The Kimberlite Report: Part 4 – the key takeaways
Posted: August 26, 2020
In the fourth and final part of our analysis of the industry trends and future strategy emerging from the Subsea Equipment & Services Supplier Performance Report, recently published by Kimberlite Oilfield Research, Proserv’s Senior Vice President Iain Smith nails down the core strategic messages.
If the myriad of findings from the recently released Kimberlite Report regarding subsea equipment and services suppliers could be condensed into one snappy message, it would probably state: be smart, choose wisely.
The study, conducted as the pandemic began to spread and the subsea sector started creaking under the strain of lower prices and thinner margins, predicts a landscape of limited expenditure, increased brownfield expansion and major worries over the reliability, quality and flexibility of subsea control systems.
The report throws up a fascinating cross-section of statistics and a glimpse into the current thinking of dozens of operators worldwide. One of the most striking and concerning points is that, on average, the mean time between failures for a subsea control system is just 22 months.
This is an alarming figure and it speaks to the fact subsea controls are the key area where Kimberlite’s respondents cite additional advancements and innovations in technology are needed to meet future operational requirements. More specifically, one in every three operators also express a general need to improve the overall reliability of control systems.
There is obviously never a good time for operators to suffer issues around production reliability, but it is particularly damaging when the oil price is modest, and their spanking new, supposedly reliable, subsea equipment is still only a few years old at best.
For us at Proserv, while, at the wider industry level, we are concerned about the feedback in the Kimberlite Report regarding the lack of reliability of subsea controls, from a strategic and technology development perspective, it is nevertheless very satisfying to be recognised, first and foremost, for the reliability of our own equipment and solutions.
Be smart: pick the right controls provider
Likewise, we are encouraged that the operators interviewed in the report identify Proserv’s expertise in retrofits. This is an area where we gain a lot of work due to the coexistence capability of our Artemis 2G subsea electronics module (SEM), which can be configured to work alongside any original equipment manufacturer’s (OEM) control system.
Kimberlite’s researchers estimate that as many as 30 per cent of all new subsea control system purchases are either for retrofits or system replacements. This suggests two things: firstly, failures in subsea control systems are quite commonplace (confirming the concerns around reliability) and secondly, operators therefore need to make informed, smart choices about which supplier they trust.
The report reveals that when subsea controls do fail more than 70 per cent of the issues stem from a combination of the subsea control module or the SEM within it. Operators must be shrewd and prioritise buying systems from a supplier that can offer reliable technology as standard.
Many OEMs only support the current version of their controls for a limited period, before moving on to their latest release which invariably is not designed to be backwards compatible. That can leave operators stuck with increasing obsolescence.
The industry is now into a period of marginal gains, involving limited expenditure, where moderate extensions and enhancements of existing brownfield assets will be a substantial driver for productivity. Carrying an escalating burden of unreliable, failing controls could be the difference between profitability and non-viability.
At Proserv, the unique strengths and features of our SEM technology make it a smart choice for operators seeking either to ramp up production efficiencies within their unreliable, obsolete legacy equipment or to add extensions or tiebacks to their assets at affordable rates, avoiding expensive full system upgrades.
As we move further into this phase of caution, while the pandemic still overshadows strategy decisions, we anticipate our value-for-money and high-quality subsea offerings will garner even greater interest from producers across the globe.
Choose wisely: focus expenditure on controls not on the tree
But an equally critical decision that switched-on operators need to make, following the trends emerging from the Kimberlite Report, is to centre their subsea infrastructure spending not on the choice of subsea tree, as has often been typical, but rather around the choice of controls. The data and findings back this up.
Almost 70 per cent of operators believe subsea trees have become commoditised and, crucially, the Kimberlite Report observes the prevailing view is that “there are really no major differences in the suppliers’ offerings and equipment performance.”
Considering there are genuine live concerns around the reliability of subsea controls, it is something of an outlier that operators tend to build their expenditure around a piece of equipment widely regarded as standardised.
At Proserv, we have had to support many operators who have based their procurement decisions around their choice of OEM subsea tree, taking their controls almost as a throw-away part of the bundle, and now they are being burned by severe issues with obsolete SEMs, unreliable performance and lack of flexibility. Life-of-field costs can only be contained and reduced by acquiring an effective subsea control system.
When our industry, like others, is navigating a challenging and unique global scenario, it is clear from the Kimberlite Report that operators can make a real difference to their margins, and the viability of their future strategy, by placing quality, reliable subsea control systems right at the forefront of their decision-making.
Part 1 of the Kimberlite Report: reduced spending and caution point to further brownfield opportunities