Offshore ‘cultural revolution’ results in Chinese-owned Nexen becoming both the largest – and lowest-cost – N. Sea oil producer

The Golden Eagle field, 40 miles east of Aberdeen is one of the jewels in the Nexen crown.
The Golden Eagle field, 40 miles east of Aberdeen is one of the jewels in the Nexen crown.

Mike Backus, Operations Vice-President at Nexen UK – which is wholly-owned by China’s national oil agency CNOOC – has delivered a case-study presentation on how it has become the biggest – and lowest-cost N. Sea oil producer to Holyrood MPs.

Backus said that Nexen is now reaping the benefits of a major culture-change re-fit which it began 18 months ago – ie before crude oil prices dived from more than $110-barrel to less than half that just now.

“Because we took action at the right time for the right reasons – to improve our efficiency and to –safely – reduce costs – we are now making headway even in today’s $50-barrel market.”

Nexen introduced an internal education and behaviour-change programme focussed on safety-first, whilst introducing new processes to improve operational efficiencies.

At the same time, its ‘ Maximum Gains’ programme has enabled, encouraged and empowered workers to change their attitude and take responsibility for improving processes, practices and procedures ‘instead of shrugging their shoulders and saying, ‘It’s not my job to fix this or that..’”

Mike Backus
Mike Backus

Backus said: “We improved and enhanced job-accountability. We sum these processes up under the internal watchwords of ‘Results matter’ and ‘We’re all in this together’”. We had to educate the entire work force but it’s been well worth it.

As a result, Nexen has, for example, been able to drive a 40% improvement in water-injection rates to achieve a 30% improvement in well productivity.

Backus said that Nexen’s Maximum Gains ethos had resulted in, for example, cutting the 60% downtime on platform supply vessels in half to 30%, and that they have improved productivity by staggering shift-start patterns to eliminate processing bottle-necks as workers queue for passes and paperwork.

These examples, as well as virtually eliminating pipe leaks from fault flanges, have contributed to a reduction in asset non-productive time of some 38% a year in 2014 to around 10% this year.

“We have achieved a major step-change in our culture, from the shop-floor to the board-room and are now seeing asset productivity rates of around 90% a year,” said Backus.

He added; “Nexen now own and operate three of the top seven performing assets in the North Sea. With our flagship Buzzard field, Nexen is the largest oil producer in the UK and we are now also the lowest-cost operator in the North Sea at around £10-barrel – $14-barrel)

“As a result, we produce around 300,000 safe – and profitable – barrels of oil a day.”

See also:

EXCLUSIVE: ‘Grave market risks’ mean N. Sea oil companies must adapt or die, UK regulator tells Holyrood MPs  http://goo.gl/lWbDs7

Pixie Energy

Pixie logo Pixie Energy is an incubator and a facilitator of strategic research and project work, focusing on energy regulation, policy and markets at the local and national level. Find out more about Pixie Energy here.

Local Energy Matters: Scotland

Local Energy Matters: Scotland is a free-to-download brochure with a focus on energy tariffs in the two Scottish electricity distribution regions, as well news on local energy and low-carbon schemes.

Previous editions can be download here.

Scottish energy market overview

You can read an overview of the Scottish energy market here.

Scottish Government energy feed