Abstract
For the past several years, crude oil prices have fallen at an unprecedented level which put the oil and gas industry at the downturn state. As a result of this downturn, the industry responded by lowering down CAPEX and OPEX investment to find new reserve, sustain or increase production and arrest production decline rate. Additional production by means of drilling becomes more challenging as the investment cost especially in offshore environment is very high. One of the way that that most of the operators choose to maintain and/or arrest decline of production is by intensifying the well intervention activities. However, the legacy of high oil price has caused decades of value leakages in well intervention that need to be reduced to reflect low price environment.
Malaysia Petroleum Management (MPM), the regulatory arm of PETRONAS, spearheads a nationwide Cost Reduction Alliance (CORAL) program to reduce overall upstream industry spending in Malaysia. One of the focus of CORAL program is to challenge the value leakages in well intervention by launching Lean Well Intervention initiative. The Lean Well Intervention initiative has an objective to reduce overall well intervention spending in Malaysia by 3 % in the first year and total of 10 % within the next 4 years.
This paper outline the journey of CORAL Lean Well Intervention program in Malaysia. MPM performed detail analysis of overall well intervention spending in Malaysia and summarized three key areas that shall reduce the cost but at the same time do more well intervention activities to maintain production and/or reduce decline in production. The selection method of the three key areas with criteria to have sustainable cost reduction shall be described in detail as well the implementation phase that emphasizes on communication with all the key stake holder. Another challenge is to ensure that the reduction in cost and improvement in efficiency will be sustainable and will not be reversed if there is an increase in oil price. These three key areas are; optimizing well intervention operating model, selection of fit for purpose technology, and contract management.
As the result of these three key areas, total of more than 20 % cost reduction was achieved in the first year of implementation. This has allowed more well intervention activities to be executed and contributed higher production gain from the previous year. As a closure, the result of the program with comparison of previous year cost spending, activity level, and production generated and how it is finally embedded in the system as business-as-usual practice shall be discussed at the end of the paper.
