120
unless it was established that the potential for substantial identified cost savings and the coordination effects had been realised. An agreement in principle on a coordinated development of Ivar Aasen and Edvard Grieg was finally negotiated in January 2012.
The government’s desire to see a coordination in this area is both understandable and correct. According to the operator’s personnel, the biggest problem with this process was that it took place in two rounds and therefore caused some delay to the schedule. However, the result was an acceptable solution, although several of those interviewed for the study believe there had been solutions which were even a little better.
121
After PDO submission and in parallel with its consideration, NOK 7.8 billion in contracts conditional on government PDO approval were entered into. Preparations for these contracts were pursued to some extent in parallel with Feed work. Available time was short, and the quality of the work varied. Lack of Feed quality necessitated increasing/intensifying follow- up in the execution phase.
Known technology. Avoiding the development of new technology if acceptable conventional technical solutions are available to choose from is a wise choice for a new operator.
Development. Plans for five large Norwegian development projects were approved in 2012- 13. That was challenging for a new and small operator company. Construction contracts for platform elements with substantial interdependence were placed in different sites at
considerable distances apart and with time differentials which made communication especially demanding. Particular problems were posed by the topsides contract and the relationship between Det Norske and Aker made it even more demanding, generating both uncertainty and delays up to contract award.
The contract with SMOE was delayed from the start, and engineering work lagged behind – also because of an immature Feed. Substantial delays were reported during 2014 but SMOE managed to get back on track through effective measures, including adjustments to the construction method/sequence to take account of delayed equipment deliveries.
High costs. At PDO submission, the project had a calculated breakeven price of USD 65.7/bbl. Although this was acceptable in relation to prevailing oil price expectations, it represented a high breakeven which reflected a high level of costs. This probably reflected a combination of the generally high cost level in the industry, conservative estimating and an expensive development solution in relation to the reserve base. The operator’s original recommended concept has significantly more robust economics in relation to the reserve base and the uncertainty this presented.
Proactive collaboration with EPC contractor. The way Det Norske managed to collaborate closely and in an integrated way with its most important contractors undoubtedly helped the project to reach its goal in a good manner. The project was able to take the right measures when the engineering process was threatening to destroy the whole execution of the project. It “took over” procurement follow-up on behalf of the EPC contractor and got it under control in terms of both planning and quality for this part of the project. (Costs, on the other hand, increased by almost 50 per cent compared with the budget.)
On stream. Despite of the deficiencies in Feed and a tight execution plan, the field came on stream in late 2016. The last six months of readying for production were characterised by good planning and control. Rapid production build-up and good regularity are indications that the pressure of time had not affected quality and safety. Drilling and well operations appear to have been particularly successful.
Project execution. As mentioned above, the choice of concept attracted big discussions and much disagreement. In retrospect, the development can be said to have been executed in accordance with approved plans and schedules. Production has developed well, and regularity is an indication of good quality. At the same time, the concept is claimed to be sub-optimal. Two reasons are cited for this.
• The dependence on Edvard Grieg is a challenge with regard to production control, capacity utilisation and regularity (dependence on electricity from Edvard Grieg has been problematic).
• the concept is expensive in relation to the reserve base, which yields a high breakeven price. A higher degree of coordination between Ivar Aasen and Edvard Grieg, with only one field centre, could have been beneficial for society.
One team. Building one team from the first day appears to have been among the most important factors behind the success on Ivar Aasen. This can be challenging when a lot of the personnel are recruited from external environments. On the other hand, however, Ivar Aasen was by far the biggest and most important activity in Det Norske (company maker) when the project kicked off. That makes it easier to set clear goals and ambitions which the whole company knows and can support.
122
Integrated collaboration in the operator organisation. The integrated collaboration between D&W and Petec can be highlighted as a good example of close and successful cooperation between departments, but also with the external suppliers. This yielded good results.
Supplier collaboration. Making provision for close collaboration between the suppliers is important. This can only be achieved by establishing an open and trusting dialogue and a form of collaboration based on give-and-take. Construction of the topsides, the jacket and the living quarters are all examples of this.
Good working environment. According to the project, the working environment is based on trust and mutual back-up when difficult challenges are to be tackled. Management’s willingness to take decisions also supported the mood of an organisation which gets things done, and where it is therefore enjoyable to work.
123