paid heed to these issues. At this year’s Offshore Technology Conference (OTC) in Houston, Equinor and Murphy Oil Corp. shared details about their latest multibillion‑dollar projects. In separate conference papers the companies said they avoided overengineering new production systems by trying to borrow the blueprints from existing facilities. They also claim to have fully embraced the idea of integrated teamwork and proactive project execution. For Equinor, the result is known as the Johan Sverdrup field which stands in roughly 375 ft of water on the Norwegian continental shelf. Output from the project’s phase one and two facilities topped out in May at 755,000 B/D with one of the industry’s lowest breakeven prices of less than $20/bbl. Meanwhile, Murphy is celebrating the new King’s Quay floating production system (FPS) which delivered first oil less than 3 years after sanctioning. The three‑reservoir deepwater Gulf of Mexico project also bested expectations as it ramped up to 100,000 B/D within its first year of operation. Highlights from these case studies and the strategies that led to successful outcomes are below. Johan Sverdrup: A European Giant In May, Equinor’s Johan Sverdrup field soared past its originally planned nameplate capacity of 720,000 B/D as it hit a plateau rate of 755,000 B/D. The peak figure represents about 7% of European crude demand. The milestone for the majority‑state‑owned oil company came a little over 6 months after it completed a $4.4‑billion phase two expansion project. In OTC 32552, authors from Equinor outline the key strategic decisions that enabled the company to deliver the 29‑well phase two project on time and under budget despite pandemic‑related barriers, equipment failures, and employee strikes. Keep Contractors Close. Equinor emphasized the role of its newest iteration of integrated teamwork—or what it calls the “one team” approach. Vibeke Lossius, a coauthor and project manager for Equinor, described the idea as the glue that held together the operator with its global network of contractors and suppliers. “Our philosophy was that if one fails, we all fail,” she said. “So, it was important to us that the contractors succeeded.” The one team approach grew out of phase one but only involved Equinor’s team leaders. Then as the operator began phase two, it pushed harder to align its goals more closely with those of its contracting partners, which meant bringing them into the tent.