Skip to main content
Springer Nature Link
Log in

System assurance of subsea petroleum production systems: a case study mapping factors influencing the sourcing strategy

  • Original Article
  • Published:
International Journal of System Assurance Engineering and Management Aims and scope Submit manuscript

    We’re sorry, something doesn't seem to be working properly.

    Please try refreshing the page. If that doesn't work, please contact support so we can address the problem.

Abstract

Subsea systems are increasingly used in the production of offshore oil and gas. However, the life cycle management of such systems is not without risks as there are many factors that could result in increased costs, lower quality, delay in delivery, as well as increased health, safety or environmental risks. In addition to engineering related risks, there are substantial risks related to the sourcing of the systems, the execution of the offshore installation process, project execution and logistics, as well as the system operation and maintenance. Often many companies with various specialized expertize needs to be coordinated in the project and the cost may become huge if something goes wrong or of the technology does not perform. The sourcing strategy in subsea systems is based on the corporate vision, management and business philosophy of the operator and the regulatory authorities in the life cycle. The purpose of this paper is to identify and discuss various factors that will influence a sourcing strategy and the decision making process previous to establishing a contractual agreement in complex industrial projects. A case study is performed in the Norwegian oil and gas industry to identify, analyze and validate factors and attributes that impact the sourcing strategy of subsea production systems. The factors are ranked according to importance and as practiced in the industry.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Subscribe and save

Springer+ Basic
$34.99 /Month
  • Get 10 units per month
  • Download Article/Chapter or eBook
  • 1 Unit = 1 Article or 1 Chapter
  • Cancel anytime
Subscribe now

Buy Now

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2
Fig. 3

Similar content being viewed by others

References

  • Chopra S, Meindl P (2001) Supply chain management: strategy, planning, and operation. Prentice Hall, Upper Saddle River, NJ, pp 49–63

  • Cousins P, Lamming R, Benn L, Squire B (2008) Strategy supply management, principles, theories and practice. Financial Times/Prentice Hall, Harlow, pp 28–38

  • De Toni A, Nassimbeni G (1999) Buyer-supplier operational practices, sourcing policies and plant performances: results of an empirical research. Int J Prod Res 37:567–619

    Google Scholar 

  • DNV-OSS-306 (2004) Verification of subsea facilities. Offshore service specification. Det Norske Veritas, Norway

  • DNV-RP-C205 (2010) Environmental conditions and environmental loads, Recommended practice. Det Norske Veritas, Norway

  • Energy Institute and Lloyd’s Register (2009) Guidelines for the management of integrity of subsea facilities, England, 39

  • Giunipero LC, Denslow D, Eltantawy R (2005) Purchasing/supply chain management flexibility: moving to an entrepreneurial skill set. J Ind Mark Manag 34(6):602–613

    Article  Google Scholar 

  • Hovland E (2007) Evaluation of vessel concepts for subsea operations in northern seas, PhD Thesis No. 43, University of Stavanger, Stavanger, Norway, ISBN: 978-82-7644-335-6, ISSN: 1890-1387

  • Ketchen DJ, Giunipero LC (2004) The intersection of strategic management and supply chain management. J Ind Mark Manag 33:51–56

    Article  Google Scholar 

  • Kumar R, Markeset T (2007) Development of performance-based service strategies for the oil and gas industry: a case study. J Bus Ind Mark 22(4):272–280

    Article  Google Scholar 

  • Kumar R, Markeset T, Kumar U (2004) Maintenance of machinery negotiation service contracts in business-to-business marketing. Int J Serv Ind Manag 15(4):400–413

    Article  Google Scholar 

  • Lysons K, Gillingham M (2003) Purchasing and supply chain management, 6th edn. FT/Prentice Hall, Harlow, pp 332–335

  • Mangan J, Lalwani Ch, Butcher T (2008) Global logistics and supply chain management. Wiley, Hoboken, NJ, pp 76-78

  • Markeset T, Kumar U (2005) Product support strategy: conventional versus functional products. J Qual Maintenance Eng 11(1):53–67

    Article  Google Scholar 

  • Marsh PDV (1984) Contract negotiation handbook, 2nd edn. Gower, Aldershot, England, pp 230–238

  • McAndrews KL (2011) Consequences of Macondo: a summary of recently proposed and enacted changes to US offshore drilling safety and environmental regulation. SPE143718. In: The proceedings of the SPE Americas E&P health, safety, security and environmental conference, Houston, Texas, USA, March 21–23

  • Ministry of Petroleum and Energy (2011) FACTS: the Norwegian petroleum sector 2011. Ministry of Petroleum and Energy, Oslo, Norway, pp 16–25

    Google Scholar 

  • Mohammad MF (2008) Procurement strategies for the oil and gas industry: to capture changing values and dealing with multi cultural complexity. In: The proceedings of the international conference on construction and building technology (ICCBT2008), Universiti Teknologi MARA (UiTM), Malaysia, 29–38

  • Moreno-Trejo J, Markeset T (2011a) Subsea petroleum production facilities: identifying development challenges. In: The proceedings of the international conference of advances in production management system (APMS2011), Stavanger, Norway, September 26–28

  • Moreno-Trejo J, Markeset T (2011b) Subsea petroleum production facilities: mapping factors influencing the system selection process. In: The proceedings of the international conference of advances in production management system (APMS2011), Stavanger, Norway, September 26–28

  • Moum IO, Laskemoen I (1993) The new business challenge for major suppliers in the offshore oil and gas industry. In: The proceedings of the society of petroleum engineers (SPE1993), Aberdeen, UK, September 07–10

  • Olsen BE, Haugland SA, Karlsen E, Husøy GJ (2005) Governance of complex procurements in the oil and gas industry. J Purch Supply Manag 11(1):1–13

    Article  Google Scholar 

  • Osmundsen P, Sørnes T, Toft A (2008) Drilling contracts and incentives. Energy Policy 36(8):3138–3144

    Google Scholar 

  • Panesar SS, Markeset T (2008) Industrial service innovation through improved contractual relationship: a case study in maintenance. J Qual Maintenance Eng 14(3):290–305

    Google Scholar 

  • Panesar SS, Kumar R, Markeset T (2007) Innovation and contracts in business-to-business services. In: The proceedings of the 2nd international conference on operations and supply chain management (OSCM2007), Bangkok, Thailand, May 18–20

  • Poppo L, Zenger T (2002) Do formal contracts and relational governance function as substitutes or complements? Journal of Strategic Management 23:707–725

    Article  Google Scholar 

  • Serel DA, Dada M, Moskowitz H (2001) Sourcing decisions with capacity reservation contracts. Eur J Oper Res 131:635–648

    Article  MATH  Google Scholar 

  • Sheridan D (1991) Negotiating commercial contracts. McGraw-Hill, London, p 71

    Google Scholar 

  • Sund KA, Bratvold RB (2008) Integrate operations: how effective is the current relationship between operating companies and suppliers In: The proceedings of SPE intelligent energy conference and exhibition (SPE2008), Amsterdam, The Netherlands, February 25–27

  • Tassabehji R, Moorhouse A (2008) The changing role of procurement: developing professional effectiveness. J Purch Supply Manag 14:55–68

    Article  Google Scholar 

  • Treleven M (1987) Single sourcing: a management tool for the quality supplier. J Purch Mater Manag 23(1):19–24

    Google Scholar 

  • van Weele AJ (2000) Purchasing and supply chain management: analysis, planning and practice, 2nd edn. Business press, Thomson

    Google Scholar 

  • Wright PJC (1996) The North Sea contracting industry—key issues and companies. Financial Times Energy, London

    Google Scholar 

Download references

Author information

Authors and Affiliations

  1. University of Stavanger, N-4036, Stavanger, Norway

    Jorge Moreno-Trejo, Rajesh Kumar & Tore Markeset

  2. PEMEX Exploración y Producción, Ciudad Del Carmen, Campeche, Mexico

    Jorge Moreno-Trejo

Authors
  1. Jorge Moreno-Trejo
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Rajesh Kumar
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Tore Markeset
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Tore Markeset.

Rights and permissions

Reprints and permissions

About this article

Cite this article

Moreno-Trejo, J., Kumar, R. & Markeset, T. System assurance of subsea petroleum production systems: a case study mapping factors influencing the sourcing strategy. Int J Syst Assur Eng Manag 3, 255–265 (2012). https://doi.org/10.1007/s13198-012-0108-7

Download citation

  • Received:

  • Revised:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s13198-012-0108-7

Keywords