Low prices have caused pain in the upstream industry. But some pain points existed even when oil was $100/bbl. One of these is cost overruns.

According to DNV-GL’s Oil & Gas Perspectives newsletter, final investment decisions for field development projects underestimated costs by an average of 16%, with deepwater projects at 45% and heavy oil projects at 50%.

And while the downturn over the past year has dampened plans for increased capex, much more fat can be trimmed from the remaining projects. “It is important to develop a detailed understanding of cost drivers,” Etienne Romson, strategy and business development director of DNV GL Oil & Gas, was quoted as saying. “Sometimes, answers that seem obvious—salaries, steel prices and so on—are not the whole picture. Cost inflation of this kind accounts for only a third of increased project expenditure seen in recent years.”

Romson went on to note that deferring projects or squeezing suppliers is not necessarily the best way forward. “The solutions lie in working smarter, for example through collaboration, sharing of assets, standardization, digital technology and joint innovation and in taking a risk-based approach across the project and asset life cycle.”

New approach
The refrain is similar throughout the industry—a new way of doing things is needed. To help its customers reduce costs, Emerson Process Management recently introduced “Project Certainty,” intended to provide “transformational improvements” in project execution, according to a press release. The idea is to help companies trim costs and speed up their capital projects.

“We’ve been working on this for a number of years, and we thought it was a good time to come out with a message about what we think we can do to help the industry,” said Jim Nyquist, group vice president of Emerson’s Systems and Solutions business. Nyquist said statistics indicate that 65% of industry projects that cost more than $1 billion fail today, meaning they’re either
at least 25% over budget or 50% behind schedule.

The two main drivers behind this are complexity and the use of outdated methods, he said. “Our customers have more partners, more people involved; they have more EPC [engineering, procurement and construction] involved; they’ve got more complex technology involved; they’re often in remote locations; and all of those things add up to a very complex situation that is extremely difficult to deal with,” he said. “Our customers also have told us that they’re engineering and building projects the way they have been doing it forever, and they keep doing it the same old way. They don’t want to risk changing anything.”

Project Certainty has three major elements—eliminating work, reducing complexity and better accommodating changes. To eliminate work, the company has introduced electronic marshalling with smart junction boxes that reduces the number of cabinets in a control system by 90% to 95%. These boxes move much of the input/output (I/O) equipment into the process itself and eliminate an enormous amount of wiring from the field to the control room. These junction boxes are standardized designs, eliminating a lot of the upfront engineering, he said.

Emerson also has introduced wireless technology for the instrumentation. “When you think about a wired instrument, you need to have cables that go from the instrument to a junction box and then all the way into the control room,” he said. “It’s a lot of cable trays and wiring.

“Wireless eliminates that completely. It cuts out tons of engineering work and wiring costs,” he added.

Reducing complexity requires a very different way of working. “The idea is to reduce as many dependencies as we can as well as a lot of engineering and to facilitate concurrent engineering and construction,” he said. “More and more the industry is going toward modular builds, and to do that you must have people working on different parts of the facility in different parts of the world. That becomes very complex.

“We have the ability to virtualize our control system. We’ve put it in our secure private cloud, and that allows multiple people all over the world to do their software and configuration development concurrently,” he continued.

He added that the company also has separated the software development from the hardware installation, placing the hardware in the field while the software is still being configured. This allows engineers to check interfaces without having the physical piece of equipment present.

To accommodate changes, Emerson has introduced a concept called “auto-commissioning.” Nyquist used the analogy of hooking up a printer to a computer. Several years ago this was a tedious process that required telling the computer which port to use and installing software. Today the computer does all of the work; the user just plugs in the device.

In the field, it’s still being done the oldfashioned way, where one technician sits at the control panel while another finds every single I/O point on the facility and makes sure it’s talking to the system. There can be 50,000 I/O points on a single facility. “It’s laborious,” he said. “It takes weeks.”

The new control system talks to the smart junction boxes and automatically connects the I/O point to the software configuration, taking a few minutes per field device.

“It can reduce commissioning hours by as much as 80%,” he said. “We have customers who have quoted a 20,000-manhour savings.”

Some of these technologies already have been launched, but it wasn’t until recently that the package came together as Project Certainty. “This has been a journey,” Nyquist said. “We’ve used pieces on many projects with some very positive impacts.

“Project Certainty is not a singular element. It’s composed of a lot of different technologies and methodologies, but the key to it is that a lot of the benefits are derived by having early engagement. You’re really tapping into the customer and engineering contractor strategy, so it’s a very flexible model, and customers can prioritize the aspects that they’re ready to do that will bring the best benefit.”

It is, in fact, customer engagement that has helped the company develop some of these technologies. Nyquist said customers point out the problems they’re having and ask Emerson to help solve them. “Frankly, that’s how we like to work. We get some of the best ideas when we’re knee-deep in it with customers.

“I would say the entire Project Certainty concept is enabled by technology, but it’s only realized when you actually change your processes and methods. You have to build it into the project during front-end engineering and development to get the benefit. If you wait too long, you’re already down the path of using conventional methodologies, and the technologies aren’t really going to pay off,” he emphasized.

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