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New life, new profits

Rejuvenating late-life operations in the energy industry

Overview

Late-life assets are a major challenge for many energy companies around the world. The problem is pervasive. Today, more than half of offshore platforms are beyond their original design life. These assets raise significant competitive problems for energy companies, primarily unit operating costs keep going up because of lower production while reliability keeps going down as the asset matures.

Given the current crude oil price environment, the economics of this operational situation are not sustainable. However there is solution – moving to a lean, fit-for-purpose operating philosophy. Accenture research finds that Operators who have adopted this approach have realized 35 to 40 percent lower costs – instilling new life and new profits into late life assets.

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Key Findings

Time to reboot your operating philosophy

Time to reboot your operating philosophy
Companies need to evaluate operations and maintenance requirements against actual operating conditions across the categories of equipment, maintenance and people. This re-evaluation can increase the potential for equipment rationalization and optimized maintenance frequencies, 
dramatically reducing the need for manpower and services.

Stop flying blind in your production operations

Stop flying blind in your production operations
For upstream operations, companies should focus on leveraging digital technologies to:

  1. Improve campaign readiness

  2. Rethink conventional inspection approaches

  3. Create visibility into logistics assets

These actions can help operators sense and react faster, reduce offshore activity and optimize asset utilization.

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Spin off late-life assets into a low-cost business
To compete effectively, some leading organizations have created parallel lean businesses focused on lower-volume assets. In this way, companies that have built operating models for large production volumes can still remain competitive and drive full value from an aging hydrocarbon asset base.

Recommendations

As the economics of late-life assets declines, operators need to consider radical changes in the way they manage assets. Here are actions to consider.
Challenge your assumptions
First, “rebooting” your operating philosophy means challenging your assumptions about the effectiveness and timeliness of your operating model.

For example, consider using zero based budgeting (ZBB) for OPEX—not just making improvements, but re-creating them starting from zero given your current operating environment.
Leverage data more effectively
One way to stop “flying blind” is to leverage data to improve planning and drive better operations. A goal here is to achieve end-to-end, integrated activity planning.

For example, companies can optimize asset utilization through control towers that cover marine and aviation, achieving visibility across the demands of different operators.
Take advantage of the circular economy
Adopt circular economy models to generate value from redundant equipment.

In the North Sea and Gulf of Mexico, refurbishment and reuse of components has become common practice as a way to monetize redundant equipment and to decrease costs.



Who we are

Mr. Witjas is Accenture’s lead for Operations Strategy in ASEAN. He has developed solid experience in operations excellence, organizational effectiveness and value realization programs for large multi-nationals across Oil & Gas, Chemicals and Utilities. Over his career, he has managed multiple strategic transformation engagements generating significant benefits at his clients. He is based in Singapore.
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Farooq specializes in collaborating with the leadership teams of Oil and Gas operators to develop their strategies, transform their organizations and improve their performance. Farooq also assists regulatory bodies in resource strategy, block negotiations and managing industry participants. Prior to joining Accenture Strategy, Farooq was with Schlumberger Business Consulting for more than 11 years. He is based in Kuala Lumpur, Malaysia.

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Sven is passionate about driving significant bottom line cost reductions in the areas of Sourcing & Procurement and Supply Chain across a variety of industries like Energy, Chemicals and Consumer Goods. Additionally, Sven specializes in shaping digitally enabled, fit-for-purpose operating models to drive efficiency and enable growth across Procurement and a variety of Supply Chain & Operations functions. Sven has worked extensively across ASEAN and China. Before moving to Kuala Lumpur Malaysia in 2009, Sven was based in Belgium and worked extensively across Europe and US.
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