Shell to move project planning into the cloud

By Thomas Menze

Industry Trends

It sounds impossible. Realizing annual savings of $5 billion while under increasing pressure to start up even more investment projects. Yet this is precisely what the multinational Royal Dutch Shell is aiming to do. After investing $35 billion in Capex projects last year, the company plans to reduce expenditure by $15 billion over the next three years

Part of the savings will come from innovative plant-engineering procedures and new ways of cooperating with suppliers and EPCs.

"Project costs in the oil and gas industry have grown disproportionately over the last years", asserts Gerhard Sallinger, President Process, Power & Marine, at Intergraph. "The drastic decline of the oil price forces the sector to make cuts. Raising the productivity of all parties is the order of the day."

Planning in the cloud to avoid loss of time and information

Shell intends to use the cloud to achieve faster and more intelligent plant engineering with fewer man-hours. Since 2013 Shell has moved planning gradually into its own working environment in the cloud. This procedure aims to prevent redundant processing of documents and loss of information, thus avoiding expensive changes in the middle of construction.

The new procedure signifies a paradigm shift, not only for the engineers at Shell but also for contractors, EPCs and suppliers. All parties accustomed to using to their own well-established, proprietary tools are now forced to apply the procedure provided by the owner-operator (O-O). Especially lump-sum turnkey suppliers are struggling as their cost calculations are based on use of their own tools.

Reducing man-hours sounds like bad news for EPCs, whose invoices list hours, yet Shell holds out the prospect of undertaking more projects with fewer engineering partners by nominating standard contractors. This could also solve the other problem owner-operators face in engineering projects: i.e. loss of information. On passing from preliminary planning (FEED) to construction contractor A and from him to his subcontractors, information becomes fragmented and is shared only reluctantly (if at all). The lack of a central information interface often leads to duplication of work.

First major project consistently planned with cloud tools

Many planning companies have implemented document management systems in recent years. Yet in major projects, thousands of documents are still shared through mail or file transfer, leading to a variety of versions. A data-centric procedure, which leads to a single active version for all parties, is still rarely implemented. Furthermore, data transfer from planning to operational phase (as-built) is often incomplete due to the mentioned information losses.

The first major project to which Shell has applied its cloud-approach is a $12 billion export terminal for LNG in West Canada, undertaken together with the partners Korea Gas and Petro China. The planning environment is based on Intergraph (Smart Plant Cloud). Shell's experts estimate that savings of 1.5 per cent will be achieved by applying a data-centric approach as early as the FEED phase, especially by avoiding changes in later phases.

The templates and data provided by the cloud solution allow planners to access existing information from the start. A good example is the component catalogue, which helps to avoid repetition of testing and approval procedures for identical components in different parts of the project. Shell included the product catalogue Sharecat in its planning cloud and connected it to the other planning tools, thus sharing data for up to 60 per cent of the equipment coming from their suppliers.

Next to the planning tools, the specialists at Shell see great potential in a consistent "Copy & Paste" approach, i.e. reuse of information from already planned plants and partial projects. Furthermore, the company aims to standardize the choice of suppliers and engineering partners. To establish this new approach, Shell has been collaborating with other owner-operators since 2012 to promote its use by global EPC contractors.

This topic and more aspects of "Prospects and Challenges of Plant Manufacturing" will be discussed at the 4th Engineering Summit, December 1st and 2nd in Mannheim, Germany. You will find more information via this link.


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