Margareth Øvrum is Executive Vice President for Technology, Projects and Drilling for Statoil and a member of the company’s corporate executive committee. Having joined Statoil in 1982, she became the company’s first female platform manager, going on to hold central management positions, first Executive Vice President for Health, Safety and the Environment and then her present position. Here she discusses the challenges set for operators by today’s low oil price environment.
Margareth Øvrum began by pointing out that although we are now in an oil market with large fluctuations, over the past 15 years the industry has seen oil prices ranging from $17 to $147 per barrel.
“So while, like our competitors, we at Statoil are affected directly by oil prices, fluctuations are something we plan for. Our investment portfolio is flexible and we are constantly working to optimise it. We have a strong balance sheet and good liquidity.
She pointed out that Statoil also has flexibility in its project portfolio, because it is the operator for most of its projects. The uncertainty we see around us emphasises the importance of our efficiency programmes and measures to improve cost and capital efficiency, she said.
Co-operation with suppliers
Today’s low price operating pressures made it more important to come up with robust projects and boost efficiency, Øvrum said. Like cooperation with suppliers, so that both supplier and operator can deliver cost-efficient developments throughout the value chain.
She thought the entire industry needed to work hard with on its competitiveness. For some years the investment has been at record levels, costs have been escalating and margins have been reduced. As a response, Statoil introduced an ambitious corporate efficiency agenda, starting when the oil price was still high, and current levels demonstrate how important this was.
The best response to the challenge of today’s low oil price environment, Øvrum said, was to ensure future projects were robust enough to withstand future price fluctuations.
That means that we must make our projects as profitable as possible even in such a scenario. Sometimes we have to develop new technology to achieve this, but most often we can use standardised solutions to reduce costs. If the break-even price per barrel gets too high, then the project is no longer sustainable, she said.
Is subsea the answer?
Øvrum said that considering subsea technology solutions, there is a question mark over cost-efficiency. She said that subsea industry prices have increased significantly over the past years and more standardisation is needed.
However, she stressed that Statoil would still use subsea wells in the future, when this was the best – and the most cost-efficient — solution. Future resources are further from land, at greater depths and in colder and harsher environments. Subsea processing technology and the subsea factory will be vital to realise Statoil’s business opportunities in these locations – and we are working on standardised module sizes and interfaces.
Standardisation is key
She said she thought low oil prices would encourage more standardised solutions. Statoil is promoting subsea standardisation through sharing technical specifications and participating in joint industry projects, Øvrum said. Standardisation is both cost-efficient and value-adding, reducing time and cost. As it is based on proven technology, it gives better regularity and safer operation.
She noted that standardisation had contributed to accelerating the development of marginal fields through fast track-execution, enabling Statoil to cut costs (30%) and time (50%).
At the same time the company needs to develop, qualify and implement new technology, since this can help reduce its capex and increase its operational efficiency.
Some of the new technologies that we introduce today will become the standardised solutions of tomorrow, so it is important to maintain technology development and implementation. For example, Statoil believes changing from 7’’ horizontal to 7’’ vertical subsea trees will produce a significant cost-reduction, taking both OPEX and drilling expenditure into consideration.”
Written by Eloise Logan
Photo: Harald Pettersen – Statoil ASA©