Wood Group Delivers Massive Savings via Standardization

         Earlier this week, Wood Group announced that they had received permission to us a well pad design for work at the Firebag in-situ site in Alberta, Canada. Suncor Energy is the operator and agreed to use Wood Group’s standard well pad design.

         The cost savings are astronomical. Over the estimated life of the wellpad, two-thirds of all capital spending is on the well pads and gathering line infrastructure. A cost that varied between C$4 million to C$9 million per well pair. Using the standard design allows that cost to be reduced to approximately C$2 million per well pair. The design delivers cost savings by using a proven design, rather than a bespoke design so common in the industry and thereby eliminates costs associated with engineering, procurement, and project management. This design can be used in numerous aspects of heavy oil production.

         In several prior editions of The Five Star Standard, we spoke about the increasing importance of oil field equipment standardization in the face of low oil prices that are probably here to stay. Arguably, it is a double edged sword: the more standardization decreases costs, the lower breakeven point is needed for a given barrel, and the more quickly drilling will resume and the service sector will recover. At least theoretically. I think we will have to see how standardization effects American manufacturers to see if, in the long term, it is positive for the service sector.

By: Ty Chapman

Five Star Metals, Inc.

Raising the Bar for Customer Service and Quality

Twitter: @FSM_TY

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