Significant cost savings
The major ACG oil complex is being developed by BP-operated Azerbaijan International Oil Company. The drilling equipment packages are being designed and built by Aker Kvaerner MH to a standardized configuration, an approach that is bringing significant cost savings to client and contractor alike, as well as improved efficiencies and greater reliability.
With more than 30 years’ established track record in designing and building world-class drilling equipment, the team of engineers at Aker Kvaerner MHhad been looking at ways to reduce costs through standardization for some time. As Thor Arne Haaverstad, Vice President - Equipment at Maritime Hydraulics, explains, “There are opportunities for standardization in several aspects of drilling equipment design and manufacture, especially on a multiple platform field development project. From the work we had already carried out, we were seeing a reduction particularly in engineering man-hours and in the time required for testing prior to delivery.”
Fully automated drilling system package
It was August 2001 when Aker Kvaerner MH received the news that it had been awarded a contract to supply a complete drilling equipment package for the first phase of the ACG Development. The company’s expertise had already been demonstrated on contracts with BP for the Valhall project and Hydro for the Grane project, giving the firm an important edge over its competitors for delivery of fully automated drilling equipment system packages.
The ACG Central project called for a fully automated drilling system package with advanced control systems for one of the five platforms that would form the entire project. Four of these platforms are planned with drilling facilities onboard.
The Start of Standardization
About a year after the award of the ACG Central package, Aker Kvaerner MH Hydraulics received the contract for two more drilling equipment packages: the West and East Azeri platforms. The design for the West Azeri package is based on equipment used for the ACG Central package. And for the East Azeri platform, the package that is being delivered this autumn is a 90 percent duplicate of the West Azeri package. The fourth package for Phase 3 is planned to be an exact replica of the East Azeri equipment.
The drilling facilities for all four platforms are fully automated with the most advanced control system available in the market today. All packages include control system, derrick, topdrive, pipe-handling equipment and other relevant drilling equipment, designed to meet the most demanding requirements for safety, efficiency and working environment. Project implementation and engineering is being carried out at Aker Kvaerner MHs’ headquarters in Kristiansand, Norway. During the installation and commissioning phase, activity transfers to the company’s operations base in Baku, Azerbaijan.
ACG Central: Hook-up of topsides at yard in Baku, Azerbaijan.
Driving the Cloning Concept
The impetus for using standardized equipment packages on the contract has come from the client, as Haaverstad comments. “BP/AIOC’s strategy for this development focuses on the use of a cloning approach. They saw that by standardizing the design of equipment for applications that were fundamentally similar, the cost savings could be considerable, especially in such a populated, multiple platform environment. It was a concept that we had already embraced in our own operations, but this is the first time that a major oil company and operator has driven it through into execution. It gave us the chance to demonstrate what could be achieved.”
And achieved they have, not just on standardization of drilling equipment but on entire drilling facilities. Estimates show that when management hours and workshop time are combined, it is possible to achieve a 50 percent man-hour reduction overall. For engineering man-hours, the figure can be as much as 70 to 80 percent. “The design is a known quantity and the equipment is familiar, this all saves time,” says Haaverstad. Savings in procurement have also been generated by the ability to purchase…more easily, quickly and cost-effectively…standardized components rather than customized one-off designs.
Efficiencies in assembly and testing are also being achieved with fewer man-hours being expended. There is also a reduction in the requirement to incorporate design changes, simply because the need for change is minimized through standardization of design.
Benefits All Round
For the customer, all this is translating into a considerable reduction in price. The other major benefit is that the quality and reliability of the equipment can be improved. “Again because we are not starting from scratch, it is easier to ensure smoother start-up and operation of the systems. We know what the issues are up front and we have already identified and resolved any technical challenges.”
In addition to equipment cost, Haaverstad is also expecting a considerable reduction in installation and commissioning costs for all parties. And in terms of schedule Haaverstad says, “We have demonstrated that delivery time can be reduced by more than 25%, a critical factor in enabling clients to bring production facilities on stream earlier.”
Aker Kvaerner MH has been engaged to provide operational support, servicing, spare parts on the ACG project. This support activity is being handled by the office in Baku, which has been considerably strengthened to be able to provide a responsive, experienced service level to the rigs in operation. This operational support agreement will be central to the company developing a long-term relationship in this dynamic market.
A Major Step Change
Haaverstad emphasizes that BP’s application of the cloning philosophy on ACG has broken through the barriers to bring about a step change in methodology for this kind of field development. It is also the first time that the doors have opened up for Aker Kvaerner MH to execute deliveries based on cloning for an oil major. The added bonus is substantial cost savings for both customer and contractor. “The win-win effects are there all round. We believe the opportunities for similar applications elsewhere in the world are enormous. Thanks to the foresight of BP, we have been able to demonstrate that our thinking was right. The potential cost savings are simply too attractive to ignore.”
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