Oil and gas companies are addressing unyielding global demand by redoubling their efforts to discover new reserves and boost production capabilities. This challenge is often compounded by working in unforgiving environments – from some of the world’s most frigid temperatures to extreme ocean depths.

The business terrain can be equally challenging as companies must focus on safety, regulatory demands, and maintaining their licenses to operate while still managing costs, replacing reserves efficiently, and striving to maintain peak production volumes.

Companies that fail to navigate this inherent industry complexity face costly performance pitfalls. For example, any delay in the cycle time – from lease to first production – has a negative impact on the cash flow and return on investment. Capturing efficiencies requires a keen understanding of how equipment movement, maintenance, communications, and technology are calibrated for maximum performance.

Three pillars of operational performance

Company executives are like orchestra conductors – they are responsible for leading diverse groups and ensuring they work in tight precision. Some organizations focus on employees’ skills, technology, or processes, but few are able to truly harmonize the full range of value drivers.

Tuning a corporate environment so it can be successful amid industry complexity requires a delicate balance among these three pillars of operational performance:

  • Assets – organizational and operational infrastructure and processes;
  • People – two-way communication across all levels and behavior change; and
  • Information – actionable insights and enhanced decision-making.

Even if an oil and gas company has the right overarching strategy, its business value is either sub-optimized or left unrealized when the three pillars are not aligned. Allowing even one of these areas to fall behind or outpace the others can throw companies out of alignment. Consider, for example, a company that keeps a tremendous focus on safety training but does not adequately address aging equipment. The training can be the best in the industry, but equipment breakdowns will nullify that advantage and place the workers in higher risk situations.

Assets

Companies rely heavily on the assets necessary to identify prospects; monitor reservoir performance; and produce, refine, and distribute some of the most valuable resources in the world. Upstream companies must have visibility across field-related capabilities including human capital, land, drilling, completions, facilities, maintenance, and production operations where field performance is often directly impacted by the availability of resources.

Coordinating these capabilities and resources is highly dependent upon an operating company’s ability to forecast its “total resource requirements” so that allocation and deployment decisions can be made as far in advance as possible.

Downstream organizations are no less complex given the cross-functional interaction required to optimize crude supply, production, and distribution constraints to maximize margins across their value chain.

With such a wide scope of assets in various states across the oil and gas value chain – and often across continents – even minor setbacks can cause major losses of time and revenue. Case after case has shown that the true solution has more to do with reconfigured business processes and centralized organizational reporting than most top executives realize.

People

Executives will likely agree that their employees should be empowered to make improvements and help spark innovation. But actually building a culture that acts on employee input from outside of the C-suite is something altogether different.

Maximizing an organization’s workforce starts with a few clear corporate goals from the executive team that can be used to create guidelines and metrics across individual departments. When employees have access to these goals and input into how they are achieved, they develop a better understanding of their roles in the context of the company. This keeps them more invested in their work and more willing to embrace change.

However, the people pillar extends beyond the creation of a motivated, aligned workforce. Whether in an office location or in the field, it is the culture that leverages access to data and employee knowledge that can create an advantage by allowing the company to maximize corporate assets and efficiently execute processes.

Information

Higher returns, more efficient processes, effective knowledge management, and better decision-making are enabled and sustained through valuable and timely infor-

mation sharing. Companies are awash in data but often can’t access new information quickly or effectively enough to correlate the findings across departments. Oil and gas companies need to hone their data mining and communications processes to adapt faster than their competitors.

Information technology plays a key role in translating data into actionable intelligence, but only if investments align with business operations and systems. Businesses must support the nuances of how teams collaborate and then tailor technology to support that collaboration.

The digital oil field and the integrated operations concept promoted in E&P organizations during the last decade are examples of integrated technology supporting decision-making. In this example and across the spectrum of technology investments, better returns on the technology infrastructure are dependent on the execution of management systems that facilitate the flow of information and cross-functional coordination.

Big data also is being leveraged at the corporate strategy level. Oil and gas companies are getting better at forecasting through their use of big data, and they are developing contingency plans to address any number of market changes. Real-time information enables companies to react to issues such as macroeconomic changes, commodity pricing shifts, and permit delays in specific regions. For example, access to this type of information can help companies better understand the individual cost components of a drilling asset, enabling them to make sound maintenance and rig decisions.

How balanced is your organization?

Clear communication is central to helping balanced companies find the right operating cadence and to reinforcing the right behaviors and processes, much like a symphony blending individual instruments into a cohesive orchestra. Through a culture of collaboration and focus on consistent improvement, companies can use the three pillars of operational performance to achieve consistent growth, promoting faster and more efficient exploration, production, and delivery on a global scale.

How well does your organization integrate its assets, people, and information to achieve operational performance? Here are six questions to consider:

  1. Are you improving your production, reserves position, and cost metrics as quickly as you would like?
  2. Is production planning adequately integrated with capital projects or midstream/downstream plans?
  3. Do you have metrics in place to identify weak links in your operations?
  4. Do competing functional objectives sub-optimize operations or timely program delivery?
  5. Is consistent information available to improve your organization’s decision-making?
  6. Would boardroom executives and drilling rig employees give the same answers about corporate goals?

Your responses may point you to more balanced, adaptable, and profitable processes.

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