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FeedsHome: Issue 1 2012 › Lead Story › Fields of the future
Fields of the future
02/02/2012 | Channel: IT, Technology
Helen Ratcliffe of PIPC on turning a digital oil field vision into reality – a project and programme management perspective
Whether it’s iField, Digital or Smart, oilfields are progressing ever more quickly to a fully integrated real-time operation. Further investment in the concept is projected at more than US $1billion by 2015, including hardware, software, and services.
But while most oil and gas operators have a digital oilfield vision - and if they don’t, they are fairly straightforward to develop - it’s the next step on the journey, from green-lighting the strategy to delivering the vision, which many find somewhat harder to achieve. It’s an expensive and far from straightforward path, which is why the voyage to a digital state has often been evolutionary rather than revolutionary for most.
The cost-effective and efficient realisation of a digital oilfield strategy is achieved by the successful execution of multiple inter-dependent projects that form the wider development programme. Programme managing such a venture is a challenge, but some basic project and programme management principles will help.
Good project and programme management can be summed up as ‘doing the right things’ and then ‘doing things right.’ So, firstly, it’s about realising that you can’t do everything; resource and budget constraints would make it impossible, and overstretching will lead ultimately to a lack of focus and failure. Once you have selected the projects that will constitute the portfolio, it’s all then down to the delivery. Remember why these two elements are important; success will never be measured by an executive team’s ability to dream up a winning strategy – it’s all about being able to execute that strategy. With that in mind, here are four elements to consider in relation to turning a digital oilfield vision in to reality.
Choosing the right projects
A common mistake with digital oilfield programmes is not selecting the right projects at the beginning. It is essential that the project which is chosen is also meaningful to the target organisation and the outcome of that can be practically absorbed into the daily operation.
Whilst it is important to have a long-term, enterprise wide vision that aligns to the corporate strategy, it is also essential to establish focused projects within this strategy that are business driven. To truly gain traction people need to understand and relate to the developments planned. Plans need, also, to focus on functional or asset related priorities and have a business case that truly adds up.
A business case on paper is fairly easy to pull together and project costs are simple to justify when production figures are used. However, at the outset, calculations should be made to which key business metrics will be impacted, and how will real $ value be generated. If it is too difficult to clearly state where people, process, OPEX efficiencies or incremental production increases will come from as a result; there may need to be further time invested into identifying the right things to work on?
An energised and engaged sponsor really helps to drive change but if the user community don’t believe in the project or cannot see how it improves the business, there should again be greater reflection on if the right things have been identified.
Finally, constantly review how the project will improve the availability, quality, transparency and use of information to drive efficient and effective decision-making and therefore drive value.
Scale the approach to suit the scale of the operation
So much digital oilfield information has been published and many success stories are available that it is easy to learn from other operators. However, it is wise to be a little wary about which examples are chosen to emulate as every operation has some key differences, and what proved of great value to someone else may not work so well for a different business model.
The IOCs have generated good results by utilising large scale centrally driven programmes partly because they are able to drive change from the top and invest in long-term wide ranging activity, while mid-tier operators are better at regional or asset owned and driven projects where local leadership is actively engaged and can tailor the direction and the solutions to meet shorter-term business goals.
Scoping and execution
It is important with a digital oilfield project that the specific business problem or opportunity is clearly understood and the technology doesn’t lead/direct the project.
Often, people take a ‘solution led’ approach, aiming to implement big solutions or aiming optimisation projects at assets and business units without fully understanding where the production constraints are and get surprised when they don’t deliver the value anticipated. Why embark on an expensive well and reservoir optimisation when facilities are up and down like a yo-yo? Equally resist the desire to create everything from first principles - most things have been done before and a good workable solution can be found described by another company. Usually over-customising a technical implementation can lead to an increase cost in maintenance and future upgrades. A lot of time and money can be saved by compromising on the nice-to-haves.
When it comes to the technical part of the solution try to buy not build. The oil industry has a tendency to tinker with, or customise, off the shelf solutions in the mistaken belief that each asset or business unit is unique. This isn’t the case as often as thought and should not be the default position.
The next step is to shape the transformation by splitting projects up into smaller chunks – as it is better to be one week late on a two week ‘smaller’ project than three months late on a six month ‘bigger’ project. A typical project (e.g. to improve production or system reliability) should be given a timescale of a few weeks to put the business case together, then between three months and two years to actually implement the project.
The user community will also find it easier to absorb smaller step changes than a big leap into working in a totally new way. Therefore, there should be a transition of each element over into support and business as usual when it is ready. That way the journey is truly a transition not a change.
Sustainability
Considering sustainability of the digital oilfield capabilities very early in the project life cycle is strongly recommended. Considerable effort and expense is invested into indentifying, designing and implementing new capabilities to improve business performance, so it would seem logical that the new ways should ‘stick’.
Change Management is a much used term and often companies dismiss change management and substitute training. Whatever you want to call it, embedding and ensuring capabilities survive ‘post project’ is bigger than just training and must be factored into the project design and budget. Keeping the key people engaged in the project and allowing them to be part of the solution and have a hand in the way the capability is shaped helps to ensure it is sustained. A huge part of digital oilfield is the IT enabling elements and software. Always work in collaboration with the IT department as they will hold the key to technical sustainability in the future.
In conclusion, it is clear that digital oilfields provide a solution to oil and gas companies that face the conflicting pressures of a shrinking labour force and a growing demand for oil. Whilst it can drive innovation, and help companies transform the way they work, successful outcomes largely relies upon robust project management and delivery.
PIPC
Helen Ratcliffe is a managing consultant with PIPC Ltd. Based in Aberdeen, Helen has over 20 years’ experience in upstream oil and gas and has been instrumental in the development of the digital oilfield concept, which matured into Intelligent Energy and is now pervasive across the industry. Helen is one of the few individuals to have successfully delivered multiple projects from inception through to operation for several international operators. PIPC Ltd is a leading project and programme management consultancy responsible for some of the largest business transformations and post-acquisition integrations in corporate history.
For further information please visit: www.pipc.com
But while most oil and gas operators have a digital oilfield vision - and if they don’t, they are fairly straightforward to develop - it’s the next step on the journey, from green-lighting the strategy to delivering the vision, which many find somewhat harder to achieve. It’s an expensive and far from straightforward path, which is why the voyage to a digital state has often been evolutionary rather than revolutionary for most.
The cost-effective and efficient realisation of a digital oilfield strategy is achieved by the successful execution of multiple inter-dependent projects that form the wider development programme. Programme managing such a venture is a challenge, but some basic project and programme management principles will help.
Good project and programme management can be summed up as ‘doing the right things’ and then ‘doing things right.’ So, firstly, it’s about realising that you can’t do everything; resource and budget constraints would make it impossible, and overstretching will lead ultimately to a lack of focus and failure. Once you have selected the projects that will constitute the portfolio, it’s all then down to the delivery. Remember why these two elements are important; success will never be measured by an executive team’s ability to dream up a winning strategy – it’s all about being able to execute that strategy. With that in mind, here are four elements to consider in relation to turning a digital oilfield vision in to reality.
Choosing the right projects
A common mistake with digital oilfield programmes is not selecting the right projects at the beginning. It is essential that the project which is chosen is also meaningful to the target organisation and the outcome of that can be practically absorbed into the daily operation.
Whilst it is important to have a long-term, enterprise wide vision that aligns to the corporate strategy, it is also essential to establish focused projects within this strategy that are business driven. To truly gain traction people need to understand and relate to the developments planned. Plans need, also, to focus on functional or asset related priorities and have a business case that truly adds up.
A business case on paper is fairly easy to pull together and project costs are simple to justify when production figures are used. However, at the outset, calculations should be made to which key business metrics will be impacted, and how will real $ value be generated. If it is too difficult to clearly state where people, process, OPEX efficiencies or incremental production increases will come from as a result; there may need to be further time invested into identifying the right things to work on?
An energised and engaged sponsor really helps to drive change but if the user community don’t believe in the project or cannot see how it improves the business, there should again be greater reflection on if the right things have been identified.
Finally, constantly review how the project will improve the availability, quality, transparency and use of information to drive efficient and effective decision-making and therefore drive value.
Scale the approach to suit the scale of the operation
So much digital oilfield information has been published and many success stories are available that it is easy to learn from other operators. However, it is wise to be a little wary about which examples are chosen to emulate as every operation has some key differences, and what proved of great value to someone else may not work so well for a different business model.
The IOCs have generated good results by utilising large scale centrally driven programmes partly because they are able to drive change from the top and invest in long-term wide ranging activity, while mid-tier operators are better at regional or asset owned and driven projects where local leadership is actively engaged and can tailor the direction and the solutions to meet shorter-term business goals.
Scoping and execution
It is important with a digital oilfield project that the specific business problem or opportunity is clearly understood and the technology doesn’t lead/direct the project.
Often, people take a ‘solution led’ approach, aiming to implement big solutions or aiming optimisation projects at assets and business units without fully understanding where the production constraints are and get surprised when they don’t deliver the value anticipated. Why embark on an expensive well and reservoir optimisation when facilities are up and down like a yo-yo? Equally resist the desire to create everything from first principles - most things have been done before and a good workable solution can be found described by another company. Usually over-customising a technical implementation can lead to an increase cost in maintenance and future upgrades. A lot of time and money can be saved by compromising on the nice-to-haves.
When it comes to the technical part of the solution try to buy not build. The oil industry has a tendency to tinker with, or customise, off the shelf solutions in the mistaken belief that each asset or business unit is unique. This isn’t the case as often as thought and should not be the default position.
The next step is to shape the transformation by splitting projects up into smaller chunks – as it is better to be one week late on a two week ‘smaller’ project than three months late on a six month ‘bigger’ project. A typical project (e.g. to improve production or system reliability) should be given a timescale of a few weeks to put the business case together, then between three months and two years to actually implement the project.
The user community will also find it easier to absorb smaller step changes than a big leap into working in a totally new way. Therefore, there should be a transition of each element over into support and business as usual when it is ready. That way the journey is truly a transition not a change.
Sustainability
Considering sustainability of the digital oilfield capabilities very early in the project life cycle is strongly recommended. Considerable effort and expense is invested into indentifying, designing and implementing new capabilities to improve business performance, so it would seem logical that the new ways should ‘stick’.
Change Management is a much used term and often companies dismiss change management and substitute training. Whatever you want to call it, embedding and ensuring capabilities survive ‘post project’ is bigger than just training and must be factored into the project design and budget. Keeping the key people engaged in the project and allowing them to be part of the solution and have a hand in the way the capability is shaped helps to ensure it is sustained. A huge part of digital oilfield is the IT enabling elements and software. Always work in collaboration with the IT department as they will hold the key to technical sustainability in the future.
In conclusion, it is clear that digital oilfields provide a solution to oil and gas companies that face the conflicting pressures of a shrinking labour force and a growing demand for oil. Whilst it can drive innovation, and help companies transform the way they work, successful outcomes largely relies upon robust project management and delivery.
PIPC
Helen Ratcliffe is a managing consultant with PIPC Ltd. Based in Aberdeen, Helen has over 20 years’ experience in upstream oil and gas and has been instrumental in the development of the digital oilfield concept, which matured into Intelligent Energy and is now pervasive across the industry. Helen is one of the few individuals to have successfully delivered multiple projects from inception through to operation for several international operators. PIPC Ltd is a leading project and programme management consultancy responsible for some of the largest business transformations and post-acquisition integrations in corporate history.
For further information please visit: www.pipc.com
