Addressing operational challenges in oil and gas has been saved
Analysis
Addressing operational challenges in oil and gas
Using the downturn to build an agile manufacturing approach to asset development
For decades, oil and gas operators have been experimenting with the right “recipe” to improve capital efficiency and well performance. Take a closer look at how agile project management in oil and gas could provide the consistent designs, stable plans, repeatable results, and better overall performance that the oil and gas industry needs to solve its operational challenges.
Agile project management in oil and gas
In recent years, the concept of “agile” has been front and center in the software application and DevOps world as a means to drastically improve development velocity, scalability, and overall performance. The same guiding principles can be applied to asset heavy industries, helping teams manage field development, well delivery, and other operational challenges in oil and gas.
How can shale operators—and other organizations in asset-heavy industries—use this new asset development approach to improve capital efficiency and well performance? In a traditional assembly-line manufacturing approach, emphasis is placed on well construction efficiency and lean principles to enable speed and scale. By applying agile, the focus on efficiency can be balanced with experimentation and accelerated learning to rapidly identify improvement opportunities. The shift to agile project management in oil and gas could deliver a structured, iterative, and repeatable process. It could also afford time to reflect and adjust field development and well delivery strategies based on near-real-time results of targeted experimentation and rigorous well performance assessments.
Using the downturn to build an agile manufacturing for O&G unconventionals
Transitioning to an agile manufacturing model
Using agile manufacturing to solve operational challenges in oil and gas will require organizations to rethink traditional ways of working and leverage new and enhanced digital capabilities. In our experience, this process should incorporate six elements.
With integrated dynamic planning, an operator can use scenario analysis and plan manipulation to optimize rig and frac fleet based on production performance data and development logistics constraints across the well value chain and life cycle. By only targeting critical areas for design experimentation, much of the well design can be consistent across a given field area, making delivery execution more repeatable and efficient as there are fewer changes occurring.
Cognitive analytics and machine learning provide capabilities to more quickly identify which well design parameters most influence well results, thus helping avoid the opportunity cost of developing wells with suboptimal designs. Operators should apply machine learning to well designs for smarter targeted experimentation, pushing the performance envelope and enabling more consistent aspects of well design in the agile manufacturing delivery approach.
Decluttering or eliminating manual and time-intensive processes can free up engineers and field leadership to focus on more value-added activities. Digitizing workflows can enable process automation, create faster and easier links across systems, and improve collaboration by bringing the right information to the right people at the right time. This combination can improve efficiency, ease scalability, and increase standardization across workflows.
Using remote operation centers (ROC) to conduct real-time monitoring and control of D&C (foe example, directional drilling, geosteering, and controlling frac intensity) helps operators to more rapidly learn and react throughout the well delivery process. This institutionalized approach to real-time data and analytics can improve well execution and, ultimately, well results and apply learnings to the next well in the factory. This process should also improve resource utilization and knowledge transfer to the future workforce.
Machine learning can help operators better determine the impact of well designs on well performance during the early life of a producing well. Digital solutions can also enable operators to more quickly uncover key findings, automate sharing with relevant engineers and stakeholders, and feed information back into an integrated, dynamic plan that maximizes well and field potential.
It’s time for the traditional transactional relationship between supplier and operator to evolve to meet the new realities of pace and scale in unconventional assets. As operators establish integrated data platforms that strengthen cross-functional collaboration, there is significant value potential in extending this to the partner ecosystem to create a more transparent and efficient operating model. In addition, realigning operator and supplier partner incentives can help make value creation a shared goal.
Foundational capabilities to enable agile manufacturing
To effectively adopt an agile manufacturing approach in asset-heavy industries, operators will likely need to augment two foundational capabilities:
- Operating model transformation: Executives can apply agile manufacturing’s guiding principles of strong collaboration; empirical learning; response to change; and iterative, repeatable processes to drive operating model transformation across the organization, capabilities and processes, data and analytics, and digital tools to make better, faster, more consistent, and safer decisions.
- Digital enablement: The oil and gas workforce is ever-changing, and executives should take intentional and strategic steps to put digital solutions in place that enhance productivity. Operators should prioritize and support core elements of digital enablement—from digital fluency to cybersecurity—to help scale and sustain integrated dynamic planning and operational execution in an agile manufacturing approach.
Oil and gas: Operational challenges, agile solutions
Over the past decade, technology and process innovations have continued to unlock new value in the US unconventional resources sector. As the shale revolution continues to mature and evolve, operators likely will need to change their business model to compete for capital and deliver free cash flow to investors. Agile project management in oil and gas should enable operators to more efficiently deploy capital, maximize reservoir recovery and productivity, and optimize lifting costs across the asset life cycle.
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