The world’s largest energy companies plan to significantly widen a two-year effort to standardize the kit they use to pump oil and gas, hoping they can deliver significant cost savings, said people familiar with the matter.
The discussions, scheduled on Wednesday for a closed-door meeting at the World Economic Forum in Davos, are the latest sign companies are seeking to tighten their belts permanently even as oil prices recover. Bespoke equipment designed on a project-by-project basis was common during the decade-long boom in crude prices, but looks less affordable after the industry’s worst downturn in a generation.
“Standardization could save the oil and gas industry hundreds of millions of dollars every year,” Bob Dudley, the chief executive officer of BP Plc, said in an interview in Davos.
Major oil companies plan to expand their list of standardized kit to 40 from the initial four items agreed on when they started their collaboration in 2016, also at Davos, the people said. Initially, the project included giant valves, electrical transformers, and two pieces of submerged oil well equipment. Executives believe they can reach a technical consensus with their suppliers on a new list including equipment from across the whole industry, the people said, asking not to be identified because the meeting is private.
The initiative includes energy giants Royal Dutch Shell Plc, Total SA, BP, Saudi Arabian Oil Co., Statoil ASA, Repsol SA, and Chevron Corp.
Big Savings
The oil and gas industry has focused on driving down costs since crude slumped from above $100 a barrel in 2014 to below $30 two years later. While Brent was back at $70 this month due to production cuts led by OPEC and Russia, companies aren’t banking on it staying there.
BP is planning its spending on the assumption that oil will trade in a $55 to $60 range, Dudley said. By the end of this decade, it aims to have driven project costs as low as $40 a barrel, he said.
The industry has already achieved significant savings on big projects. BP cut the price tag for the second phase of its Mad Dog field in the Gulf of Mexico to $9 billion in 2016, 60 percent lower than the design three years earlier. Statoil reduced the budget for the Johan Castberg oil project offshore Norway to about 49 billion kroner ($6 billion) from an initial forecast of more than 100 billion kroner.
The hard part is ensuring cuts like this stick. Industry costs, such as rental rates for offshore rigs, fell along with crude during the global financial crisis of 2008 to 2009, but surged again as prices recovered.
This website and sisters royaldutchshellplc.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, and shellnews.net, are owned by John Donovan. There is also a Wikipedia segment.
Royal Dutch Shell conspired directly with Hitler, financed the Nazi Party, was anti-Semitic and sold out its own Dutch Jewish employees to the Nazis. Shell had a close relationship with the Nazis during and after the reign of Sir Henri Deterding, an ardent Nazi, and the founder and decades long leader of the Royal Dutch Shell Group. His burial ceremony, which had all the trappings of a state funeral, was held at his private estate in Mecklenburg, Germany. The spectacle (photographs below) included a funeral procession led by a horse drawn funeral hearse with senior Nazis officials and senior Royal Dutch Shell directors in attendance, Nazi salutes at the graveside, swastika banners on display and wreaths and personal tributes from Adolf Hitler and Reichsmarschall, Hermann Goring. Deterding was an honored associate and supporter of Hitler and a personal friend of Goring.
Deterding was the guest of Hitler during a four day summit meeting at Berchtesgaden. Sir Henri and Hitler both had ambitions on Russian oil fields. Only an honored personal guest would be rewarded with a private four day meeting at Hitler’s mountain top retreat.
IN JULY 2007, MR BILL CAMPBELL (ABOVE, A RETIRED GROUP AUDITOR OF SHELL INTERNATIONAL SENT AN EMAIL TO EVERY UK MP AND MEMBER OF THE HOUSE OF LORDS: 
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A head-cut image of Alfred Donovan (now deceased) appears courtesy of The Wall Street Journal.
