April 2024
SPECIAL FOCUS: Offshore technology

Custom-made blueprint for optimizing late-life assets

Late-life management of oil and gas assets is a careful balancing act where operators weigh many evolving factors, all while tracking cessation of production and potential options that follow. Mistakes can be costly and developing a tailored asset management strategy is crucial to avoid wasting resources and ensure that assets are maximized.
Rama Sharma / Xodus

From day one, oil and gas assets—irrelevant of their size, location or importance—are designed and optimized to maximize extracted commodity value. As they mature, these guiding principles do not change, but various pressures, issues and factors make late life enhancements a difficult task, Fig. 1. 

Fig. 1. Xodus’ experience allows clients to visualize all stages of their late-life operations, enabling cost-savings realized through sound decision-making and optimizing operations.

Adapting to changing requirements. First and foremost, operations are simply not the same; it isn’t possible to run assets in the same manner during late life, as you would have during their peak years, so a change in tack is needed to optimize output. At the same time, legislation can change, and operators may have to adhere to rules that weren’t in place when the asset was first installed.  

On a physical basis, assets are also being pushed to the limit. Advances in technology mean additional value can now be extracted that weren’t envisaged at the time of commissioning. As such, assets that may have been designed for a set lifetime are now operating beyond their years, with the North Sea Transition Authority (NSTA) keen to make life extension the norm, in order to achieve maximum potential. In turn, as assets age their maintenance requirements shift according to their specific requirements.  

Moreover, the new pressures of meeting energy demand have meant assets now evolve, with some taking on a new purpose through re-use or re-purposing strategies, once their primary objective has been completed. In the UK, there are various reviews ongoing into large infrastructure—such as gravity-based platforms, large steel piled jackets and export trunklines or pipelines—to determine whether there is scope for reusing them in alternative energies, like carbon capture and storage (CCS) and hydrogen. One of these studies is being conducted by Xodus in partnership with the Net Zero Technology Centre, to highlight assets well-suited to offshore hydrogen production (HOP2). 

All these factors are considered when designing and preparing an asset for the next stage of its journey, whether that be decommissioning, reusing or repurposing, and the plan itself should be optimized in line with the end point in mind. Every year, when assets undergo budget reviews, the cessation of production (CoP) timing is reviewed, and an asset management strategy is chosen.  

Most of the time, this is a glidepath toward decommissioning; however, if alternatives are not reviewed and considered at the right time, it can be a very bumpy journey to get to that end point. Some of these bumps are issues with stakeholders, a sudden shift from operating to decommissioning, or simply not responding to changes at the right time, meaning the desired or optimal asset end point is missed. 

Getting late-life management wrong can be a costly mistake. The impact of wasting resources is most noticeable when asset production is in decline, and that should be a real consideration for those in the UK North Sea, a mature basin with ageing assets. Pressure to keep costs low is something operators are constantly under, as they try to ensure their assets can run for as long as possible. Some companies are able to proactively reduce their costs as part of a wider asset management strategy, but smaller operators may find this complex, especially when they aren’t backed by a multi-disciplined team of experts, Fig. 2.  

Fig. 2. The UK North Sea is a mature basin with dozens of ageing assets. Xodus has an extensive track-record developing decommissioning program support throughout the energy sector, where we advise operators, as well as government agencies.

But it requires proactivity, and the later the task of optimizing a late-life asset is left, the harder it can become. Being one step ahead, with a clear understanding of what happens to an asset once it hits CoP, allows the operator to put a suitable and specific asset management strategy in place. Cost minimization is one aspect that is being managed as an asset enters its twilight years, but it is not the only one. As per the North Sea Transition Deal, the industry has to cut upstream emissions in half by 2030. As such, operators are constantly striving to minimize the environmental impact of their activities. Therein lies a dilemma though, as hydrocarbons can be lost through inefficient operations while focus is given to trying to minimize emissions.  

Under the UK’s strategy for maximizing economic recovery (MER), operators are compelled to extend the production lives of their assets for as long as safely possible. Doing so efficiently is key, and that requires having a suitable asset management strategy in place to avoid wasting valuable time optimizing an asset or losing precious resources.  

Drawing up a late-life asset management strategy. A fundamental part of any asset management strategy is the operations and maintenance approach (O&M). O&M forms the main asset cost component within the operating phase and directly impacts performance and revenue through uptime and reliability—it is an area that requires laser focus. By prioritizing O&M activities during the life of an asset, operating costs can be kept to a minimum without jeopardizing the current or end-state goals of said asset.  

Assets have a range of systems built in to achieve operating requirements. At start-up, all these requirements are essential to keeping the asset operating, but as it ages, the system needs change, and it is possible to adapt systems for other purposes. In parallel, the maintenance needs of an asset generally increase as CoP inches nearer. Maintenance optimization, which involves only performing those activities that are needed to match the platform objectives, is essential to keeping costs to a minimum while ensuring safe operations.  

One size doesn’t fit all. It's not easy managing an asset after its most profitable years, and there is no one-size-fits-all solution; each will have a unique map to that golden end point. Determining the right approach for the right asset requires input from experts across many disciplines, and not all operators have this expertise in house. It’s not just about decommissioning either; at Xodus, our teams navigate the whole asset management approach to achieve optimized performance, Fig. 3.  

Fig. 3. As offshore assets move toward end-of-life, they are pushed to their operational limit. Xodus works to provide strategic solutions by influencing regulator and stakeholder expectations, while creating a mindset that helps drive efficiency in decommissioning by supporting an integrated one-team approach.

A client once asked us to detail the process for changing out a compressor to boost production efficiency and slash emissions. Before diving headfirst into the project, our team took time to study work that had been done previously and some of the assumptions made. With decades of experience managing similar studies, both in early concept and delivery, Xodus engineers quickly realized that other options had been overlooked. By dropping the suction pressure of the compressor and with a bit of reconfiguration, they were able to deliver almost the same results (91%) for a fraction of the cost (3%). 

On top of the cost cuts, this approach also slashed the time that needed to be dedicated to the compressor, used less power—and thus emissions—and the risk profile was a fraction of full change-out. For Xodus, this solution cut our scope by 18 months and about 60%, which may seem counterintuitive, but these are the wins that inspire engineers and ensure that clients come back to us time and again.  

Operating efficiently in the decline phase. Guidelines on late life decommissioning inspection and maintenance give information on which systems are needed for the various stages of an asset, but they don’t give direction on how to optimize these systems during the production decline phase before wells are shut in for good. As production begins to wind down, power requirements change in line with the purpose of the asset, and focus on one factor (e.g. operational efficiency) means another (e.g. emissions) can be neglected. It’s a balancing act and it can be a hard one to get right.  

But with careful attention to detail and small improvements here and there, it is possible to find an equilibrium that is right for your asset. Xodus has worked on many projects, where the operational efficiency of turbines has been altered to reduce emissions and increase production to provide immediate impact, saving millions of pounds over the remaining life of the field.  

Once the end of the road is reached though, there is a decision to be made about the future of the asset—repurpose, reuse, or decommission. Some may have an alternative use in new energies, in which case the review of the systems could be updated to ensure this end state is met. If for example, the asset pipelines were to be re-used for CO2 injection, it is likely that systems needed to support the pipeline asset integrity and operability would be assessed by the operator, technical authorities and CCS specialists.  

Take the time to get your asset management strategy right. The journey of oil and gas assets from peak production to late life to decommissioning or repurposing is a complex and multifaceted process. From adapting to changing requirements and advancing technology to meet the unique challenges of aging operations, operators have much to consider. 

Late-life enhancements are far from uniform; they require a comprehensive, proactive and tailored asset management strategy. The potential consequences of getting this blueprint wrong are significant—wasted resources and financial implications—especially in a mature basin like the UK North Sea. The pressure to keep costs low and reduce emissions further complicates this equation, necessitating careful consideration of operational and maintenance approaches.  

Efficiently operating in the decline phase requires a delicate balance. Xodus has a multi-disciplined team to support this end-state decision-making process—whether this be asset decommissioning or re-use—and provide the operational support to help assets make the most of their potential. 

About the Authors
Rama Sharma
Rama Sharma is a knowledgeable decommissioning specialist striving for safe, efficient and cost-effective decommissioning. She has over 20 years of experience in operator and contractor environments, specializing in upstream technical and management positions. At Xodus, she is focused on driving optimization in late life assets to deliver their maximum potential through risk management and planning. Ms. Sharma is focused on supporting the energy transition by decarbonizing assets through late life and beyond, as well as leading decommissioning cost estimates and due diligence work for clients.
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