The Weekly Reflektion 16/2022

To be able to learn from poor performance, the causes have to be identified. To be able to learn from good performance, the same is true.

Martin Linge platform (©Equinor)

Is learning from repeated failures in field development projects in Norway all words and little action?

Last week’s Reflektion addressed the Martin Linge development in Norway and the role luck has played in making the field financially viable. The development was originally approved with a budget of 26 billion NOK but was delivered 5 years late at a final cost of 63 billion NOK. The Norwegian minister for Petroleum & Energy stated recently that “the industry must learn” from the Martin Linge development. Stavanger Aftenbladet, the regional newspaper, in a leader article exclaimed “the oil companies must learn” from the Martin Linge development. E24, Norway’s biggest finance and industry newspaper on the internet told the Martin Linge story from a journalist’s point of view, where “oil workers told of poor management, chaos and the worst platform they had seen”.

The Martin Linge field development followed the Goliath field development, approved with a 30,5 billion NOK budget, delivered 30 months late at a final cost of 48,5 billion NOK. Pre-dating Goliath was the Yme 2 development which cost 15 billion NOK with the platform finally being scrapped without producing oil. It is apparent that the Norwegian oil industry is not learning the lessons that would prevent financial disaster in field development projects, and the Norwegian taxpayer should be asking the question, why not?

A key part of learning lessons is finding out what caused the aspects of the activity that went badly, to go badly. When somebody is killed or injured, or there is a potential for injury, investigations are held to find the causes. In the oil and gas industry these investigations are triggered by both the oil company involved and by the authorities, mainly the Petroleum Safety Authority (PSA) in Norway. 

One common factor with Martin Linge. Goliath, and Yme 2 is there has been no comprehensive investigation report published by either the operators concerned, or the authorities. More importantly perhaps, there has been no independent investigation into these projects. With no investigation reports to establish the causes, preventing a recurrence is difficult for successive field development operators. The industry must learn, but what is the expected process if no causes are publicly identified? Who should be triggering the investigations if not the Petroleum & Energy minister? The minister demands learning but has not prepared the ground for learning by identifying the causes. Instead, we have to rely on what the oil workers have told journalists what they have experienced, or informal discussions over a beer with our network.

The successful field development of Johan Sverdrup has beenpraised, but do we know why it was successful? How can it be repeated if we don’t know why it was a success? The authority responsible for the financial performance in oil and gas projects, the Ministry for Petroleum & Energy, has failed in identifying the areas for improvement in these projects, or causes for success in others, thereby preventing the learning.

An interesting point to note in the media coverage was that politicians and journalists criticised the Martin Linge project and emphasised the importance of learning however no oneadvocated that an investigation be carried out to find out the causes. We wonder why.

Reflekt AS