Offshore fog

Try to keep it pumping

WHEN the North Sea oil- and gasfields were booming, inefficiencies mushroomed. Now, times are tough—and it may be too late for belt-tightening. The offshore industry, particularly the British bit of it, is squeezed between a lower oil price, stubbornly high costs, an ageing infrastructure and a looming bill of many billions of dollars for decommissioning old platforms.

The result threatens the profitable and unprofitable alike. If even a few companies which use the pipelines and terminals shut down, then the bill lands all the more heavily—and perhaps cripplingly—on the survivors. Similarly, if a piece of the infrastructure breaks (or its operator goes bust) then everyone who uses it is in trouble.

Operating expenditures in North Sea oil have doubled in 15 years. Only a fifth of that increase, at most, is because of increased activity. The biggest reason is inflated costs, reckon consultants at McKinsey, followed by pure inefficiency, such as needlessly high standards and complexity. Poor planning wastes the time of highly paid staff: overlapping safety briefings for example, or...

via Business Feeds

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