Benefits and applications of commonality and platforming in the oil and gas industry

Abstract

Platforming, the sharing of parts, processes, knowledge, and technologies, across products and projects has proven to be an effective way for firms to reduce their costs. While platforming is now common in many consumer and industrial products, the use of platforms is a relatively new practice in the design of civil and industrial projects such as buildings, power grids, and oil and gas facilities. The research in this thesis was specifically undertaking to examine the use of platforming and commonality in the oil and gas industry. The first objective of this thesis was to understand which platforming benefits were applicable to oil and gas, and to discover the extent of the platform benefits. This was accomplished by studying commonality on an oil and gas project, codenamed Steambird, at an unconventional oil company over a period of 10 months. The secondary objective was to propose a framework for commonality and platforming applicable to oil and gas based on the findings from the Steambird case study. Significant commonality benefits were found in the case study, including a 35% reduction in engineering effort, faster production ramp-up, and a reduction in operational sparing requirements. However, these benefits were relatively modest, only totaling about 10% of the overall project cost. Greater benefits would have likely have been possible but not realized due to organizational factors. The cost structure of the project, dominated by construction and third party procurements, also reduced the potential for commonality benefits. An alternative platform approach to commonality is suggested for future development of the Steambird project. The proposed platform includes 3 well pad variant designs with 6, 9, and 12 wells for low, medium, and high production. A development strategy using the suggested variants was shown to have lower costs than Steambirds current strategy even under conservative assumptions. Finally, the platform strategy proposed for Steambird is generalized to oil and gas development in general.