North Sea ROI only feasible if maintenance becomes more targeted
Published: 29 January, 2014
A leading engineering consultant says the 2013 rate of investment in North Sea assets is unsustainable and that more carefully-targeted maintenance is now essential for the region to stay profitable.
Philip Lawson, of ABB Consulting in Aberdeen, says North Sea operators are only likely to achieve an acceptable return on investment if they maintain and invest in the right areas from now on.
Offshore industry body Oil & Gas UK recently revealed that maintenance on ageing infrastructure had dented outputs for 2013, with levels at a record low. Average output for the year has been forecast at between 1.2m and 1.4m barrels of oil and gas per day (BOEPD), down from 1.54m in 2012.
The drop has been attributed to downtime caused by the extent of asset improvements and repairs that have taken place this year, with investment estimated at £13.5bn so far.
Lawson, said: “There is no question the region can still be profitable for many years to come, but maintenance programmes must now be targeted very carefully in order to achieve those targets.
“There has been record investment in assets this year but it cannot continue at that rate if an acceptable ROI is to be achieved.
“Assets may be ageing but many of them are capable of safely reaching the end of their design life, particularly over the next two decades as activity in the North Sea slows down.
“It is possible, therefore, to target the right areas effectively – applying maintenance only to the right equipment and systems at the right time, and prioritising investment in areas that are most likely to fail.”
He said it could sometimes be difficult for those working offshore to identify priority areas, which meant onshore support and consultancy was playing an increasingly vital role in the industry.
Lawson added: “Sometimes it can be hard without an outside perspective to identify the most critical assets correctly. Resources and skills are currently at an absolute premium so strategies have to be implemented perfectly in order to achieve profitability for the next 20 years.”
