BHP’s Hunt for Oil Delivered $500 Million in Savings by Supercomputers

Notching up savings of $500 million in development costs at a project in the Caribbean, work to bring new fields into production is being accelerated by supercomputers that create 3-D seismic maps for BHP Billiton Ltd.’s oil and gas assets.

Chief Technology Officer Diane Jurgens said in an interview that to cut operating costs and lower the development bills of potential projects including the Jansen potash deposit in Canada, the supercomputers are among initiatives aimed at using technology such as drones and robot drills for the purpose. She said the time needed to produce oil from sites in Trinidad and Tobago is being reduced to three years from seven years as data is crunched at a center in Houston.

“It helps get us closer to the oil the first time, and closer to the reserve and that’s taken years off what we’d typically have to do in terms of drilling and exploration. Current operations were sped up by four years, that’s $500 million you’ll save through getting the first oil to surface faster,” said Jurgens, who was appointed to the post in February after being hired last year following a 17-year career with General Motors Corp. and earlier roles with Boeing Co.

With the aim of bolstering margins as tepid global expansion limits demand growth and as commodity prices trade about 50 percent below a 2011 peak, the biggest mining companies are placing an increased emphasis on using new technology to extend a cost-cutting drive.

BHP’s Chief Executive Officer Andrew Mackenzie told a conference in Miami in May that volumes would be increased, safety improved and expenses lowered by better use of technology.

In a presentation last year, haul and load costs were reduced in its iron ore division by 13 percent y the use of technology, said Bottom of Form

Rio Tinto Group., which operates the world’s biggest fleet of autonomous trucks.

Aimed at winning clients in the sector looking for new methods to make savings, a mining services unit led by ex-Rio and ex-Anglo American Plc executives has been formed, said Telstra Corp., Australia’s biggest phone company, last month.

Reduction in the costs of the development of its Jansen project in the Canadian prairies is the current focus of Singapore-based Jurgens’ work. She said that she has already visited the potash development twice since joining BHP.

“Jansen is a greenfield, a brand new project. It’s a technology wonderland,” Jurgens said. The producer is testing the potential deployment of technologies including the latest boring machines and the use of movable conveyor belts in place of trucks. “They are one option to make a very efficient project,” she said.

Under a vision to add potash to its portfolio of iron ore, oil, copper and coal assets, BHP is seeking to build Jansen, in Canada’s Saskatchewan province sometime in the next decade. Citigroup Inc. forecast in 2013 that the BHP project may cost as much as $16 billion while the company has already approved about $3.8 billion for the project so far.

(Adapted from Bloomberg)

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