Chevron- Evolution of the Britannia Operating model: A case history in business efficiency

Submitted by Chevron

Impact

The change in Operatorship will

  •  Deliver simplified governance and efficient and effective decision making;
  •  Provide streamlined access to specialist support within an optimized organizational structure;
  •  Drive improved focus on production efficiency and safety; and
  •  Maximise shared resource synergies which will result in operating and capital cost savings over time [10% opex reduction in 2016].

 

Description of Best Practice

In 1994, Chevron and Conoco formed Britannia Operator Limited (BOL), a company that owned no assets, did not make a profit and existed solely to develop and operate the Britannia field on behalf of the fields’ co-venturers.

The setting-up of a 50:50 joint operating company for the Britannia development was an innovative approach in the UK North Sea. It expedited the development of the field by simplifying the process of reaching agreement between Chevron and Conoco. It was an operating company that looked and functioned like a traditional one-company operator with the ability to utilize the technical strengths of both – with Chevron providing seconded employees primarily responsible for subsurface activities (geology, reservoir engineering, drilling) and Conoco seconded personnel responsible for conceptual engineering, safety and the environment, operations and commercial activity.

This Operatorship model proved to be an outstanding success, providing safe, cost-effective and objective management of the Britannia asset to the benefit of all co-venturers.

Twenty one years on and [47] production wells later, Britannia is a very different asset. Development of the subsurface is still important but the focus is now on safely, efficiently and cost-effectively managing a mature asset. In addition, a large part of the throughput is now derived from satellite developments tied back to the field, which requires a different approach to management.

Both ConocoPhillips and Chevron recognized that the change in the nature of the business might be better managed under a different business model. Early in 2015, a joint review was launched to consider whether a greater value with tangible results could be delivered to co-venturers if the company was to become a 100% owned entity. It was coincidental that this review took place against a back-drop of falling oil prices. However, both companies concluded that there was an opportunity to reduce operating expense without impacting safety and efficiency.

Formal agreement was subsequently reached to transition the organisation to become a 100% ConocoPhillips-owned entity. By integrating the operation into the broader ConocoPhillips UK company, efficiencies can be enabled. The focus on reliability and maintenance will become more challenging as the demands of fabric maintenance and asset integrity compete with the need to maintain high levels of production efficiency for all fields using the Britannia facility.

There is an additional level of complexity that needs to be factored in, namely the process of decommissioning certain Britannia assets which will begin over the next several years. Both parties agreed that the increased depth and breadth of technical and operational resources required during this phase would be better handled within a larger organisation having more direct access to specialist support. In addition, ConocoPhillips has recently established a dedicated decommissioning team whose expertise and growing experience can be more easily and efficiently accessed in-house.

However, the spirit of BOL lives on and the contribution of Chevron to development of the subsurface has been recognized with the decision to second [7] subject matter experts to ConocoPhillips to continue working on the Greater Britannia Areas.

Contact: Andy Clitheroe / Chevron Upstream Europe