In nearly every game, at least those involving balls, the first, second and last admonition coaches give their players is, "Keep your eye on the ball." In our game production is the ball.

Daniel Yergin's epic, "The Prize" has focused world attention on our industry like no other. I'm not saying that everyone who reads it will understand completely the complex and arcane world of oil and gas, but they will appreciate one thing - the petroleum industry is the world's biggest business. And the prize is production.

Not drilling. Not exploration. Not marketing. Production.

In our game, keeping one's eye on production can make the difference between winners and losers, between champions and also-rans - because decisions affecting production go straight to the bottom line. But like balls in a game, production only scores when it goes across the goal line, into the basket, the net or the cup. I'm not going to descend into endless sports analogies, but if I could learn to make better decisions, I could be a scratch golfer. Chasing little white balls all over the place doesn't win. Sinking them does. That's what I'm talking about when I relate sports to production.

Production decisions can have enormous effect. For example, an engineer with Petroleum Development Oman (PDO) was overjoyed to tell me he had implemented a decision that reduced water cut in his well from 95% to 90%. First, I thought, "That's still a lot of water." But then I caught on to what he was saying. He had doubled his oil production!

Now that's something to shout about. Obviously, the engineer had his eyes on the ball.
Today, there are thousands of techniques that companies can implement that improve production. And at today's oil and gas prices, it's surprising that there hasn't been a "black gold rush" to put these practices into play. In fact there is hardly a decision without production implications. Can anyone afford to miss the reservoir because of going "economy class" with exploration and geological evaluation? Can drilling engineers really feel good about using Brand-X drilling fluid that forever damages the producing formation, just because it helped them stay within their AFE? "I saved US $15,000 on perforating!" isn't going to impress the asset manager, when the well underperforms even as little as 1 bo/d. The savings will be gone in less than a year.

Every player on the team has to keep both eyes on the ball, because every player's actions can influence the ultimate value of the prize - production. From the design of the well, to drilling and completing it, to formation stimulation and to production management, players who don't lose sight of the ball can make the highest percentage of correct decisions.

No one has said it's not complex. It's always risky to invest big money upfront in search of long term profits. But modern technology is working to reduce these risks every day. We have better reservoir characterization, better management, and better techniques to land the well right in the sweet spot.
Completion technology has experienced a quantum leap and provides improved flow rates at reduced drawdown. Reservoir modeling highlights critical production nodes and identifies the wells not performing up to par. And a wealth of information now streams from permanent downhole gauges and flowmeters to enable rapid effective production management decisions. When this information is coupled with surface-controlled downhole adjustable chokes, entire fields can be tuned to produce optimally. Now, powerful reservoir simulation software programs have been integrated with production network and black oil simulators so the entire process from the reservoir to the export line can be modeled.

"But this stuff costs money," you may be thinking. True. But consider the example of PdVSA, which merely by changing the way it acquired production data and stepping up the frequency with which it applied the data to its models was able to ramp up production from 250 wells near Lake Maracaibo. Profits came from three sources, improved oil production, reduced water production and greatly reduced requirement for injection gas. Long term estimates for the 250-well pilot project amount to $800 million per year for 10 years. That's mucho pelotas.

Dr. Yergin had it right. The prize, like the gold medal, goes to the players who keep their eyes on the ball.

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