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Our client, a large independent exploration and production company, had purchased a substantial acreage position in one of the World-Class unconventional shale plays in the continental US. A new asset team of 200-plus employees was created to exploit the opportunity. The new vice president in charge of the asset called us in to help ensure that the aggressive production targets set for the next five years would be met.
The five-year plan meant drilling over 1,500 deep horizontal wells with an estimated budget of over $7 billion. The challenge was to stabilize the drilling schedule and optimize drilling, completion and construction activities in the face of aggressive targets that had been set to justify the acquisition price.
Our studies of the Location Selection to Drill Ready process revealed significant opportunities to reduce cycle time and rework and improve overall process throughput throughout the activities performed by Geology, Reservoir and Drilling Engineering, Land, Regulatory and Construction.
The Drilling department was on a steep learning curve with some 80 new well site consultants reporting to an evolving town-and-field departmental structure. Initial wells were taking longer to drill then forecast, a situation that was creating frequent changes to the drilling schedule dictated by upcoming lease expirations. Pockets of excellent drilling performance existed but there was no mechanism to disseminate best practices and lessons learned to standardize the drilling programs.
Rig release to ready for production cycle time was excessive due to long setup times by stimulation crews and pre- and post-stimulation well cleanout times. This was due to a lack of contractor management skills more than any technical aspects of the actual work involved.
Construction costs were over budget and field observations showed opportunity to reduce costs through better contractor management and best practice sharing.
Our study of the performance management system showed the metrics for the new asset needed to be fully established as well as an Integrated Business Planning process to ensure that all departments – Land, Subsurface, Drilling and Completions, Construction, Marketing and Production – were aligned to the mid- and long-term plans.
After carefully deliberating the most valuable workstreams against the perceived ability of the staff to handle the project workload in addition to meeting the demanding targets, the decision was made to address the entire process – from identifying where to drill to putting the well on production. This was to be a large scope project that would have to be closely integrated between all workstreams to ensure the various departments and disciplines involved (virtually the entire 200-plus person client team plus over 2,000 contractors in the field) were working toward common goals in concert. The Integrated Business Planning/ECSSM workstream would be instrumental in ensuring all the pieces were working seamlessly.
The project deliverables were:
Objectives for the IG2DR team were:
The drilling execution workstream worked closely with client personnel both in the field and office.
Field efforts concentrated on:
Work with the Drilling Managers/Engineers consisted of:
Completion activities took place in both the field and corporate offices. Major areas of work revolved around:
Improved contractor management and best practices made up the majority of our collaboration with the client. The focus was on:
An Execution Control System (ECSSM) is used to manage processes and track performance. The ECSSM uses defined KPI targets and plans that are discussed in a structured meeting format where variances are addressed and corrective actions identified.
Integrated Business Planning (IBP) is a cross-functional planning and review process that “operationalizes” the business plan.
Major issues initially tackled through IBP, using an 18-month horizon, revolved around where additional drilling was likely to demand new or expanded facilities and where market outlets for future product needed to be secured.
Utilizing process, data and systems analysis, client subject-matter experts and teams from all functional groups involved, Advisian partnered with the client to identify waste and opportunities for improvement in the form of delays, bottlenecks, rework, inefficiencies and ineffective coordination across functions. Initial process mapping indicated numerous activities that were being done more than once due to errors or inadequate information occurring upstream in the process. The most obvious rework areas were addressed and fixed first resulting in a 35 percent reduction of cycle time. Process throughput capacity with the existing client personnel was improved 140 percent vs. a project target of 30 percent. To further better manage the process, implementation of business process management software was recommended to ensure the 70-plus process steps were executed in a standard and orderly manner.
Identification of the Best Composite WellTM allows the Drilling Engineers to prepare standard drilling plans that incorporate the practices resulting in the best performance.
Establishing the behaviors in the field that reduce unplanned events and ensuring rig moves are managed as tightly as drilling operations led to successful execution of the plan. By project end, the spud-to-spud cycle time had decreased by 37 percent vs. a target of 15 percent – worth $200 million annually based on the planned number of wells per year. Additionally, the non-cycle time cost reduction identification work generated $46 million in annual savings.
Improved on-site management through prejob setup tailgate meetings and the move workbooks contributed to a 32 percent reduction in stimulation cycle time vs. a target of 35 percent. Well clean out cycle times were reduced 50 percent vs. a target of 15 percent. Additionally, efforts to identify non-cycle time cost savings through technical improvements, vendor management and field efficiencies resulted in $134 million in savings.
Improved contractor management and standardized design related to purchasing, fabricating and installing individual well test skids resulted in a $74 million annual improvement over the original base period.