Situation 

Our client developed an ambitious five-year plan for the 2014-2018 period to turn the company around. The plan includes a CapEx program of CAD$4.7 billion over five years. The company has already made significant progress on a number of fronts, including: renewed focus on profitability and cost control, divestiture of non-strategic properties, several waves of restructuring, over CAD$100 million in OpEx cost reduction in 2013, and significant gains in capital efficiency, primarily in drilling and completions. 

With its growth-focused plan, management recognized the need to enhance the Idea Generation to Put on Production (IG2PoP) process to ensure that its inventory levels, throughput and cycle times across the different phases (from planning to drilling, to completions to tie-in, and handover to production) are consistent with the goals of the plan for 2014 and beyond. 

Approach 

During the Scoping phase, potential opportunities were identified, including the lack of a robust overall process, with gaps in common language, stage gates, decision-making and approvals, and information inputs and outputs for all parties involved. Lack of clarity for roles, responsibilities and accountabilities, and cross-functional collaboration were identified as significant areas for improvement.

Jointly with the client, during the IG2PoP Analysis phase, we evaluated the whole development process and prioritized improvement opportunities. 

For the subsequent Implementation phase, Advisian assisted the client in delivering the changes in processes, organization/people and management systems that were identified during the IG2PoP Analysis. 

Key findings included: 

  • Key processes, including the IG2RTD process, are not being executed in a standardized manner across the organization, thereby creating considerable duplication of effort and rework 
  • Budgeted drilling schedule will unlikely be delivered given the potential lack of desired locations
  • Organization structure has led to the creation of functional silos that are adding considerable nonvalue-add in execution of work processes
  • Interfaces between the field and the office are broken
  • Performance measures and metrics are inadequate for creating visibility of and driving the right performance levers
  • Uncertainty of knowing if capital is being adequately prioritized
  • Supply Chain spend dispersed to the Field and out-of-date MSAs and rates
  • SG&A expenditure is well above industry benchmark

Working with the client in supporting both the offices and in the field, Advisian formed teams to develop solutions to the gaps identified, thus creating client ownership as early in the front end of the project as possible. 

Idea Generation to Ready to Drill 

Idea Generation to Technical Approval (IG2TA) and Geology Initiated to Ready to Drill (GI2RTD) processes were redesigned and installed for each development team based on District, Mineral and Surface Ownership variables. 

  • The new, standardized process was fully implemented and included supporting documentation for the IG2TA and IG2RTD process including: Standard Operating Procedures (SOP), SIPOC (Supplier/Input/Process/ Output/Customer); RACIs; check sheets and other tools as required (e.g., rework and waste tracking tool) 
  • Performance and results tracking mechanisms, process scorecards and KPIs fully developed and implemented 
  • Roles, responsibilities and accountabilities defined and agreed 
  • Sustainability tool developed and implemented 

Facilities Engineering & Construction 

  • Naming conventions for all projects (New Well Tie In, New Well Upgrade/Install, Major Project) and project types developed, updated and implemented for all new facility projects going forward 
  • Documented Event-driven Process Chain (EPC) processes roles and responsibilities 
  • Implemented new facilities’ EPC processes 
  • KPIs, scorecard, meeting structures and agendas developed, defined, agreed and implemented along with supporting reports 
  • Implemented effective contract management practices 
  • Developed standard modular facility designs 
  • Approved vendor list to support efficiencies of equipment install, efficiencies when ordering, and realize a subsequent reduction in cycle time 

Procurement and SCM 

  • Streamlined and rationalized purchased items and vendors 
  • Prioritized categories and sourcing wave schedule
  • Initial top-priority sourcing waves executed 
  • Assigned and executed quick wins 
  • Completed detailed spend analysis 
  • Prioritized categories for sourcing 
  • Executed top priority sourcing waves 
  • Designed and implemented ECSSM/savings tracker 
  • Developed, implemented, trained on RACI 
  • Streamlined and consolidated spend category accounts 
  • Implemented improved invoice and filed ticket coding 
  • Executed additional sourcing waves (every eight weeks)
  • Provided ongoing coaching, training and support 

Execution Control System (ECSSM

  • Level 1 and Level 2 ECSSM developed and implemented 
  • IG2PoP KPI tree incorporating Drilling and Completions, new production and new production reliability 
  • Aligned and mapped KPI reports and scorecards to the process owners 
  • Developed required reports and performance review forums for more robust performance management and visibility 
  • Manual KPI reporting capability 

Field Operator Management 

  • Checklist/Troubleshooting Guides 
  • Well down diagnostics: training in planning stage 
  • Daily activities: Reviewed and part of rigorous Short Interval Controls (SIC) 
  • Operator-performed activities including simple PMs: identified, prioritized and fully implemented 
  • Operator training program: In place and being actively managed
  • Root Cause Analysis: Widely utilized in first asset and becoming more routinely utilized in other areas 
  • Tablet use expanded to document sharing 
  • DOR (Daily Operating Report) for Field Operators – widely utilized 
  • Daily Performance Review – widely utilized 
  • Daily Safety Moment/Safe Work Practices planning – routinely utilized 

Results 

  • Supply Chain spend reduced by $158 million 
  • SG&A is now considered best-in-class 
  • IG2RTD process delivered an additional $138 million in benefits 
  • Field Operational improvements reduced lifting cost from +$19 BOE to just under $17 BOE