Avoiding the five ways your project concept phase can be derailed

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In part three of his series on the best ways to manage an offshore development, Leandro Basilio walks us through the conceptualisation stage and a how to dodge a handful of very real stumbling blocks that can hinder the process.

As we have observed, dependent on the history and culture of organisations from region to region, there is a difference in both the practice and adoption of technological trends.

That said, there is a great similarity between the logical sequence in the technical definition of concepts and the way in which work packages associated with each discipline are developed sequentially, with each discipline determining the technical requirements and boundary conditions for the next.

Based on this workflow, the financial evaluation of conceptual alternatives occurs after the technical definition phase, limiting, in many cases, the optimisation process to a focus on economic KPIs.
It is possible to conclude that the level of integration between the various disciplines is limited, since the technical processes have an excessive focus on delivering reports and inputting data required to progress to the next stage, with less effort dedicated to developing an integrated economic analysis of design variables.

Figure 1 (below) shows a typical workflow in the generation of conceptual alternatives in an offshore full field development.

concept Figure 1 - Usual workflow in the generation of conceptual alternatives for an offshore full field development

The workflow presented in Figure 1 usually requires several months to generate a limited amount of conceptual alternatives, since the organisation of work is mostly sequential, and in certain disciplines, the engineering methods and processes are based on computational tools with an accuracy level much higher than what is required in the FEL 1 and FEL 2 stages. This is the case in spite of the large uncertainties inherent to the data available in these phases.

This practice leads to analyses that can run to several weeks of computational simulation for just a basic concept and long cycles of revision whenever data is updated or changed.

This can be the starting point for a number of areas in which your full field development can become bogged down. Below I have highlighted five.

Fast-track projects

Fast-track projects necessitate the parallel development of technical disciplines, particularly in those areas associated with design of equipment and physical systems - such as well engineering, subsea engineering, topside facilities and production units. This is because the specification and acquisition of equipment and systems is usually integral in the critical path for project development.

Despite the best intentions of a project manager, it is common to verify any reworks after equipment and systems specifications, leading to several cycles of revisions and design changes that often consume any time savings made up to that point, and lead to higher costs than those observed in a regular project schedule.

Matrix structures

Many large corporations adopt a matrix organisational structure, oriented by technical disciplines. In the matrix structure, a project manager or a project coordinator is appointed to lead the integration and the development of the project along with a technical team, formed of members of the functional departments.

Matrix structures may promote synergy between simultaneous projects and create a favourable environment for benefitting from lessons learned among the projects. However, the management of the technical teams inside the functional departments is complex and can cause several problems. 

One of the most often observed issues is the sharing of specialised professionals in various projects. This hinders the prioritisation of activities dedicated to the optimisation of projects with an economic focus.

Another characteristic of the matrix structures is the limited level of integration between technical teams. Once the specialists are physically-located in separate regions with guidelines decided by their own departments, the demarcation lines of hard siloes have formed.

Technological risks and innovation

As well as aspects that pertain to interdisciplinary and organisational issues, most companies in the sector have a low tolerance of risks in the areas of technological development and innovative systems.

Despite the literature and standards available to guide processes of development and qualification of new equipment and systems in the oil and gas industry, what we see in practice is a tendency for selecting qualified equipment and systems that are field-proven over novel technologies with intangible benefits.

This approach usually leads to new technology having long cycles until it is considered "mature", despite the obvious benefits of innovative approaches to old problems.

In times of heightened  demand and high oil prices, tolerance for technological risk is further reduced, as economic feasibility and favourable rates of return are almost assured.

Supply chain

Regional supply chains have demonstrated a significant influence in the decision-making process.

Owing to geography, politics, fiscal considerations and local content constraints, the full globalisation of the supply chain becomes unattractive and in many cases uneconomical. Local supply chain specialisation is then at a premium.

This specialisation in the regional supply chain has meant that companies have become less likely to adopt different design archetypes, despite the positive margin verified in economic evaluations of concept designs that differ from the historical norm.

The logistical difficulties of importation of equipment, and the lack of local availability of special maritime resources necessary for the construction of offshore systems also leads to additional logistical risks that also influence decision makers.

Engineering methods

A fastidious quest for accuracy in the engineering methodology applied to the project feasibility assessment (FEL 1) and for the selection of conceptual alternatives (FEL 2) may lead to a significant impact on final economic results.
It is not uncommon to observe a large number of revisions throughout the process due to the updating of environmental and reservoir data, which are usually unreliable at the conceptualisation phase.

Looking for acute levels of accuracy at this stage makes it unfeasible to evaluate a large number of alternatives within the timeframe available, meaning that some solutions are overlooked simply because of the delivery guidelines laid out at the beginning of a project.