Transitioning from Project to Operations in CSG to LNG
Download as PPTX, PDF1 like260 views
This document discusses best practices for transitioning large projects from construction to operations. It emphasizes the importance of planning for operational readiness from the beginning. Key recommendations include establishing minimum requirements for early cash flow, planning interim operational states, and learning through the process. The document also stresses designing start-up organizations for continuous improvement, ensuring technical and business systems are in place, and building operational capacity and leadership. Maintaining social license is also discussed. Current challenges in the environment like low oil prices are addressed, but the foundations in place in Queensland position future projects well for long-term growth.
Transitioning from Project to Operations in CSG to LNG
- 1. Transitioning from Project to Operations in CSG to LNG Kai Eberspaecher
- 2. Unprecedented Transition from Project to Operations – Three Projects in Queensland Advisian | 2
- 3. Case for planning a smooth transition Industry data suggests that around half of large scale projects do not attain the planned production 2 years after start-up Reasons for this can be: • Inadequate front end loading and understanding of the subsurface uncertainties • Focus on schedule rather than value • Treating the project and operations phases as separate / siloed organisations rather than a continuum that doesn’t stop at the handover Advisian | 3 Project to operations transitions are notoriously challenging
- 4. Achieving operational readiness is part of good project execution
- 5. Achieving operational readiness is part of good project execution Start with end in mind Establish the minimum value chain: Advisian | 5 • Think about technical systems, organisational capability and partner requirements to generate cash as early as possible • Plan how to get there with broadly defined interim milestones • Know your critical path(s) to get there and develop execution plans upfront Wells – Compression Dehydration – Pipeline – LNG to generate cashflow
- 6. Achieving operational readiness is part of good project execution Advisian | 6 Plan for interim states • Not all systems will be ready at the same time, think about e.g. telecoms, control systems and determine the minimum requirements for start up • Look out for regulatory approval requirements • Don’t forget that some of these systems still need to be completed at the end Learn along the way • Manage risks early and systematically • Address uncertainty with building in contingency in schedules, manpower and budgets • As project progresses, uncertainty reduces and the execution can become more rigid and efficient
- 7. Designing a start up organisation geared towards continuous improvement Advisian | 7 Contract management Budgeting Resource planning • Think through the number of parallel workfronts and skills required, look for specialised manpower partners early • Allow for competition for resources in the market place in your plans • Commissioning and start-up typically percentage allowance (3-5%) of total cost estimate • Start up team needs to substantiate this estimate with manpower, productivity and benchmarks available • Learning curves are important, these should be part of an upside case not the base case if no track record available • Develop an overall contracting strategy that suits the project and corporate requirements • Defining contract scopes and interfaces is important • As an Owner, consider the number of interfaces that need to be managed and how to reduce them • Include incentives for innovation or efficiencies in the contracts
- 8. Systems and processes for start up and handover Sequence for Introduction of Hydrocarbons • Develop a pre-commissioning and completions strategy • Work out start up sequence of components in detail such as compressor stations • Aggregate components to systems and define interfaces e.g. trunkline / compression – understand individual requirements • Conduct desktop planning exercises aligning all stakeholders Technical Systems • Understand commissioning systems and subsystems and reflect these in your plans • Determine what state the systems will be or should be at the end of a commissioning sequence Business Readiness • Cover Permits and Licenses • Define Handover documentation • Develop Operating procedures and conduct Operator Training • Work with Finance - insurance and asset handover Advisian | 8
- 9. Establishing continuity and building capacity in Operations Advisian | 9 Long term perspective Training and Competence – Leadership Resourcing Strategy • Decide on your operating philosophy (inhouse / outsource / combination) • Start early and know your requirements, look for a mix of experienced and newcomers to build in longer term perspective. Integrate operations need with some of the start-up team positions e.g. control room operators • Front line leadership is key to success, choose your leaders wisely and ensure that they have the right supporting behaviours driving delivery • Safety – Safety culture starts in the project and flows into operations • Production – once hydrocarbons are produced the organisational focus shifts • Maintenance – Reliability and Availability is key to maintaining production
- 10. Social Impact on Communities – Maintaining the license to operate • Early stakeholder engagement is key to a successful project outcome • Rural communities change as part of the project cycle and have to adapt to FIFO workers and higher levels of activity • Industry working hard with local communities to become accepted and continue to be a sustainable partner • Lessons learned from initial project phase must be applied to future developments Advisian | 10
- 12. The current environment Challenging environment • Low oil price = low revenues due to LNG contracts linked to oil price • Industry consolidation in full swing as it’s cheaper (and less risky) to buy reserves than to explore for them generating earlier cashflow • Unlikely to see concentrated mega projects anytime soon New operational reality • Key is to maintain or increase equipment availability balanced against cost • Focus on 20% of producers that deliver 80% of production • Operators are reacting to reduce cost and moving to lean operating model • Restructuring and challenging cost structures, deferring projects Advisian | 12
- 13. Foundations have been laid for a long term industry • Incremental projects will benefit from existing infrastructure • Multiple export routes now generating competition in the long run Advi sian | The Outlook for Queensland’s LNG Projects
- 14. The Outlook for Queensland’s LNG Projects Some Scenarios: Integration • Development and project organisation will need to integrate earlier to address uncertainty by allowing for flexibility in design and operating envelopes Back to basis • Operators will concentrate on what they understand which is producing oil and gas. Transportation, water and power assets might be outsourced. E.g. QCLNG export pipeline Cooperation • Operators will find that sharing resources, supply bases etc will be an efficient way to reduce cost. Example – Supply boats UK Offshore Innovation • Advances in technology will allow further optimisation of the workforce reducing risk. E,g. application of drones to inspect easements and conduct operator rounds. Advisian | 14
- 15. Although the outlook for the medium term is challenging, in the long term the Queensland projects, having transitioned into operating assets, will provide a platform for further innovation, efficiency and growth both locally and globally
- 16. Thank you Advisian | 16