Page 19: of Offshore Engineer Magazine (Mar/Apr 2015)

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Analysis

Back to basics

Neil Dufn, President ExxonMobil Development Co.

industry needs to get its engineering “get back to basics” and

Getting engineering back to basics isn’t just get it right, up front. Engineering, he says, has been allowed to about standardization anymore. Industry do its own thing too much. executives at the annual GE Oil & Gas summit

Turning the tide around at ExxonMobil has involved a discussion around “minimum kit,” but also around, where pos- in Florence advocated for simplicity in order sible, designing one to build multiple, instead of re-engineering to keep costs low and get projects done right. the latest design, he says. Re-calibrating how the industry

Elaine Maslin reports.

engineers its projects will have the greatest impact on capital costs, he told GE Oil & Gas’ annual meeting in Florence, early

February. ack in the frst half of 2014, capital discipline was a big

How did we get here? fxture on the tables of oil executives globally. Then,

B over a period of six months, the oil price fell to its low- “When you look at how much money has been spent in our est in nearly six years. industry, the numbers are staggering,” Duffn told the event –

The reasons for the fall in oil prices have already been well over US$800 billion was spent in 2014 in the upstream indus- aired and the responses rapid – job cuts, swift and deep, run- try. As spending increased, so did engineering, procurement ning into the thousands, at operators and contractors. and construction (EPC) backlogs. “This has meant the industry

Downturns have become a cyclical feature of the industry. has been struggling to keep up with demand,” he says. “In some

So, many have been asking, how can the industry address this cases, industry has not enable to pull it off and costs have got latest down turn in a way that means it comes out the other side out of control.” stronger and more resilient – and not simply primed for the Also speaking at the event, Rod Christie, CEO Subsea next cycle? Systems, GE Oil & Gas, cited fgures published before the

Engineering has come under the spot light as one of the areas oil price plummet which say 64% of oil and gas upstream that could be addressed, and it’s not just about standardization. projects were facing cost overruns and 73% were running over

Neil Duffn, President ExxonMobil Development Co., says the schedule. oedigital.com March 2015 | OE 21 021_OE0315_analysis.indd 21 2/22/15 5:16 PM