The oil and gas industry is under continual pressure to deliver greater returns at the lowest possible overall cost. From the perspective of drilling, that goal is realized by delivering the best performance when creating the well bore to deliver the highest-value well.

In this competitive market, oil companies need to be recognized as being the best at developing the assets they have while continually outperforming their peers. The increasing use and development of performance studies, such as the Rushmore review where information is shared among operators, provides greater transparency and accessibility to performance comparisons, reinforcing the imperative to achieve the highest levels of operational efficiency.

Another trend within the marketplace that is driving the pace of improving drilling performance is that there are fewer opportunities than in previous years for mergers or acquisitions to expand portfolios. Also, companies that were previously more active in trading assets and now have fewer opportunities are dedicating more resources to developing the organizational capabilities required to work the assets they hold. The productivity of organizations in this environment must continually improve and at the same time be capable of maximizing a project’s value while creating savings in capital expenditure.

Tackling the problem

Optimizing the drilling operation to deliver the highest performance and simultaneously develop and deliver the well design that has the highest value has many facets. Complexity is further increased with the many different well construction requirements around the world.

One essential factor in achieving the required levels of efficiency is a close working relationship between operators and service providers and the development of a culture that encourages collaboration across disciplines with the free exchange of information.

It has been estimated by some operators that up to 90% of the hours spent planning and executing drilling projects are accounted for by the service company, with the success of many projects being directly attributable to detail of the upfront planning and design work. The service company selected for a job has to be able to deliver all of the required services to a specific location and has to understand the drilling process from the same perspective as the operator. This means the company has to be able to recognize the relationships and dependencies among all of the elements of service delivery so the best recommendations can be made to the operator. Successfully developing this level of knowledge and the capability to work in this manner is only achievable if a collaborative culture is created within an organization.

To continually improve drilling performance, it is essential that people, processes, and technologies work together efficiently. (Images courtesy of Halliburton)

Changing the approach

Unfortunately, traditional behaviors often run contrary to the development of this capability. When services are contracted for a single project from multiple vendors or service companies, they are regarded as suppliers of equipment, fluids, and software, not as partners. In this situation, the competitive drivers of the business preclude direct and unrestricted information sharing and the ability to collaborate freely. This approach also places the operator in the role of “integrator” among competing parties.

To continually improve drilling performance, it is essential that people, processes, and technologies work efficiently together. Performance gains cannot be achieved or maintained without a detailed understanding of the drilling challenges, the capability to identify all of the limitations to performance, and the ability to design a drilling system that overcomes these limitations. Obtaining services from the same service supplier removes the restrictions to free communication among technical experts so the full detail of the dependencies and interactions throughout the drilling system can be established.

Given the realities of market segmentation and different market requirements, a service provider also must have flexibility in the scope and type of its service offerings if the required level of alignment is to be achieved. This alignment can present a challenge to some service companies given the complexity of the market segmentation and the requirements of different geomarkets. Only a fully integrated service company is able to transfer knowledge and capabilities globally and can best adapt and respond to the divergent needs of the entire marketplace, a marketplace that includes early to late technology adopters; national oil companies; major integrated oil companies; and large, medium, and small independents.

Achieving performance gains requires not only setting in place processes and behaviors that encourage collaboration, but also establishing trust, both technically and commercially, between the operator and service supplier in regard to the recommendations and services provided. A service provider that understands the importance of accuracy in modeling and analysis and continually develops the capabilities of its engineering staff, including both focused technical skill sets and the ability to understand and interact with other engineering disciplines, has an important advantage. These measures improve the service provider’s ability to examine the drilling system and make performance improvements with a balanced technical and procedural approach, even when there are no perceived problems.

Being able to recognize and understand how to integrate many discrete workflows is central to developing a high level of organizational effectiveness, which in turn improves the service provider’s ability to examine the drilling system and make performance improvements.

Many operators now recognize that the lack of incentives or misalignment of performance with traditional commercial terms comes at a price. Commercial trust is achieved through setting mutually beneficial performance measures that create a sense of ownership regarding the overall success of the project. Historically, commercial terms typically were structured around day rates, rentals, or bulk purchase of chemicals and offered little or no incentive to improve performance. However, the market is steadily changing as performance incentives have become more clearly understood and effective key performance indicators have become established.

Halliburton understands all of these needs and has worked to create a culture that delivers drilling performance improvement by continually developing organizational effectiveness. Being able to recognize and understand how to integrate the many discrete workflows is central to developing this level of organizational effectiveness, and it is an ongoing activity. The organization that effectively aligns internally and externally with each customer’s operating culture helps ensure that objectives are shared, trust is developed, and continual improvements in drilling performance are fully realized.

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