Chevron/Conoco Venture Considers Lessons Of Britannia Development

The Britannia platform, probably the last conventional giant steel platform to be installed in the U.K. North Sea, has an operating weight of more than 29,000 tons. Though the platform is large, its technology is now conventional. The project's innovation showed in massive cost reductions. Photo courtesy of Chevron/Conoco.

Britannia field lies in about 450 ft of water on U.K. North Sea Blocks 15/29a, 15/30, 16/26, 16/27a, and 16/27b. It comprises a reservoir roughly 25 miles east to west and 6 miles north to south, at a depth of 11,900-13,200 ft.

Britannia has estimated reserves of 3 tcf of gas and an anticipated 145 million bbl of condensate and natural gas liquids. Peak production is expected to be 740 MMcfd of gas and 70,000 b/d of condensate.

At a recent London conference to analyze the lessons learned from Britannia development, Prabhat Garga, topsides manager at BOL, said: "Britannia platform is a large production, drilling, and quarters facility with a dry weight of 19,500 metric tons and an operating weight of just more than 29,000 tons.

"It is a large facility by today's North Sea standards but nothing remarkable in terms of possessing any major technically innovative plant. In late 1994 when we started this project, the challenge was to create this facility at a cost significantly lower than previous projects of similar size but without compromising on quality."

While the technical side of Britannia may not have been revolutionary, the way the project was managed probably reflects more than any other U.K. development the principles of Crine-the Cost Reduction Initiative for a New Era instigated by U.K. offshore operators.

One of the key aims of the Crine program was to reduce typical field development costs by 30%. The means of achieving this aim was seen as smarter management rather than smarter technology.

Jeff Tetlow, BOL's Britannia project director, told delegates: "It wasn't so much what we did, but the way that we did it. In 1994 the Crine report said about our industry that 'The present culture is characterized by adversarial relationship and mistrust at almost every level and interface. The costs associated with manning this mistrust are huge.'

"Did they mean us? We rather felt they did-and it wasn't very nice to hear-especially when we knew it was true. We felt there must be an alternative way of doing things. So did Crine."

Tetlow said the culture envisaged by Crine was characterized by teamwork and openness, which Chevron and Conoco set out to achieve on the Britannia project.

"First of all," said Tetlow, "we integrated all of the functions within the development team. What this meant was that commercial, geological and geophysical, reservoir, drilling, operations, and facilities all worked closely together and not in isolation.

"Next we created an organization which broke down what was a £1 billion ($1.6 billion) development into six separate projects, with values of between £100 million ($160 million) and £400 million ($640 million).

"The people responsible for each of these projects were then given the freedom to use their own best execution strategies, with a few rules and as little central control as possible. This really encouraged creative thinking."

This approach helped BOL to shave £300 million ($480 million)-that is 30%-off the development budget. The capital cost over the whole project, including development drilling over the next 5 years, is expected to be $3/bbl of oil equivalent, which BOL reckons is probably the best for such a project in the North Sea.

Anticipated operating costs have also been driven down more than 20% during the development program, to 87.5¢/bbl of oil equivalent during the first few years of production.

While BOL reckons Britannia to be a major success, the project has not been without hiccups. Garga explained that the complexity of the topsides and overlaps between design, fabrication, and hook-up persuaded BOL that an alliance arrangement with contractors was the best way of working.

Garga is still convinced that the alliance way is best but reported some important lessons from the Britannia work. For the topsides part of the project, cost savings are to be shared out 55% to BOL and 45% to the various contractors involved.

"What is unique," said Garga, "is that none of this alliance incentive is actually paid until the acceptance criteria, which include first year operating expenditure and first year plant availability, have been met. That is 1 year after the start of full gas sales production."

While the relationships with contractors were said to have worked well, suballiances were formed when contractors put out work to key vendors and subcontractors.

"These suballiances generally worked well," said Garga. "However, in a couple of instances the suballiances did run into problems. In those instances we did have to modify the contractual arrangements to complete the work."

While BOL and alliance partners shared an understanding of how the project should be carried out, and how the incentives systems worked, the suballiance companies were not as thoroughly informed.

Another speaker, Dave Baker, operations director for export pipelines contractor J.P. Kenny Ltd., said interfacing between the various parts of the project could have been improved.

"The main lesson we have gained," said Baker, "is that despite the nature of our alliance, the parties are still responsible for the various subcontractors which have the more traditional contracts to follow.

"We could, and should, have paid more attention to these by additional supervision and control. Whilst this would have meant the need for additional resources, issues raised would have been more efficiently resolved and perhaps additional money saved.

"So don't assume that the message that you have about your project is easily transferable to those who may just have been brought into the fold. Remember that you have to involve others and spend time with them."

Garga concluded: "When problems arise, it is all too easy for clients and contractors to slip into old behaviors. I think over and above the cost-saving and profit motivation which alliancing creates there must be a framework for deciding on the best-for-project solution rather than best-for-self.

"This may require flexibility in the alliance contractual approach, which should adapt as circumstances change. After all, the objective of the exercise is to produce safely a highly operable plant at least cost, not the demonstration of adherence to a single strategy."

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