Shell's Matthias Bichsel on Reducing Complexity

Saturday, November 5, 2011

  • Matthias Bichsel, director of Shell's Projects and Technology business, gave his views on why the industry is complex and how to make it simpler.

Dr Matthias Bichsel, member of the Executive Committee of Royal Dutch Shell and director of its Projects and Technology business, said that in the past, 'most complexity in projects was in the technical realm.'

But now, some of the most complex and difficult issues Shell has to deal with are meeting the requirements of the people who live in areas where Shell would like to operate, he said.

He was speaking at the Offshore Europe (Aberdeen) plenary session on September 6, 'managing complexity'.

The specifics of local requirements and needs 'vary from country to country,' he said, and include 'requirements or local contracting, local workforce development and employment, both direct and indirect (using local contractors).'

For Shell's proposed Beaufort Sea (Arctic) projects, 'The key is to understand what the local people want. 'There is a desire for development, but on their own terms and in a way that safeguards their traditional way of life.'

For example, the noise of drilling operations could have an impact on whaling, which is important to native people. 'We have developed a technology to produce a curtain of bubbles of air around the platform which shield noise, to protect the mammals and fish.'

With Arctic projects, 'the complexities aren't really high-tech; drilling for instance is straightforward,' he said. 'However, the Arctic presents a complex set of non-technical risks.'

For instance, it is important to show local residents that the company can deal with a spill. 'There's no reason to assume it is not possible [to deal with a spill in the Arctic],' he said. The flow rates are much lower - these are not high pressure wells-, the water is shallow hence oil is relatively easy to capture in the very unlikely case of a blow-out. Moreover, Shell has invested in 3-tier spill response capability to deal with any such eventuality. Also, significant R&D was undertaken to demonstrate, for instance, how to deal with oil under and in broken ice.

NGOs and the public

A secondary 'public' you have to contend with is the non-governmental organisations (NGOs), he said.

For example, 'people who don't live in the Arctic who have perhaps a perception about what is or isn't possible and what should or should not be done.'

When it comes to working with these groups, 'we are pleased that some NGOs are willing to work with us to find solutions that make sense for everybody. Sadly, others are not willing to even talk.'

The fact that much of the public believes that renewable energy offers a future in the short term can be a problem.

'Some seem to believe that the only answer [to the energy challenge] lies in renewables. It's simply not going to happen in the short term. Even if renewables grew in double digits for the next 10 years, it won't get to 20 per cent by 2020. Hence, fossil fuels are still needed to cover a large portion of the energy demand.'

An elegant solution is gas, which is abundant, affordable and acceptable since it has a much lower CO2 footprint than, say, coal. However, the industry could have done more to get its view on gas across. 'As an industry we haven't really lobbied very hard, really in a concerted way,' he said.

The previous day, Dr. Bichsel had attended the World Engineers Convention in Geneva. 'It was interesting to see oil and gas didn't really figure in the discussion,' he said, 'despite the fact that oil and gas will need to figure prominently in the energy mix even by 2050.'

Simplifying operations

Shell is making big efforts to try to find ways to reduce complexity in its operations, including pushing for more standardised designs and simplified contracting.

The company has an initiative called ESSA, which stands for eliminate, simplify, standardise and automate, to try to reduce complexity. 'We're simplifying our frameworks, to abolish unnecessary double checking and increase control strength,' he said. This has a direct impact on tendering, making it faster and cheaper.

'I think there are opportunities in being smarter in the supply chain. For instance, we are running a 3 year programme to simplify and de-spec all our standards to ensure they are up-to-date and can be applied globally,' he said.

There are big benefits to the company of reducing the cost of the supply chain. 'Supply chain management and logistics are big factors in how much [overall] value we generate,' he said.

In order for more collaboration between companies, 'you require trust,' Mr Bichsel said. 'Many times we tried to work together [with other companies] the trust was mis-used.'

Shell is also lengthening its deepwater rig charters. This allows real and long term collaboration with the rig contractors to train and develop their staff, come up with new safety measures and overall to ensure safe operations.

'We did that because we saw a dilution of competence on the rig floor' [due to the influx of many new deepwater rigs].

Shell charters its currently 10 strong deepwater rig fleet on average on 5 year contracts. 'Last year we had contracts which go out even for 10 years,' he said.

The company is also aiming to use the same design more than once. For instance, it has done this for Gulf of Mexico tension leg platforms and floating LNG. 'Our 'design one, build many' approach gives better construction, operations and maintenance, flexibility of deployment and scope for successful deployment,' he said.

Automation can help too. 'Every project now has 'smartness' designed in from the start with the right level of automation to reduce cost, improve safety and reliability and reduce the environmental footprint,' he said. 'That's the kind of thing we need to manage the growing complexity of offshore.'

'We're ready to innovate not just with the technology but also the business models - with new processes, new ideas, new techniques and new ways of working.'

Staffing

One area Mr Bichsel doesn't believe is getting more complex is staffing, which has always been a problem. Discussions about people shortages were going on when he joined the industry in 1981, he said.

However, it is true that in the Western world there are less young engineers, but this is offset by the many thousands of engineers and scientist that graduate in India and Asia in general and are very happy to join the energy industry.

He suggested it is up to all of us to give young engineers responsibility early to allow them to move up the learning curve faster and to develop their skills.

This article by Karl Jeffrey is also available both in print and digits at Digital Energy Journal.

Article Tags Shell E&P United Kingdom West Europe People on the Move Aberdeen Arctic Deepwater Gulf Of Mexico LNG University

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser. More

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