Logistics of Explorations & Industrial Productions Vol 2

Why this book?
Many years of working with organizations providing logistics for offshore oil and gas exploration and production industry in the Gulf of Guinea, the Niger Delta region as well as the Port & Maritime Industry have installed in me some degree of sympathy with the present and future of the professionals as well as the academia in logistics and supply chain discipline about the lack of reference material which should have been available and which is needed to provide the fundamentals of the subject in a logical and practical manner especially in Nigeria and with a Nigerian case study, considering the country’s landscape. This book, Logistics of Exploration and Industrial Production Volume II (2): a process-based approach is delivered in 333 pages, 5 Parts and 22 chapters, using a system thinking concept of a universal understanding, is intended to pioneer a sincere effort to harmonize all the skill sets required to awaken our intellectual consciousness and induce the ideological principles required to initiate the learning of logistics and to serve as a textbook and reference material that introduces consolidated logistics knowledge and skills to users in both the academic and professional discipline related to every strata of the Nigerian economy including the oil and gas exploration and production in the Gulf of Guinea.

The materials presented in its pages find their inspirational origin from the various research efforts and studies acquired from citadels of learning such as the Maritime Academy of Nigeria (MAN) Oron, the Maritime Industry, the Oil and Gas Industry. And then subsequently the Nigerian Institute for Transport Technology (NITT), and the Ahmadu Bello University (ABU) Zaria. Furthermore, the solid professional background in field operations showcased in this book were acquired from several offshore shallow and Deepwater oil and gas Exploration and Production (E& P) projects in the Nigerian offshore of the Gulf of Guinea using existing research effort by hard working contributor globally and lately the Nigerian Ports Authority (NPA) spanning a period of more than 13 years. The need to write a book on logistics of exploration and industrial production became necessary during my participation in some major E & P projects offshore Nigeria. During this period, I noticed a large volume of logistics activities happening in the Nigerian offshore had limited local participation. A high percentage of the labour was outsourced to foreign expatriates; the few locals involved mostly lacked logistics background, while most qualified employees obtained their logistics qualifications abroad. This phenomenon led to my enrolment in professional and advanced programs in Logistics Management courses at the NITT, Zaria; and subsequently to a post-graduate program in Logistics Management Science at the Faculty of Science, Department of Geography, Ahmadu Bello University Zaria, with a research specialization in Offshore Oil and Gas Exploration and Production Logistics in the Gulf of Guinea.
During my study period, it was practically impossible to find a book that dealt with knowledge of offshore E & P logistics in Nigeria especially within the study area. Considering the fact that, I had academic qualification in Nautical Science (Navigation and Direction) plus professional and post graduate qualifications in Logistics and Transport Management and was actually appointed Officer – in – Charge of Navigational Watch (OOW). I had begun my Nautical career with Blue Water Marine, later joined Bourbon Interoil, which was a more experienced company and a leading multinational offshore oil and gas Exploration and Production (E&P) Logistics service provider, both world-wide and in the Gulf of Guinea with operational foot-prints across the world. During my active engagements in the offshore, I was regularly transferred from one oil field location to another. This gave me the chance to work with foreign multinational experts and to gain first-hand knowledge and skill about the E & P logistics processes in and around major oil fields.
This challenge brought to the fore, an opportunity for me to indeed bring the practical E & P logistics knowledge and skills, gained on the field closer, to the academia and other professional stakeholders, using a process based-approach of converting technical data through analytics into academic materials in the area of offshore oil and gas E & P discipline. This is not simply the story. As I progressed in my research, I further observed that other subtopics, sectors, and disciplines that are in some case partially or fully logistics related, also suffered the same fate. Consequently, this led to the gradual expansion of the book’s scope and brought about the need to now have it delivered in multiple volumes. Most of my colleagues with nautical background focused on other areas of specialization; mostly revolving around operational functions in the nautical discipline. This development left the academic research needs under-explored, undermining the potential of providing a book designed to meet and develop Nigeria’s national capacity in the general Logistics intellectual space and Offshore E &P logistics skills. This space usually represents the starting point for most of us. Yet, at the time, there seemed to be no prospect of getting such a book written to fill in this vital knowledge gap in Nigeria’s Supply Chain Space, Logistics practices and Offshore Oil and Gas E & P Logistics Management Education. Another challenge that further contributed to the widening knowledge gap is the fact that most personnel occupying or carrying out Logistics and Supply Chain mandate are not intended for such functions by their training background. This has made practitioners of Logistics and Supply Chain an accidental workforce (i.e. learning on the job), thereby making the logistics practice an unprofessional trade from the grass roots. On the other extreme, in the mainstream education sector, ‘academic egoism’ is responsible for ‘Logistics naivety’ which has continued
to thicken the barrier between the academia and the professional domain, whereas, operational and industry data can and should be harnessed and leveraged upon. If managed properly, this can assist the academia in rectifying the problem while facilitating a diverse range of readership by delivering ‘fit-for-Nigerian’ present and future textbooks, capable of generational transfer of Logistics knowledge and Supply Chain understanding, discipline and awareness. Hence, the strategy to achieve sustainable and effective knowledge transfer as showcased by this book is being made in order to achieve a collaborative approach between the academia and the industry operation practices.
My first response to these challenges was to make Offshore Oil and Gas E & P logistics needs my main area of academic focus; while making efforts to make further researches on general logistics application in a typical economy as well as on E & P intelligence. My subsequent challenge was how to build up data that will address these areas of knowledge, with some emphasis on infrastructural and environmental needs in oil and gas E & P operation in the Gulf of Guinea. Further impetus to write this book arose with the growing realization and evident acceptance of Logistics as the major driver to achieve effective service delivery and effective functionality of every economy in the world, Nigeria inclusive. In this light, the need for acceptance of Logistics as an academic discipline in Nigerian Schools and Research Institutes at Diploma, Undergraduate and Postgraduate levels became evident. The increasing interest in Logistics Studies especially in the Oil and Gas E &P is expected to guarantee full opportunity realization of local content participation, and energy efficiency in Nigeria and even, a Nigerian economy beyond Oil. This book aims to pioneer a sincere effort to expand the Industrial Trade skills, in both the Oil and Non-Oil economy in Nigeria by establishing the linkage between the industry, local
research institutes, and foreign professional bodies supported by relevant academic and professional groups. In this way, a firm synergy will be rekindled among nautical mariners, geographers, geologists, marine engineers, logicians, transport professionals, offshore logisticians, stakeholders in the financial industry, maritime security operators, engineers, senior international offshore project directors, research analysts, economists, environmentalist, major oil and gas industry professionals, stakeholders in the port and maritime industry. This body of work has benefitted from various enriching influences. To simply recognize the contribution of Captain Lubo Milosevic, Captain Dusko Jzelaka, Captain Francuior, Captain Josesh Odu, Captain Stephen Roderick, Alhaji Jibril Ibrahim (FCILT) (President Chartered Institute of logistics and Transport CILT), Alh Isyaku Maiwada, Engr. Y.G. Adamu, Late Dr,
Rilwanu Lukman (Opec President, Secretary General and Minister of Petroleum to Late President Umar Musa Yar’adua of Blesses memory) Dr. Saidu Adamu, Mal. Musa M. Auwal, Late Mal A.A Abbas, Professor Jaro, Professor I. Oni, Professor A.T Oluwosulu, Dr. A.I. Danjuma, Dr. I. Felicia, Alh Suleiman Ahmad Ilyasu (of NIMASA), Alh Adamu Babayo of NPA, Alh Munir Jamoh of NPA, Hon Abba Jatau, and Alh Ismail Abubakar. Logistics Science or Management is essentially a multidisciplinary skill and multi-temporal,
but due to its spatial nature, a deep interest is seen from geographer. Thus, most university logistics studies programs are initiated and run in the Geography Departments (Faculty of Science) of such universities, Nigeria inclusive. However, teachings are mainly drawn from other relevant departments such as Transport department, Economics, Engineering, Computer Science, Information and Communication Technology, Environmental Science, Law, History, Urban and Regional Planning etc. This further explains that most lecturers that assist to teach logistics science, offshore logistics or supply chain processes do not have it as their area of specialization and therefore, will need to be supported with basic and advanced textbooks of this sort. Furthermore, by reading books that treat offshore E & P logistics such as this text books, these lecturers can comprehend what the scenario is in the remote offshore and then
encourage undergraduate students under their supervision to undertake their research works in this untapped area of specialization. This will give students a taste of the real-world activities since domestication and localization of expertise and skills in these specializations are required in Nigeria. This book will serve as a foundation to introduce such undergraduate and postgraduate students into the field. This is a strategic way of bridging the knowledge gap between Science, Offshore E & P logistics and understanding Supply Chain in Logistics Studies, since a well-grounded technical and industry logician can only be produced through his/her participation in physical activities and understanding of the industry. Lastly, it is worthy of note that Nigeria being the largest single trade block in the world, ratified the African Continental Free Trade Area (AfCFTA) Agreement in last quarter 2020. This Agreement came into force on January 1st, 2021. Consequent upon this and knowing that the two most abundant resources in Nigeria are undoubtedly Gas and Human resource, Nigeria therefore needs an army of trained graduates in the field of Logistics that will play vital roles within the arena provided by AfCFTA. Unfortunately, if Nigeria fails to empower practitioners for one reason or the other, competitors from other member states will do so. Thus, it has become exigent that all Nigerian Schools capitalize on the quaternary sector (Knowledge) to address industry gaps associated with the Tertiary sector (Service) of the country’s economy.

Teaching Objectives
Logistics of Exploration and Industrial Production Vol II: A Process-based Approach using a Universal Concept with System Thinking and Industry Application has three main objectives. As I have already said, this book serves as the basis for teaching Logistics Science and entire E & P Supply Chain. Therefore, it relates to the specific teaching objectives of Universal Logistics although, in principle, many different curricula may benefit from the teaching materials collected in this book. Upon completion of a curriculum based on the core concept, a student should be able to:

• Understand the basis of Universal logistics processes, from both natural, physical and social point of view;
• Apply system theory in administrative, management and operational functionalities;
• Understand process reasoning and application through the policy cycle;
• Distinguish between linear and circular, economic and political processes;
• Demonstrate good knowledge of E & P Economics;
• Comparative analysis of E & P Project Screening and Ranking;
• Understand the Appraisal process and value of Information in Exploration projects;
• Describe E & P Incremental Projects;
• Understand Infrastructure Projects;
• Identify strategic requirements for Portfolio Management;
• Understand the different Development Projects;
• Determine improved management of Exploration through Exploration Governance models;
• Understand the Petroleum Contract Governance models;
• Comprehend Performance Monitoring in E & P;
• Understand political issues that having direct bearing on E & P infrastructures in the Gulf of Guinea;
• Give an overview of the various government policies, intervention on the E & P infrastructures in the Gulf of Guinea;
• Understand the resource allocation processes and how is use for resolving infrastructural issues in the Gulf of Guinea;
• Give an overview of reforms in the Nigerian oil and gas E & P industry;
• Explain the how computer support Exploration Projects;
• Understand the need for E & P logistics supply & cost analysis;
• Understand the need for E & P logistics cost analysis;
• Identify design features of offshore supply vessels (OSVs);
• Understand E & P logistics requirements from a different location of the world;
• Demonstrate a broad view of economics of scale, scope & density and economic relativity in logistics;
• Demonstrate good knowledge of Measurement techniques in E & P logistics;
• Comprehend the purpose of E & P Economics;
• Showcase good understanding for negotiation of Petroleum contracts;
• Understand how E & P logistics operation costing is done;
• Identify how to determine efficiency in E & P logistics fleet operations;
• Demonstrate good knowledge of offshore marine logistics landscape and costing;
• Demonstrate good knowledge of Air lifting transport service nature and costing;
• Showcase good knowledge of E & P logistics operation costing, concept and purpose;
• Comprehend pricing concept in offshore logistics industry;
• Understand theory of imperfect competition in E & P industry;
• Understand Multi-lateral issues driving regional and global oil trade pattern;
• Demonstrates good knowledge of hydrocarbon commercialization.

The Concept of the core book
Logistics of Exploration and Industrial Production (E & I P): is a process-based approach with System thinking and Industry application. It is a textbook that introduces students and professionals to the field of Logistics and Supply Chain discipline as well as offshore E & P logistics in the Gulf of Guinea in addition to other operations in different parts of the world. Together, it represents the core of the knowledge and skills all students and professionals should possess, whether they are studying Transport, Supply Chain or Offshore Logistics or practicing in other sectors related to the Logistics or E & IP industry. It is suitable for use at all academic levels and should provide a basis for further study in more specialized directions. Reflecting the core of scientific and strategic knowledge practiced by Logicians, Trade Economists and Offshore Logistics operators both by state and non-state actors-covering all disciplines involved in the terrestrial and Offshore Logistics value chain. This book is unique in being elementary, general, and specific, all at once:

• Elementary in the sense that student from different backgrounds of varying levels and from all parts of the world, can understand it, with no more than common sense knowledge of the field.
• General in the sense that it does not focus on a single sector of Exploration and Industrial production logistics knowledge and /or strategic skills; and
• Specific as the disciplines covered by this book are unique, and specific in their focus. For all these reasons, I refer to this book simply as the core of Logistics of Exploration & Industrial Production Supply Chain Book. It is intended that to provoke new Supply Chain Schools of thought as well as ideologies capable of advancing better understanding of Supply
  Chain operations in Nigeria.

The Concept of Universal Logistics
Knowledge about Industrial Logistics and Offshore Oil and Gas E & P logistics in the Gulf of Guinea which represents in large part, the focus of this book, is presented at the core from the point of view of Universal system; the phrase, “Universal system” being a general term that I use to identify some of the fields of interest. It will not only tell us what we do, but also what we do not do. It may, thus, lead to new fields and to new combinations of fields. I hope the Universal System that I am going to describe is general and broad enough to allow for this concept. I call this a Universal System and it is my intention to understand this system from a Logistics perspective. I will explore those processes in the Universal System that I consider important to understand, using available knowledge, skills, and tools to do so. However, because we cannot understand it all, I will limit myself to only those segments that we can possibly observe to be
part of the process of Industry in E & I P Logistics value chain, process and model through the methods and techniques that I have at my disposal. A basic distinction can be made between natural and human-induced processes of movement of goods and service delivery. Most processes found in our Universal System have both the natural component and a component artificially induced by human intelligence. It is easy to separate these two. Thinking about locomotion for example, we can easily see that there is a
natural component (locomotion followed by mechanization) and a social component (socioeconomic forces, urbanization etc.). Often, we will need to firstly consider the Logistics user and assign him or her a well-defined position. Another system function of the Logistics space is that of mechanization, automation then digitization of locomotion, which is a result of human influence on natural processes. Clearly, for a complete comprehension of the logistics space system, I have to describe and understand the position of its user (customer). The whole of this book is devoted to this role. Here, I will introduce a few processes that are particularly helpful
in understanding the role of Logistics in E & I P and Offshore Oil and Gas exploration and production industry.

• A logistics user (operator-customer) may be concerned about planning, design and execution of its operational processes;
• A logistics user (operator-customer) may be concerned about his locomotion from one place to another (location) or destination either alone or with his goods and services by land; sea or air domain. Human locomotion can only be well understood if the natural patterns are well identifiable. A pattern of locomotive needs, reflect the planning requirements, but also quartering techniques and the kind of strategies to be deployed. Under Natural Logistics phenomenon, the processes that directly determine the pattern are for example, resource exploration, striving towards industrial production in an efficient manner, the effect of logistics on the production output as well as factors that constitute soft and hard limitation to logistics process. At a somewhat deeper level of infrastructure, skills play an important role in influencing the other logistics components. Apart from these, there are also the effects of human influence, as nowadays, large volumes of Logistics Services are maintained by innovation; technically, strategically and administratively. In total, I notice that a locomotive pattern is the result of several interactive processes.
• Today, many users and stakeholders are interested in the efficiency of production processes and effectiveness of system strategies. State businesses and strategic ventures, government agencies, politicians, multinationals, both oil majors and
  auxiliary partners, international conglomerates and those working on infrastructural assets have their concerns about effective resource exploration systems and efficient productive output for economies; from military logistics of defence operation; to
  business logistics of trade transactions and facilitation; to life decisions on Logistics infrastructure and assets utilization threshold decision. Nowadays, logistics performance is largely determined by innovative application of ideas such as administrative strategies, electronic intelligence applications and automated platforms. The effects are mostly impressive when these result in increased overall operating efficiency and profit.
• Monitoring and modelling these processes may lead to a better efficiency in service and operational excellence.
• Industrialized corporations in Nigeria, especially indigenous players are interested in a backward integration of production growths, through a competitive displacement of multinationals in Nigeria and in Africa. On this basis, logistics and transport carriers and other high-tech service providers could be serving as a special purpose vehicle and a platform for the prioritization of local content participation in Nigeria E & Industrial Production. Expansion in Nigeria’s local industrial capacity is an indication of industrial growth. In this sense, infrastructure will instigate more growth, a growth which will lead to increased demand for more infrastructures. Consequently, the need to take into account the relationships that exist between infrastructure and growth becomes necessary, in order to avoid overestimation of infrastructure’s contribution to individual and National Growth. There is the need to capitalize on growth opportunities offered by a ‘business climate’ and its dynamics which often escalate process needs, therefore industrialist, regulators and government must consider a sustainable approach to be able to do more with less.
• Like the reasoning approach employed by this book, trade facilitations are generally inspired from global to local levels, through trade blocks at Regional and Global level. Local and National approaches are deployed using state owned policy tools i.e.
  designated areas with Free Zone Statuses. Trade Blocks at Regional levels are interested in regional market integration and penetration i.e. African Continental Free Trade Area (AfCFTA). At this level, Treaties and Agreements in form of protocols are deployed as tools for the implementation and realization of trade blocks agenda. While examples of a globalized tool in trade networking, is the World Trade Organization (WTO). Nonetheless African countries need to leverage on the support platforms provided by other international bodies such as the IMO, UNCTAD, ACMA and others to build technical, financial and operational competence and capacity to raise standards and efficiency levels toward attainment of a Win-Win goal.
• Supply Chain gateways such as Ports and Harbours, airports and even land boarders are identified entry points to reaching the hinterland and land locked destinations, thus connectivity to ICD’s are imperatives for trade facilitation from hinterlands to coasts and vice versa. Promotion of the use of ICDs and off-dock facilities should be considered as a measure of promoting hinterland connectivity. Looking at a continental angle, parties need to operate within the prescription of the FAL convention to mitigate border post problems and associated delays and connectivity restrictions. Other notable areas of focus for trade movers is that African ports need to develop the right capacity to take investment opportunities in landlocked countries while viewing Connectivity
  for economic growth, expansion and integration as the perspective of domestic, subregional, continental and international trade domain;

In this book, I endeavour to consider those processes that are commonly involved in the method of Logistics execution and for which strategy implementation with deterministic, strategic logistics models are sustainable and straight forward. These models are products of strategic initiatives and usually generic enough; although more complicated logistics processes especially in the offshore may require more specialized and sophisticated approaches beyond the scope of the volume I of this book. Given the total concept of the core book, it is logical that the conceptual modelling of logistics processes with (simple) analytic and strategic steps has an important place. However, as the term, ‘model’ is broad in its meaning, therefore I must be specific about what we should understand when I use the word in Logistics context. In this, I make a distinction between two types of models in the Core Book:

• Conceptual models, for example, are models that by means of mathematical, logical or statistical methods approximate processes in the real world that are as close as possible in a vertical sense and that can be implemented within a Logistics system; and
• Strategic models, for example, are models that provide a focal point for thinking laterally about the future of an organization’s system and the role and objectives of the operational functions and options.

Conceptual models are closely related to a specific point of view. A surplus U.S. Navy patrol craft that equipped with cantilevered drilling equipment can be considered as drillship. Seeing some successes, it has recorded, but it can also be considered as a form of military surveillance craft, for example for securing the offshore territorial area. Moreover, logistics has a military origin. Strategic models require a basis for planning against the future of an organization or process and the roles as well as the objectives of the operational functions of the model. For example, Floating Production and Storage off- take models (FPSO) this is an offshore production facility that houses both processing equipment and storage for produced hydrocarbons. It is a shipshaped vessel, with processing equipment, or topsides aboard the vessel deck and hydrocarbon storage below. This model is an effective development solution for both deep water and ultradeep E & P fields. Permanently moored, FPSOs are viable E & P development logistics options for a number of different offshore field solutions. Since FPSOs can be moved, they are more economical solutions for more marginal fields, in that the vessel can be moved to another development area and redeployed once the original field has been depleted. Within my central concept of Logistics of Exploration and Industrial Production, there is also a clear role for the users of logistics models. I define users as those that are actively involved in using and understanding the Universal Logistics System; posing questions about it and looking for answers and solutions to logistics problems. Sometimes, they are also problem owners. The users I have in mind are primarily, but not exclusively, users from Nigeria and other developing countries. They may be individuals or organizations each acting at different scale and with a wide variety of interests. These users pose questions about Logistics systems and have a keen interest in the output of the logistics initiatives and modelling process. In the core book, I follow a number of steps in my process-based approach using system thinking which I shall repeat here and a strategic application to E & P logistics (for the following numbering, please refer to figure 1). Starting with the system that is of central interest, i.e. the Universal Logistics System (1) I then make the step from process to model. The Universal Logistics System is modelled using conceptual models and strategic models adapting it to policy cycles leading to Logistics Linear processes application (2) Theories of Logistics systems, Logistics schools and the offshore logistics processes chain (3)-(6). Then the Logistics Process Monitoring and Performance Evaluation; leads from the model to a Supply Chain Process (7) and then Physical Distribution Process, from the Logistics Distribution to The Logistics Intelligence Coordination, Supply Chain Gateways and Hinterland Connectivity Concept (8). Next is the E & P Logistics Systems; infrastructures using a multi-layer perspective of Administrative, Technical and Fiscal concepts (9). Assets late life decision solution by the users of logistics will lead to answer posed by user actions in logistics and supply chain process leading to user satisfaction (11). Here, the logistics user is using logistics data to operate within a solid scientific model with a clear strategic and analytic component. I identify in this chain the step of theory formulation (3). Logistics Schools, orientations, patterns and ideologies in application (2) – (3) – (4). Then there is an important
role to be played at the organization level stage which I refer to the design stage (5). Where the planner will develop a model through design which relies on logistics performance data analytics from that logistics model and possess questions about universal logistics system.

Planning stage (6) includes the technical and administrative (Non-Technical Risks [NTR]) outlook of the anticipated task to be executed through organizing the steps and processes involved in the task. The Logistics process planning (6) – (10) proceeds through a check point, Figure 1 The conceptual framework of the core book therefore, from a conceptual model to a strategic model and from strategic model to platforms and innovations applications that support Supply Chain and physical distribution processes through intelligence and coordination leading to service delivery for User (customer) satisfaction (11). At this stage (11) logistics users are involved in this entire process to a degree that is equal the scale of their understanding of the implication of the operational decision they will take. Therefore, logistics intelligence through operational data is collected for actionable data analytics of i.e. offshore infrastructure at various moment in time, are interpreted, for example as input for green field or brown field projects and corresponding late life decision making process (12) for E & P asset and then feedback for a conceptual model to further again provide an innovative logistics solutions. All these steps are considered in the core book Volume I – V. Of course, the central concept Universal Logistics System can be further subdivided into different subsystems. It is not so difficult, for example to define the subsystem
Exploration and Industrial Production Logistics which includes many specialized systems such as Global Logistics, Local logistics, E & P Supply Chain Systems of surface marine operations, subsea operation, air logistics component, port and harbours operations, interior to coast material transfers, geo physics, environmental survey operations, discovery and delineation, appraisal, development, exploration, production etc. Some of these specializations are within the scope of the Book. Other specialties have only been developed and may be available outside this book. In the core book, I aim to cover universal application of Logistics and Supply Chain in industrial scale in a typical economy as well as oil and gas E & P Logistics specializations; “non-Logistics” components here are included if they are considered necessary for a proper understanding of the processes that are inherent to the mission of the book. Nevertheless, the core is meant to be sufficiently rich in content to enable readers, to also delve into non-oil and gas specialties of Logistics.

Teaching Approach
The central concept of Universal Logistics system of Exploration and Industrial Production logistics have been translated into the comprehensive body of teaching material found in the core book Volume I to V. This teaching material, I concentrated on steps (1) – (12) of figure 1; during the use of this book, all components of the core book curriculum are to be treated. I identify case studies that I followed throughout each of the different components in this book. Of course, I have assigned priorities to each of these components. These priorities given, reflect the strength of the book. In addition, I treated both processes and models at a sufficiently general level with illustrations, wherever appropriate, from the various applications as they are seen in all the volumes.

Mubarak Ibrahim Mahmoud
April 2021