MOST big North Sea developments have been hit by lengthy delays in recent years while significant cost over-runs have become the norm, according to research which highlights the impact of behavioural failings in the area.
The Oil and Gas Authority regulator found new developments were completed an average 10 months behind schedule and 35 per cent over budget between 2011 and 2016.
With around three out of four projects found to have finished late, the study may stoke concern about the level of efficiency in an industry which prides itself on being a world leader in terms of engineering standards.
Oil and gas firms are grappling with the impact of the sharp drop in crude prices since 2014, which makes it imperative that projects are delivered on time and on budget.
However, the OGA study provides further evidence of the need to change cultures and management attitudes in the North Sea, where firms invested over £40 billion in new oil and gas projects in the last five years.
The OGA’s operations director, Gunther Newcombe, said: “One of the key findings was that there was no correlation found between the size and complexity of projects and delay, with the key factors being non-technical in nature.”
The organisation's report on the lessons learned from the study notes: “Many behaviours continue to contribute to poorer project delivery, inflated budgets and schedules, or projects not even getting sanctioned.”
Highlighting the prevalence of adversarial behaviour in the industry, the report cites issues such as centralised functional control, micro management, aversion to risk and a fear of failure.
The report concludes that building the right behaviours will be essential to addressing the other main weaknesses identified by the research. It notes the need for better organisational structures and increased management skills in the industry, for improvements in the planning work done before projects get under way, and for firms to take a collaborative approach to addressing issues that arise during the execution phase.
The OGA, which is led by chief executive Andy Samuel, said it will work with firms that operate oil and gas fields to ensure that lessons learned from the study are applied in the drive to maximise the recovery of oil and gas from the North Sea.
It noted encouraging signs that firms have been getting better at delivering projects in line with cost and schedule commitments has been improving recently.
The 38 completed projects covered by the study had budgets of at least £50m each. It is likely all were approved during the boom that ended in 2014, as global supplies increased faster than demand.
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