Four years ago BP was forecasting production from the huge Forties Field in the North Sea would become uneconomic by the mid nineties and progressive shutdown would commence around 1995-96 with the last platform being decommissioned by the year 2000.
A challenge was set to extend the life of the field through to 2010, and as a result of a major review by BP of the cost efficiency of its operations the challenge is beginning to be met. Forties production can now remain viable for much longer than expected in 1989, even after a fall in oil price from $25 to $18 per barrel. Not least of the influences making this extended life expectancy possible are the cost advantages promoted by an innovative Partnering venture between BP as operating company and Brown & Root as contractor.
The Forties Oil Field was discovered in 1970, 110 miles ENE of Aberdeen in 110 metres of water. Recoverable reserves were then estimated at 1.8 billion barrels. Four platforms were designed, constructed and installed and first oil was produced in September in 1975. Peak production of 500,000 barrels per day was reached in May 1978. A fifth platform was installed in 1986 and the 2 billionth barrel of oil was produced in April 1989, an achievement far in excess of original predictions. The estimate for recoverable reserves today stands at 2.5 billion barrels with the current production rate being 140 mbd.
With operating costs over the 10 years from 1980 to 1990 rising from $1 per barrel to about $5 per barrel and capital costs running at about $100 to $150 million per annum for the past 5 years, BP began to seek ways of reducing operating costs. It rapidly became clear the way forward was for the company to concentrate on its core activities of exploration and production and to buy in non core activities as services i.e. "to do what they did best and hire the rest".
From this came the decision to reduce the number of service providers and to develop long term relationships with selected suppliers. One strategic consideration was to identify a contractor with proven capability for co-ordination and execution of integrated engineering and construction services. The long-standing successful relationship between BP and Brown & Root in the Forties Field, together with the shared conviction that traditional adversarial contractual methods and relationships could be substantially improved upon and lead to increased cost efficiency, provided the foundations for the Partnering agreement, signed in January 1991 between the two companies.
Partnering can be defined as a contractual arrangement in which the client and supplier agree to work closely together to the increased benefit of both; it is a long term commitment between two organisations for the purpose of achieving specific joint objectives by maximising the effectiveness of each party's resources. The relationship is based on trust, dedication to common goals and an understanding of each others expectations.
The way that BP and Brown & Root now work together on the Forties Field differs significantly from the traditional style of relationship, particularly in the following areas:
Engineering Support Service Contract Agreement Organisation Structure