Better Design/Build/Operate Technologies for the Ultra Deepwater

Energy Industry State-of-the-Art

A significant amount of oil and gas reserves have been discovered in ultra-deepwater (>4000 ft.), particularly in the Gulf of Mexico and off the coasts of West Africa and Brazil. The Capital Expense (CAPEX) costs of building the facilities associated with harvesting these reserves has risen exponentially compared to shallower shelf and onshore projects. These deepwater production facilities average upwards of $1 billion each.   The aerospace and automobile industries have been developing an integrated Lean Engineering approach to the design, build and support of large capital expense projects in manufacturing for more than twenty years. The energy business can benefit from such technologies for large CAPEX engineering and construction (E&C) projects like offshore platforms, refineries, undersea pipelines and LNG plants.  Based on our investigations with major exploration and production companies, and Lean Engineering specialists we believe the need for such a “Lean Energy” system exists in the energy industry. For example, the DOE, with extensive industry assistance, developed a Offshore Technology Roadmap, which identified "High Intensity Design" as a critical technology required for successful harvesting of ultra-deepwater reserves. (Available at http://www.fe.doe.gov/oil_gas/reports/ostr/roadmap.html).

  

The difference between Lean Engineering and what the energy industry is using today is that the very best tools for each task must be used to implement the Lean “process strategy”. These tools must be integrated together to produce a totally seamless digital environment. The CAD suppliers tend to oppose this approach because it is OPEN to best-in-breed solutions, and the owners tend to oppose this approach because it requires working together with all contractors in an intensely collaborative digital environment.  It competes against the adversarial, conflict-oriented approaches to buying and selling prevalent in the energy industry today.

The Lean Energy Initiative at Columbia

As part of an overall effort to cut costs and improve the cycle time of large energy industry CAPEX projects, Columbia University is housing the “Lean Energy Initiative”.  Ours is a cross-industry, neutral, technology migration program designed after the Lean Aerospace Initiative that MIT runs for the aerospace industry (see http://lean.MIT.edu). 

 

We maintain the following capabilities at Columbia as part of the Lean Energy Initiative:

1)      We house a web-based “Performance Metrics Site” that tracks the improvements in energy industry processes as Lean Engineering becomes adapted throughout the industry. These metrics are an integral part of all Lean Engineering systems, and whether measured by oil company clients, contractors, or sub-contractors, they must be certified correct by a neutral, reputable party and made available to all participants on each project.

2)      We maintain a best practices “Knowledge Storage Site” for the Lean Energy Initiative. This site makes available to all what works and what does not work as the energy industry transitions to Lean Engineering.

3)       We conduct “Life Cycle Case Studies” that track performance of the assets built with Lean engineering processes throughout their operational life. It often takes tracking long after specific design/build contracts are fulfilled to develop the true performance metrics for success or failure of any new technology.

 

 

4)      We maintain “Lean Connectivity beyond Energy” by promoting alliances and forums with other Lean Engineering disciplines such as aerospace, automotive, military, and other university based initiatives that have the propagation of Lean Engineering practices as their common goals.

5)      As oil and service companies develop the need for jointly funded Research and Development of new Lean Technologies specific to Energy Industry needs, we manage “Focused Research Teams” made up of graduate students and researchers from Columbia, other universities and service companies, and supporting member companies.

6)      We “Teach, Publish and Study” the effects of Lean Engineering processes on the people and institutions of the Energy Industry. Critical to this is the design, coordination and teaching of a special-built educational program that is required to 1) train transitioning aerospace and auto scientists and engineers in the methodologies, current practices, terminology and requirements of the energy industry and 2) train energy industry personnel in the methodologies, current practices, terminology and requirements of the aerospace and auto industries.

Columbia hosts all of this on this interactive, and hopefully, heavily trafficked website http://leanenergy.ldeo.columbia.edu. Papers on technical issues are published on the website, and inter-company collaborations supported by the website.  The initial members are the oil and gas exploration and production companies such as ExxonMobil, BP, Shell, TotalFinaElf, ChevronTexaco, ConocoPhillips, Anadarko, etc. The service companies that build the giant structures of the energy business are the targeted users, such as Halliburton KBR, McDermott, ABB, Intervep, ENI, Becktel, etc. Universities and governmental agencies that interact and regulate the industry globally, such as the DOE in the U.S., the Ministry of Petroleum in Norway, the British DOE, the International Energy Agency of the European Union, etc. are also invited to join at nominal cost.  Our vision is that as Lean Energy practices spread throughout the energy industry, the Columbia Lean Energy website will become as vibrant and important to the energy industry as the MIT site is to the aerospace industry.

Benefits of Columbia’s Lean Energy Initiative

Affordability of systems, increased efficiency, higher quality, and technological improvement are promised by Lean Engineering processes if they can be successfully migrated into the energy industry. Success would result in a stronger energy base for the country and the world. Columbia will participate in this noble task through mutual commitment to improvement in shared knowledge, proper tracking of performance metrics that track improvement, and leveraged implementation of mutually beneficial R&D. Service Functions of the Lean Energy Initiative provided by Columbia are:

1) Performance Metrics Site

The use of Integrated Design systems in the oil industry will generate a significant body of knowledge about the effectiveness of lean practices in the energy industry.  We will independently conduct studies of each project that decides to use us to quantify the performance metrics attributable to lean energy practices.  For instance, we might study near-term cost of program instabilities in order to compile the average cost growth that a project experiences (4.5% to 5% cost growth resulting from budget and requirements changes, year after year, is common in aerospace).  We might also study early sub-contractor integration successes and difficulties – this is thought to be one of the major acceptance obstacles to successful Lean Engineering adoption in the energy business. This information will be routinely used to produce policy reports and change recommendations to help identify factors contributing to program risk from adoption of Lean Engineering practices in the energy industry.  Each year, we will conduct an audit of how things are going.  We will ask every contractor and sub-contractor of member companies how well Lean Engineering processes are doing? How is the Lean Energy Initiative evolving, and what can we each be doing better. How is incentivization working, and how could it be improved. How are the strategies, practices, enabling tools, methods and decision-support systems for Lean Energy practices being propagated throughout the value stream? For example, we will ask how are you handling change management strategies, coordination mechanisms, gain-sharing, common business practices, electronic integration, knowledge management, and tracking of performance metrics themselves.  

2) Knowledge Storage Site

Through its active collaboration and Advanced Product Team approach, Columbia will deliver an evolving and ever expanding knowledge base of what Lean Engineering processes are working in the energy industry, and which are not.  We will capture these learnings for future teachings, and create a set of Best-Practice reference tools for sharing common awareness, language, and understanding of Lean Engineering principles that will bridge the gaps between aerospace and energy people and practices. Despite the collapse of the dot.com economy, the Internet will continue to act as a disruptive technology that changes the ways Lean Engineering processes are adopted and used in the energy industry.  What is more, the Internet will likely do so at far greater speeds than any one organization can keep attuned to. We will disseminate among members and their sub-contractors our tracking and understanding of important progress being made in e-technologies as part of the Lean Energy Initiative.

3) Life Cycle Case Studies

In the energy business of the past, performance was the major driver in production facilities design and development. In the face of sharp cost cutting initiatives industry-wide, emphasis has shifted to performance AND affordability, and, more recently, from front-end affordability to total lifecycle affordability. However, reducing total cost of ownership is a subset of achieving best lifecycle value. Best lifecycle value is delivered by a system that arrives at the right time, at the right price, and that delivers best value in operational effectiveness, performance, affordability and sustainability throughout its life cycle.  Measuring that takes sustained, focused work over many years. The Lean Energy Initiative will conduct such life cycle case studies of Lean Engineering projects.

4) Lean Connectivity Beyond Energy

Since Lean Engineering is much broader than its energy, or even aerospace applications alone, we seek to integrate lessons learned in energy with those experienced in other industries in Manufacturing Systems, Supplier Networks, Product Development, Acquisition Strategies, Organizational and People re-engineering, and Operations Research. This research base ultimately shapes outreach as well as producing enduring products for stakeholder use.

5) Focused-Research Teams

As Lean Engineering processes gain adoption in the energy industry, problems that need R&D effort of the industry will appear. The Lean Energy Initiative is an excellent place to virtually house these custom-made focused-research team efforts.  We are open to all and so can provide secure communications across company firewalls.  We will also keep metrics on R&D successes, and provide a forum for publication of the results in our electronic Lean Energy Journal.

6) Teach, Publish, and Study

Despite numerous books describing how to manage change in organizations, large-scale system change such as that required for Lean Engineering process adoption is difficult to do successfully. Making the task more difficult, the energy industry has been engaged in massive consolidations and restructuring during the major part of the last decade. We study the emerging new integration of organizations and how they interact with each other as Lean Engineering practices spread through the design/build community of the energy industry.  We study the overall patterns of success and failure in individual change initiatives, seeking to explain the factors that contribute to success. We also look at overall systemic change effects that cross the entire enterprise of upstream oil and gas, and that have resulted from the individual change initiatives. The goal is to better understand and predict success in large-scale system change initiatives in general.  We teach and publish our findings. We write Teaching Guides to provide a set of materials allowing users to understand and navigate through the transition to Lean Energy from both technical and people perspectives. Lean leadership processes and attributes that nurturing the transformation to lean principles and practices will be exported from aerospace into energy industry language. The processes responsible for the design and manufacture of energy industry products from conception through post delivery support will be tracked with case study examples. On-Line courses from content providers such as TAMU, NeXt (a collaboration of the old Amoco Research, TAMU, OU, Harriet Watt and Schlumberger), and the University of Houston will be used whenever appropriate.