Transformation and Change in Oil and Gas Production

Intelligent Energy ("IE") describes a new way of monitoring and performing production operations, with IE initiatives driven by multiple business imperatives such as increasing production, reducing cost, managing risk, etc. Disciplines within exploration and production ("E&P") and other industries have undergone similar changes, but E&P companies have been typically slow to embrace new operating practices. Published case studies, Cambridge Energy Research Associates and other sources (Dutra et al. 2010, Moisés et al. 2008, Sankaran et al. 2011 and García et al. 2010) have provided a continuous stream of justifications for adopting these new methods. Given the substantial gains possible, the pace of innovation associated with these initiatives seems inconsistent however. Some of the reasons for hesitancy in adopting new solutions include: Culture. Culture is a major factor in transformation and in an organization's ability to embrace change. Production is driven by process efficiency, reliability, tight control and predictability among others. Change threatens to upset these accepted norms; therefore, it is largely unwelcome. Entrenched business models. Production groups have for years repeated the same tasks and experiences where habit, personal judgment and good management have delivered acceptable returns. Fragmentation. Disparate applications, data, and procedures have become "stacked" haphazardly without a stabilizing, unifying framework. People have adapted to a highly fragmented environment by not changing anything unless required but if everyone does the same things as before, there can be no meaningful gains. People, process, and technology. Each must be aligned to reach a business goal. If one component is missing or misaligned, the goal is less likely to be achieved. Engineers are comfortable with technology and accept ownership of processes, but almost universally believe that someone else is responsible for "people." These components may never align without strong leadership. Manpower. If an organization is "getting by" with limited resources, new processes often mean core activities are threatened. Such threats tend to make companies avoid disruptions and maintain the status quo. Manpower shortages can impact nearly all aspects of business success. At this time, staffing issues may be more critical than any other single factor when the consequences and ramifications of insufficient staffing are examined. It is likely that E&P performance will be most heavily impacted in today's environment by our industry's ability or inability to address this critical issue. This paper examines the key contributing factor of manpower availability, its impact on the industry, and assesses the readiness for transformation within E&P.