For a long time it has been clear that oil & gas projects on the Norwegian Continental Shelf (NCS) are way too expensive, and that the costs must come down. Our main operator in Norway, Statoil, has been talking about the need for an industrialization of oil & gas projects for years, but at the same time contributing to even more Engineer To Order or one-offs due to very detailed and project specific requirements in the different projects.
Historically however there have been limited drivers for EPC’s and product companies to deliver standardized solutions, as they have earned more money from tailor made solutions that was even required by the operators (See Resistance to change, a PLM tale from Oil & Gas), but I think that the incentives for change might be strong enough this time.
Interestingly there are examples of companies that have managed to move from pure Engineer To Order to more standardised solutions in comparable industries. A few EPC's have done exactly this. The incentive to change was brought forward by competition from low cost countries, and of increased and unsustainable use of engineering hours to get and to execute contracts. It was not uncommon to create more than ten different designs (or mini FEED's) for the same project in order to be awarded the contract.
This created a need to go from strictly Engineer To Order projects to a situation where technical documentation and designs could be re-used from project to project while at the same time generating project specific information like tags, functional requirements and how they were to be fulfilled by product deliveries.
- The product specific aspect
- The project specific aspect (tag/plant)
- The supply aspect
A PLM platform was used to manage the catalog with its different aspects, the off the shelf product structures (EBOM), the project specific product structures (if needed) and all the project specific plant/tag structures.
The products in the catalog was built as object structures with both meta-data (attributes) and generic technical documents associated with the objects in the structure. If a product was needed in a project specific context (a plant design/tag structure) it was simply picked from the catalog and then the project specific structure for that product or module was automatically created and tagged based on the project specific aspect of the catalog, and the context it was used in in the tag structure. Since this company also did EPC, they had to manage different tagging requirements coming from different operators. The way this was solved was to have one universal tagging methodology for internal use across all projects, and one external or custom tag for exposure to the operator, if the operator required a different tagging methodology.
The catalog became a crucial part of managing the entire company’s intellectual capital and was managed globally by Master Data groups responsible for each and every product / module and their aspects.
Of course this approach did not eliminate the fact that each project is unique, but it allowed for massive re-use and improvements across the entire portfolio of products and modules used across all projects.
This kind of solution also balanced the need for standardization with the need to make project specific additions to the plant design/tag structure in individual projects.
Maybe similar concepts could be used in oil & gas?
Some points to ponder
The image used in this post is by Satori13 and purchased at dreamstime.com