Upstream operational excellence (OE) can be defined as the execution of value-driven performance in an efficient, best-in-class, collaborative manner across the upstream value chain. An OE program should provide a framework for participants and other stakeholders to understand why and how performance needs to improve. The road to achieving this excellence begins with what people are doing in their roles, including understanding business processes in the context of decision-making; identifying strengths and weaknesses based on performance measures and industry’s best practices; and redesigning processes as needed to align with corporate strategic goals, which typically incorporate relevant best practices and LEAN concepts.

Four underlying themes should resonate throughout an OE program. The first is advantage. In every arena in which a business operates, a competitive advantage must be secured, or at least anticipated and planned. This “edge” is imperative for the creation of value.

The second theme is integration. Building advantage through strategic and operational links among core teams and across domains results in a coherent investment plan that maximizes the value extracted through a collective, or integrated, effort.

Leadership, the third theme, involves management’s focus on strategic initiatives and the recognition of the importance of integrating people, processes and technology. The fourth theme is continuous improvement. An organization needs strategies to meet or exceed industry’s minimum performance standards and then to lead by example. Combined, these themes underlie the business of delivering excellence in operations.

These themes also form the basis of integrated operations (IO). IO refers to the development by a business of organic decision-making capabilities through the orchestration of key upstream operations across domains and organizational teams. Although IO employs digital field solutions for better data capture, visualization, analysis and automation, the real benefit lies in the ability of an organization to leverage solutions that add value at the business portfolio or corporate strategy levels. The benefit for operators is to their processes and people—that is, what is actually done with the large volume and detail of information that digital fields generate in terms not only of data but also of decision outcomes, interpretations and knowledge (both tacit and implicit), and who does the work.

IO makes a particular impact on production, integrated activity planning and logistics, and monitoring. If an operator spends billions of dollars on marine logistics and can streamline its activities through IO by 3% to 5%, millions of dollars can be saved. Likewise, a reduction in the number of unplanned shutdowns through better control and constant surveillance creates significant savings. Surveillance enables production engineers in the head office to see in real time what is going on in any part of any field. Smarter production decisions can be made, and workforce resources can be streamlined and realigned.

IO basics: business processes

Achieving excellence by integrating operations requires understanding what is done by whom, when, and to what level of efficiency. Processes need to be examined, understood, evaluated and then improved as part of the IO initiative. Management and operations personnel need to have this visibility to better understand areas of improvement and to assess current and future needs. It is also important for personnel to have the agility and capability to manage operational challenges proactively.

Business processes are the lifeblood of any operator’s organization. The visibility, efficiency and effectiveness of these processes enable operators to exceed their goals and differentiate themselves in a fiercely competitive market. A process-centric approach to IO delivers value directly to the owners of these business processes. Key to this approach is examining the process layer independently of technology and organizational structures to understand the interactions among domain and discipline professionals. The upstream business stakeholders can then understand the current state of affairs and decide what they would like, ideally, before addressing the issue of organizational or technological constraints. This fundamental process-centric approach empowers the business stakeholders to take direct ownership of their processes independently of the underlying dependencies.

Operational linkages

Understanding how disciplines and domains are interrelated across the upstream value chain presents opportunities for integration. In a typical IO scenario, constant data gathering and the transmission of information are used to manage potential production, well or reservoir problems and to establish key performance indicators as organizational benchmarks.

Real-time field data are leveraged to deliver enhanced production analysis, optimization and detailed reservoir management.

Asset teams are alerted to potential problems, allowing resources to always be focused exactly where they are needed and improving asset management efficiency. Modeling and analysis are done with real-time data to define possible solutions. In turn, optimization occurs when the alternatives are assessed on the basis of all possible data, capability constraints, risks and economics to inform decisions that improve the reservoir and production system. The results enhance asset management by creating an organic decision-making system designed to increase reserves, optimize reservoir drainage, improve production and operations and lower costs and capex.

By combining well operations, production management and integrated engineering models, engineers can gain insight into historical conditions to optimize present production and forecast future production. This insight plays an important role in driving maximum asset team efficiency during production optimization. The ability to use a common platform for data management, modeling, simulation and production management activities greatly improves multidisciplinary collaboration.

Managing people

Stakeholders typically have very different responses to challenges driven by varying perceptions of what IO is and, more importantly, what the implications (real or perceived) are to their daily routine, job function, career progression and responsibilities. The initial adoption of an IO initiative in one asset does not guarantee successful integration into daily work activities and continued use. Nor does it presume successful diffusion throughout an organization. The initiative must be supported by an appropriate company structure that is governed by the dynamic nature of the company’s objectives, functions, workflows, roles, responsibilities, solutions and operating systems. Essential themes to be embedded in this structure are ownership, knowledge, integration and collaboration.

Every IO project has long-term and significant organizational implications, so it is important to maintain focus on how the project will impact the wider company. Attention must also be paid to how these changes will affect an asset team’s working practices. Senior management must be committed to the implementation of any changes and ensure that all business units are aligned. Pan-organizational integration sometimes means that one segment of the business may appear to be at a temporary disadvantage in relation to others. It is important that each segment’s management team keep broader operational goals in mind and cooperate fully to reach them.

Automating routine tasks that were previously manually undertaken could mean that certain employees’ daily jobs change or are even eliminated. Appropriate and timely planning and communication should be put in place prior to any IO integration. Managing human factors such as these is crucial to fully realizing the value of IO in a wider context. The attitude should always be that IO is a continuous process, one that is constantly monitored and evolving and one that becomes part of the rhythm of a company for years to come.

Governance

Governance used to mean telling people what to do. However, governance increasingly means facilitating what people do. This revised meaning involves policy setting, compliance assurance, group portfolios, performance management and group-level strategy development. Added value relates to a company’s ability to integrate and its consistency in doing so that arises from common policies and strategies across the core business.

It is crucial that companies consider their operations holistically—that is, how the operational elements of the organization interrelate and how asset teams are integrated. IO ensures that people and work processes are tightly aligned to enable optimal collaborative decision-making and to build value through these strategic linkages.

Combining automated and optimized workflow processes with the right blend of corporate values and vision is central to achieving operational excellence. Once an IO project has been successfully implemented, the benefits are wide-ranging and profound. Operators are able to make decisions centrally, across a number of assets. Quick, accurate control and monitoring of equipment and facilities is simplified and has positive implications for HSE. Medium-term production decisions are also aided—for example, well pressure drawdown for sand control balance or fluid breakthrough, testing, well-rate estimation and optimization of production through the ideal configuration of artificial lift strategies. Longer-term benefits include simpler infill well planning and a better means of defining the reservoir depletion strategy.

Quantifying value

OE delivers value by impacting both the top and the bottom lines of an organization. However, this value has to be quantified for the organization to show the specific impact that will be made. IO not only brings quantifiable value to the business but does so in a sustainable way.

A compelling business case is needed to provide the motivation for and prioritization of any IO program. This case involves assessing current business processes and performance, designing the future process and a solution to support it, identifying the benefit drivers and calculating the ROI. Altogether, these themes and concepts provide a clear direction for achieving excellence in upstream operations.

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