2020s: Intensive and a little concerned

Since the start to production on Ekofisk, 119 fields have been developed on the NCS. At 31 December 2021, 94 were on stream – 71 in the North Sea, 21 in the Norwegian Sea and two in the Barents Sea. 

Most PDOs are more or less fulfilled. Even after 50 years, however, projects are still failing to meet schedules, budgets and quality. That can affect HSE requirements in both development and operational phases. 

Consequences 

A period of particularly high development activity is looming for the NCS. But experience shows that it is hard to stick to plans and costings at such times. 

“The pressure may have consequences for complying with safety and working environment requirements,” says Inga Lina Austnes, who works with Per Eivind Steen on project follow-up at the PSA.

Most companies can perhaps stretch to delivering a PDO, but the question
is whether they can manage to secure sufficient capacity and competence
for the execution phase.

Inga Lina Austnes, PSA

“That’s because it can affect the quality of technical deliveries and of safe start-up and operation.” 

The main reason for the increase in activities is temporary changes made to Norway’s petroleum tax regime in 2020 as a stimulus during the coronavirus pandemic. 

These measures, which include tax reliefs for development plans submitted before the end of 2022, were adopted at a time when oil prices were low. 

Licensees must make provision for the operator to do its job as required
by the regulations.

Per Eivind Steen

These have subsequently risen, alongside record demand for Norwegian gas as a consequence of the war in Ukraine. That has further lowered the investment threshold at the companies. 

While just eight PDOs were submitted to the government in 2021, several tens of such applications are expected this year. 

Concerns 

An important question in these circumstances is whether the industry has sufficient time and enough personnel to carry out such levels of work. 

“The high level of activity will put pressure on resources,” says Steen.

“Adequate capacity and competence are crucial for good project execution.
 
“This concerns the actual PDO, the preconditions for these plans, and capabilities in the execution phase. Realising a number of these projects depends on hitting the 2022 deadline.” 

He points out that the basis for good execution is laid in the planning phase.
 
“When schedules are speeded up and thereby squeezed, a danger exists that decisions get taken on an inadequate basis. An insufficiently matured decision base can affect the whole course of a project.” 

Sufficient 

“Most companies can perhaps stretch to delivering a PDO, but the question is whether they can manage to secure sufficient capacity and competence for the execution phase,” adds Austnes. 

“We’ve also seen that a connection exists between incidents in the early production phase and weaknesses in design and fabrication.” 

To avoid that, it is important that the companies utilise the overall knowledge and experience they have built up through 50 years of developments, she emphasises. 

“They should purposefully draw on lessons learnt in earlier projects, and share experience between them." 

Studies 

The PSA has acquired much information on how companies can manage future developments in ways which ensure that safety is well taken care of. 
In 2019, for example, it commissioned a study of the Goliat, Aasta Hansteen and Ivar Aasen developments which aimed in part to identify challenges. 

Underlying causes and recommendations for improvements in the companies’ execution methods and government follow-up were also covered.
 
The subsequent report contains many important lessons for the oil companies, the suppliers and the authorities. 

A new study was carried out on behalf of the PSA in 2021 to identify indicators which can be used to spot HSE challenges in projects as early as the pre-PDO planning phase. 

Among other benefits, these indicators can say something about the status of the work on maturing a project and identifying risk.
 
A third study now under way aims to pinpoint similar indicators for the phase between submitting a PDO and bringing a field on stream. 

Also being pursued on behalf of the PSA, this work is due to be completed towards the end of 2022. All these reports are or will be available at psa.no.

Responsibility 

Steen emphasises that licensees also have a clear responsibility to contribute to work in a production licence. 

“They must both support and challenge the operator – and are under an obligation to take action if they uncover conditions which don’t comply with the rules,” he says. 

“Operators are responsible for executing developments on the NCS in accordance with the PDO and applicable safety requirements. Licensees must make provision for the operator to do its job as required by the regulations.” 

Supervision 

The PSA supervises the work of the companies during the planning and development phase, and participates as an observer in a number of production licences.
 
Its attention in the early phase is concentrated on project management by the company and how it works to ensure that safety is taken care of once the facility becomes operational. 

Ten commandments for developers 

Project development on the NCS has improved a great deal since such activities began in 1970, and meets a high international standard today for both HSE and value creation. 

The study of field development projects on the NCS carried out for the PSA in 2019 summarised company experience with project developments in 10 key learning points or “commandments”. 

1. A good HSE result equals high value creation 

2. A good and detailed concept selection process, independent of company policy considerations, lays the basis for all future value creation (and for good HSE) 

3. Accurate technical detailing/maturing at choice of concept (decision gate 2) and PDO (DG3), plus sensible use of new technology, are the most important requirements for a successful project 

4. The project organisation must ensure learning and experience transfer, and have clearly defined responsibilities – with associated delegation of authority and a thoroughgoing “one team” mindset 

5. Early involvement of the industrial safety organisation and future
operations personnel is crucial for the HSE quality of the end product 

6. Strategies for project and contract execution must be tailored to the assignment’s complexity and market capabilities (which change over time) 

7. Prequalification for and evaluation of key contracts must give heavy emphasis to the contractor’s execution capability, understanding of risk and level of expertise 

8. The follow-up team must have good expertise on risk and project management, the work content of the contract and the contractor’s culture and attitudes, and ensure continuity in key posts (both its own and at the contractor) 

9. Technical documentation and project status must always be completely truthful and available to the joint venture and the government 

10. Principles, criteria and the division of responsibilities for testing the facility, delivering to operations and starting production must be established early in order to achieve a safe start-up