As we ease into 2017, general industry opinion seems to be that, while the worst of 2016 may be behind us, the industry still faces somewhat of an uphill struggle. The first half of the year, in particular, is unlikely to be an easy ride, even if some commentators, including Deloitte, have suggested there may be some grounds for cautious optimism as the year unfolds.

Challenging markets have long led to focusing minds on improving processes and procedures. Now is the time to rethink and challenge our preconceptions about the way things are done, and how we relate to each other within the industry. This was well expressed in a recent statement by Neil Gordon, CEO of Subsea UK, who advised, “No matter what the future holds, we can’t afford to be complacent and slip back into old habits. The changes we make today are for good and must be embedded into everything we do from here on out.”

The need for continued vigilance on capex and opex efficiency remains paramount. Tom Ellacott, senior vice president of corporate analysis research at Wood Mackenzie, recently said, “Overall, 2017 will be a year of stability and opportunity for oil and gas companies in positions of financial strength … strengthening finances will still be a top priority. Capital discipline, cost reduction and deleveraging will frame corporate strategies in 2017.”

FPSO demand

Despite this, major upstream players are beginning to tentatively flex their exploration muscles once again; Statoil has announced plans to drill around 30 exploration wells in 2017, an increase of around 30% compared to 2016. China National Offshore Oil Corp. has revealed a 2017 business strategy and development plan that includes a total of five new projects set to come onstream, and a capex that could reach $10.2 billion. Demand is anticipated to rise in the floating production, storage and offloading (FPSO) market over the coming years due a rise in exploration activities around the world.

As might be expected, the industry is seeing new dynamics that reflect these shifts. In comparison with the mega-mergers that followed previous slumps in crude prices, many of the world’s top oil companies are now “back in acquisition mode,” targeting smaller exploration and development firms to boost oil and gas reserves. These newly acquired firms will need to think carefully about each aspect of their operations to ensure that they are cost-efficient and reliable to achieve their expected returns.

The aim for suppliers to the industry will be to ensure, as ever, that these new opportunities continue to encompass best practices that have ensured safety and efficiency. 2016 was a year in which the industry moved increasingly toward rationalization, with marginal efficiency gains becoming the norm rather than an aspiration. Achieving this will require a rethink in approaches to oil transfer, and the relationships between suppliers and customers.

At Trelleborg, we have long recommended a consultative and collaborative approach to hose management and life-cycle optimization. By collaborating with our customers to better understand the environment in which their product will function, helping select the right application and working together on ongoing maintenance, we have assisted customers in minimizing operating expenses, while maintaining confidence that safety will not be compromised in any way.

Research, context and understanding

The first step on this collaborative approach is to understand the environment in which the product within the oil supply chain will function. We have found it to be immensely advantageous to take a strategic approach to procurement at the earliest stage of oil and gas projects to determine the most appropriate technical solutions for the targeted application and design life.

This begins with our R&D team, which is involved in the earliest stage of oil and gas projects in order to cooperate
with our customers in defining the most appropriate technical solutions for the targeted application and design life. Traditionally, R&D departments may not have been expected to play such an active role. However, it is becoming increasingly vital for R&D teams to consult on each project to ensure truly customized solutions.

In our case, we are able to leverage 40 years of expertise in the industry at our facility in Clermont-Ferrand, France, where hundreds of hoses per year are manufactured. This site is also where full-scale tests are performed, new materials are developed, and new components are manufactured.

To accurately assess the impact of environmental and situational conditions, R&D teams typically use prototypes to undergo rigorous mechanical and chemical testing, and hydrodynamic analysis to determine material behavior laws, establishing aging models for realistic service conditions as well as a detailed analysis of performance under fatigue. This allows for the creation of high-fidelity finite ele-ment models for each specific hose construction, enabling the rendering of exact hose behavior under complex load combinations, and compute strains and stresses in any rubber layer or internal reinforce-ment. Crucially, this work is undertaken whether the project is a new project or replacement; a complete system; or to be installed as part of an existing system.

Essential factors to consider include the fluid properties of the crude oil, refined products or condensate to be transferred, including temperature, pressure and viscosity. The necessary standards and their specific requirements must also be considered, such as Guide to Manufacturing and Purchasing Hoses for Offshore Moorings (GMPHOM 2009) or API Spec 17K, an industry standard for bonded flexible pipe.

Consideration of the environmental and operational conditions is also paramount. Weather conditions are often harsh, and equipment can be put to the test in the most extreme environments. Selecting the right hose can ensure the highest safety standards while not compromising on ensuring an optimized service life. The number of offloadings must also be taken into account, as this will affect the strain that is placed on the hose. The expected service life and maintenance programs are also important factors. How often will it be feasible to change and maintain an oil hose? What is the optimum balance between capex and opex in each case?

Mixing technologies

Integrating hoses with other installation technology, such as marine breakaway couplings, quick emergency release devices or reeling apparatus, is also essential in ensuring safety. Hoses need to be specifically engineered to be easy to install with minimal requirements for the management of the integration with other systems. These might be catenary anchor by mooring systems, conventional buoy moorings or reeling systems. All of these will place different demands on the hose and present different potential challenges.

One example of a solution that came from careful analysis of the environment is Trelleborg’s Adjustable Buoyancy Module. In considering the environment in which their products function, Trelleborg’s engineers identified two particular technical applications that needed to be addressed. First, in congested areas where usual floating lines cannot be used, it is necessary to create a submergible line that allows traffic to pass. Second, it will often be important to adjust the shape and angle of a submarine line to accommodate density changes in the conveyed product. In order to address these issues, Trelleborg has developed adjustable buoyancy modules that can be placed along the hose at any point, maintaining the ideal shape and configuration of the hose to maximize flow, minimize the risk of breakages or leaks and improve safety. The same modules include rubber bladders that adjust the shape of the hose by inflating or deflating with compressed air. The module can be fitted to any Trelleborg hose, eliminating the need for an expensive, specially designed hose, and uses passive components to reduce the need for maintenance.

Another environmental factor to be considered is the numbers of facilities that are either being used or planned for use beyond the scheduled design life. Of the 6,700 platforms in operation around the world, on average 30% have been online for more than 20 years, and many are operating beyond their designed life cycle—which, in turn, poses risk. There are currently few international industrial stan-dards for evaluation of design life extension. In addition, the practice in this area is not uniform. Given the lack of standardization on this issue, it’s vital for suppliers and customers to collaboratively share information to arrive at solutions together.

Finding the right tool

Hose selection is an area where a “one size fits all” approach simply does not work. Once suppliers and customers have properly analyzed the environment in which transfer will occur, it’s then a matter of selecting the correct solution. Trelleborg’s hoses, for example, cover all environments—from near-shore to the harshest, most challenging conditions in oceans around the world. It is essential to identify the right choice of hose for the right environment to ensure less degradation and truly effective life-cycle optimization.

We believe it is important to offer the broadest range of solutions to the market, including both nipple hoses and unique nipple-less hoses, as well as options of single carcass, double carcass with leak detection system and dual carcass hoses. All hoses are designed, manufactured and tested in accordance with the GMPHOM 2009 guideline and API Spec 17K standards. Fatigue computation can be applied on specific cases.

In most cases, the most suitable solution for non-harsh, low cost of extraction environments will be a single-or double-carcass nipple hose. The so-called nipple is a metal cylinder with a standard flange at the end of the hose that connects securely to a corresponding attachment on another hose, or piece of equipment. The advantage of such a configuration is the ubiquity of its application. Many sites around the world use this technology, which is certified to GMPHOM 2009 guidelines. These are also often the most affordable solutions— they can withstand all but the most extreme environments with ease. Nipple hoses can be used in both floating and submarine offloading configurations.

For extremely challenging environments or long service life, more specialized solutions may be required. In this case, a nipple-less technology may be required. A nipple-less technology means that there is no stiff metal connector that would reduce flexibility. These hoses can be used in both sub-marine and floating situations in which environments would be too challenging for a nipple hose.

Rethinking maintenance

Perhaps the most significant need for collaboration, and an area that is vital to maintaining the highest safety standards, comes after purchase and installation: maintaining and servicing the equipment.

It is essential that suppliers support projects throughout their execution to ensure that the highest safety standards are upheld, as well as guaranteeing the benefits of proper life-cycle management. This approach includes onsite inspection and testing for requalification, hose maintenance and inspection programs, and onsite repairs to ensure that hoses are not only performing correctly but are meeting the required standards in safety and quality.

This can even extend to undertaking specific investigation programs. These may include inspections, tests on site or in the factory such as The Oil Companies International Marine Forum and burst tests, or aging analysis of the components such as adhesion tests, elastomer property analysis. Suppliers can also choose to engage in training and education programs, disseminating best practices on storage, transportation and maintenance of hoses.

This ensures that products function at the optimum level for the longest possible safe operational lifespan— reducing the amount of time and money spent on maintenance, which can contribute to a significant proportion of opex.

Rethinking collaboration

When a supplier works together with a customer as a partner, then the supplier can understand the customer’s environment and, most importantly, what will make a difference in business results. Efficiency, savings and increased reliability will be tangible. As we tackle the challenges and opportunities of 2017, we look forward to seeing what new breakthroughs and innovations will emerge through collaborative projects.

Hopefully, 2017 continues to unveil the green shoots of recovery reflected in reinvigorated exploration, with collaboration between suppliers and producers focused on delivering significant ben-efits in terms of safety, a reduction in operating expenses and efficiency. If so, we are likely to see further innovations emerge, which may move the industry from seeking marginal gains to laying the foundations for sustainable future growth. We firmly believe that this can be effected by rethinking oil transfer— and establishing cooperative relationships to discover bespoke solutions.

It’s hard to predict where 2017 will take the industry. Depending on oil prices, companies will either prioritize marginal gains in areas with low cost of extraction, or head out further offshore. Regardless of where the sector moves, choice and flexibility from suppliers is key; understanding that options exist for all environments is vital.

Nicolas Landriere is product manager and Vincent Lagarrigue is sales manager for Trelleborg Oil and Marine AB.