Executive viewpoint

The offshore industry faces an urgent need to transform and remain viable in a weaker environment. The oil price remains intangible, so we need to focus on what we can control—which includes re-defining the fundamentals of how we operate, to introduce new, smarter and more cost-effective technologies and processes that ensure a healthy future for the offshore industry.

For the subsea sector, this means streamlining operations. A key area that has the potential to greatly change the game is subsea processing. While the entire subsea sector is going through change, subsea processing is at a pivotal point in its evolution, as it moves from a niche position of one-off projects to the subsea mainstream. There, operators are accepting its value as a key tool to enable field access and improve overall project economics.

The power of processing. Recently, the cost of execution in the subsea arena has risen exponentially, due to a combination of factors, such as increased complexity, stringent local content requirements and governmental policies, but also due to widespread inefficiencies. At its core, subsea processing has always been about moving capabilities from the topside to the seafloor, to create efficiencies and increase recovery rates.

In today’s cost-constrained landscape, there is a renewed focus on the potential that subsea processing technology brings to the table. This drive for improved efficiency has placed new expectations on subsea processing providers to develop equipment and systems that not only deliver cost reductions, but also enable simplified, reliable operations. Step by step, through pilots and projects, the industry has demonstrated the viability of subsea processing. Thus, further long-term and collaborative efforts on deepwater development with subsea processing are on the agenda.

As an industry, we need to achieve greater efficiency and speed-to-market. To do this, we can learn from other industrial sectors. Applying key learnings from other sectors can provide valuable lessons to address cost escalation in oil and gas. By optimizing and improving specifications, standards and qualifications, supplier ecosystems, and project execution, we can internalize these best practices and put them into action.

For key focus areas, such as subsea power and processing, we are now at the point where the technology is at our disposal, the project execution experience has been developed, and a global pool of subsea processing experts and technology has been built. To continue this evolution, we need to intensify collaboration, push the boundaries of what is possible, and be prepared to do things differently.

Innovative commercial models. In subsea, there is an opportunity to change the paradigm between the technology provider and the end-user, from a traditional equipment transaction, with a long-term service agreement, to a more progressive commercial model, where there is a measured element of risk-sharing—and reward. But this is not new. GE has been running commercial models like this for years in its aviation, transportation and power businesses, and other parts of its oil and gas portfolio.

We call this the GE Store. Making use of GE’s presence across other industrial sectors, helps us leverage the accomplishments that other mission-critical industries have achieved in standardization. From reduced engineering, fewer project management hours and re-use of existing parts, standardization can be applied across a number of areas to unlock significant cost-reduction opportunities. Standardization delivers reduced cycle time that contributes to cost-savings, as well as reduced project risk.

Subsea processing is ideal for exploring different types of risk/reward agreements. Unlike conventional subsea production systems, subsea processing introduces rotating machinery that can be monitored, using sophisticated sensors and devices, to provide continuous diagnostics on equipment performance and provide predictive failure capability. Couple this with GE’s Predix platform—our industrial Internet cloud—and you have the power to optimize equipment performance, maximize system uptime, and get rewarded for that increased reliability.

Another area where we have significant experience is in equipment financing. Even though GE has slimmed down its financial businesses, it has kept its vertical financing capability in Equipment Financial Solutions (EFS). And in the current environment, oil and gas is an obvious sector in which GE can look for customers open to collaborating on alternative commercial models.

Again, subsea processing is an obvious candidate. Major processing projects require relatively high, initial Capex outlays, and operators are often concerned that they cannot guarantee the incremental recovery upfront. This can result in the operator pursuing a more conventional approach, such as drilling and installing an additional well.

Conclusion. As an industry, we have come a long way over the last two decades, tackling and solving some of the major challenges in subsea processing. Some of these achievements would not have seemed possible before—from the world’s first subsea separation and injection system in 2001, to the world’s first subsea gas compression system in 2015. We are at the point where we not only have the technology at our disposal, but we also have developed the project execution experience. We have built a global pool of subsea processing experts, and we are proposing innovative commercial solutions to our customers.

To continue this progression, an approach that shows greater openness, transparency and collaboration in subsea solutions will deliver enormous benefits. We can lead the way toward making efficient and integrated subsea processing systems the new standard in industry-leading transformation.