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5 Feb 2015

By Phil Stockton

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Phil Stockton

The North Sea holds some of the most complex infrastructure in the world and each offshore resource has multiple stakeholders.  This clearly requires extensive management and monitoring.Oil and gas flows out of hundreds of wells, in and out of dozens of platforms and through a maze of pipelines.  The introduction of subsea production has further expanded the diversity of offshore  assets.  Keeping tabs on the hydrocarbon journey requires accuracy and communication.   

As the calendar year begins, operators and offshore support companies are continuing to review their cost bases in light of the oil price decreasing more than 50 per cent since June 2014.  It means gaining value from existing resources is vital.  Accord has helped producers clarify the complex relationship between risk and reward on a daily basis for the last five years. 

Extracting hydrocarbons from below the seabed seems a million miles from glamourous casino tables in Monte Carlo or Las Vegas.  But in terms of probability, uncertainty, risk and reward it surprisingly has a lot in common.  Measuring a mixture of hydrocarbons produced from below the seabed takes control and accuracy.  Holding your nerve in a game of blackjack and waiting for an oil and gas project to bear financial fruit can both have high stakes and carry significant risk. 

Accord acts as the table’s croupier, ensuring fairness in conduct and distribution of pay outs.  Instead of chips and cash, Accord deals in the allocation of oil and gas by determining quantities and qualities flowing in and out of North Sea platforms. 

As an independent company working with all major operators in the North Sea we have a vested interest in fairness within our allocation systems.  Partners and operators are comfortable using an independent such as Accord because our only concern is getting it right. 

The Monte Carlo simulations that we use account for the fact that no measurement is perfect.  There are many variables in the UK Continental Shelf that affect uncertainty.  In an ideal world, the measurement of hydrocarbons coming on to a platform should equal the measurement going off.  But in the real world, due to readings being made by several meters, there are slight legitimate discrepancies and it is the division of these that is at core of allocation. 

 Indeed, we use the mathematics of probability to determine the acceptable size of such discrepancies, identify the uncertainty in the allocated quantities and even incorporate these uncertainties into the allocation itself to arrive at optimal solutions.  These are then agreed and signed off by all parties involved.

A roll of the dice

Forecasters who made predictions about the life of the North Sea’s oil and gas industry at its inception have been stunned.  In their view, it simply was not supposed to last this long.  But discovery after discovery has allowed modern day experts to predict the industry may last until 2050 or beyond.  Its longevity is its strength and weakness.  On one hand people and companies have skills and experience, which have now been exported globally.  But, on the other hand, ageing infrastructure has become entwined with newer kit to create 14,000 km of pipeline and 300 platforms.  It is complex, but can be maintained and managed with the right people and techniques. 

The precise measurement of oil, gas, and water is vital to the operations of every oil and gas company.  Allocation by an independent organisation ensures certainty, trust and ultimately an ongoing successful working relationship.  We help clients to realise the true fiscal value of their produced hydrocarbons and avoid leakage.  This removes any doubt and alleviates potential disputes and loss of reputation associated with any error rectification.

Today, North Sea producers are adopting Uncertainty Based Allocation to maximise the use of all production data and optimise the allocation of products.  Oil and gas inevitably mingles during processing which makes correct calculations all the more vital.  Accord’s staff have been instrumental in making a difference to our customers.  They have developed engineering processes to improve the upstream market and addressed issues that had previously gone unrecognised.  These systems have halted the inequitable allocation of millions of dollars’ worth of oil and gas. 

We’re looking at how our work will develop over time.  80 per cent of what we do is in the UK Continental Shelf, due to its complexity and large scale sharing of assets.  A country with a single national oil company has no reasons to divide up the oil and gas pie.  But, the North Sea is a unique region where interests go as far as how big the slices of the pie are, who gets which slice, who is cutting the pie and even how sharp the knife is.  We see this market as vital and a steady source of collaboration with a range of operators. 

There are also hydrocarbon accounting opportunities overseas.  We have already worked in the Caspian region, with regular visits to Azerbaijan.  This type of expansion is important to us and as infrastructure grows in less-established world regions, the need to divide up the fiscal value of natural resources will increase.  We will continue to push the boundaries of our craft and introduce new ideas which create true value in the supply chain.