Operations Management: Lessons Learned from the Oil Field

Oil and gas prices and markets instability have challenged the oilfield industry to a bold rethinking of business and operating models. Companies must find a way to do more with existing resources—make better margins, increase efficiencies, lower costs, minimize risks and optimize operations as much as possible.

Oilfield digital transformation presents the opportunity to do that. Some of its benefits are listed below:

• Cash Flow Optimization: Cloud solutions, like RigER, accelerate the flow of data between departments, which increases operational visibility, maximizes data integrity and puts decision-ready information in front of those who need it, from accounting, field and operations teams to the C-suite and boards of directors.
• Operational Excellence: Armed with timely, accurate data and mobile applications suites, energy service companies can drop more revenue to the bottom line by precisely tracking assets, mobilizing workforce and improving safety performance.
• Risk Mitigation: Digitalization can improve regulatory compliance, predictive maintenance, incident prevention and cyber security.
• Cost Savings: Digital Oilfield is streamlining operations, automating processes, finding new efficiencies and enhancing customer experience through cloud software and customer relationship management tools. All operational data are collected during the transaction, stored centrally and updated in a real time. Digital transformation of oilfield operation requires to reorganize the following four components of effective business strategy: information, process, people and technology. Software implementation is important, but it's not the only component of oilfield operation management system.
• Oilfield Operations Management (OOM): This is the art of setting the policies and rules necessary to maintain operational efficiency and ensure that everyone and everything operates accordingly.  It involves continuous improvement of scheduling processes, field jobs, technicians’ time-tracking, inventory, quality control, equipment maintenance and staffing around strategic objectives such as safety, cost reduction, product innovation, sustainability, quality and regulatory compliance.  

Implementation of OOM requires collaboration between all departments and review all operational business processes. For example, RigER OOM includes modules such as Oilfield Safety, CRM, Sales, Job Scheduling, Resources Dispatching, Equipment Reservations and Backups, Document Control, Tech Data Collection and Processing etc.

RigEr analyzed its OOM implementation practice and defined seven key lessons learned from over 100 implementation projects:

Assess implementation readiness

Problems associated with an OOM implementation are often classified into technical and organizational aspects. Technical aspects include the technology readiness of an organization, the complexity of the software and inadequacies of newly redesigned business processes. Common organizational factors may include employees’ resistance to change, inadequate training, underestimated cost and time of implementation, unwillingness to adopt new business processes and strategic view of technology adoption.

One of the reasons for OOM implementation failure is lack of organizational readiness in terms of business process maturity, cultural, technological, and organizational aspects.  With the above reviewed facts, to implement an effective and successful OOM system it is highly important to evaluate the enterprise readiness before starting the project.

Define goals

Before choosing software and starting implementation, figure out business needs and make sure they are aligned with corporate vision and strategy, define project goals, understand priorities of different departments, set deadlines and budget restrictions, identify resources and responsibilities. It is important to have plan and weekly check the progress and if necessary correct actions.

Choose wisely

There are likely dozens of software products designed to address the problem you are having. But that is not enough. You need software that will match your business’ specific needs. Knowing what you want to get out of the software you use will help you get closer to the right choice for your business. Here are some requirements to consider:

• Features (all the things you need it to do)
• Number of users (if you need separate accounts for each user)
• Ease of use (how easy it will be for your team to use)
• Integrations (how it interacts with other software you use)
• Support (how the software is documented and supported)
• Maturity (how deep the software is developed)
• Scalability (how well the software will meet future needs)
• Pricing (how much you are willing to spend on the software)

Choose the right implementation partner(s), communicate with the vendor(s) ahead of time about the following:

• Cultural Fit: How they define speed and quality of service
• Expertise: Industrial focus and knowledge
• Experience: How many similar projects were done

Discuss what the software vendor will be responsible for post-purchase. This could include onboarding and staff training, customer service availability and access to future software updates. If paying on a monthly or other recurring schedule, work with finance internally to make sure the budget will be available when needed.

Use phase approach

Working with complex implementations projects, RigEr uses phase approach, which means defining business priorities and moving from simple to complex modules.

RigEr always implements back office first (sales, dispatching, asset management, job tracking, invoicing, etc.), and filed service second (mobile tickets, expense claims, filed purchases, safety). Another rule is to implement core functionality, import all data, run several cycles and then start integration with other software.

Educate team and train end users

Training of the end users is one of the most important steps for a successful system implementation. The end users should be utilized during parallel testing, so training will need to be rolled out prior to that. Getting the end users involved at this point is also a good way to get them excited about the system, as many of them may not have been involved with the project prior to training. Their assistance in parallel testing will help them prepare for when the system goes live. End users are good at using the system in more of a “real world” situation and can judge when process flows are not working.

When everyone involved with using the system is included in the training, they will feel more confident about using it as they go into production and the user community will view the implementation as successful. The system may have been tested for functionality and all customizations are working accurately, but if the end users do not know how to use it or feel comfortable with it, then the launch of the new system will be viewed as unsuccessful. Therefore, the timing of the end user training is critical and must be planned for and implemented prior to the start of the parallel test phase to ensure a successful implementation.

There is a difference between on-line and on-site users’ trainings, group and personal trainings. Riger uses a combination of both, developing individual training program based on number of users, particular requirements, departments’ geo allocations, etc. When RigEr implements OOM with over 50 users, we train the trainers (implementation champions) first and they provide internal training within the departments.

A good practice is developing how-to instructions for users and internal operations policies for personnel based on software build-in process and procedures.

Develop cultural change plan

OOM implementation is a significant project for any oilfield service company, which can change some operational practice and requires transformation of corporate culture. Management should be ready to define future corporate mindset. For example, growing companies are moving from flexible business processes to standardization and corporate bureaucracy, from traditional paperwork routine to digital technology adoption.

Prepare detailed Scope of Work

OOM implementation projects may include customization of software. It’s critical to have detailed Scope of work (SOW) because without it client and project managers would have no clue what time, cost or labor was involved in a project. It forms the basis for every decision a project manager will make on a job and when it needs to change, proper communication will ensure success every step of the way.

The SOW should describe:

• Deliverables: These are what you expect to get from customization. At a general level, deliverables can also be a document, report, a set of features, a business process or something you would define as the end product. 
• Timeline: Think of a timeline as a road leading from the start of a project to its end. It is a section of the document that delineates the major phases across the schedule of the project’s duration. This is best presented visually, like a rolled-up Gantt chart plan, so the stakeholders can see the high-level timeline.
• Milestones: The project needs to be broken down into its manageable phases. The end of a phase and the beginning of the next marks a milestone in the project that lets you monitor the project’s progress and how close it is to your defined timeline. Milestones can be kickoffs, meetings, feedback instances and more. 
• Reports: There should be automatic weekly reporting for all ongoing projects, so clients can check the progress every Monday.
• Budget: Each SOW has its own budget approved by the client. It is a transparent and predictable approach, so the client knows how much to expect to spend.

Final Thoughts

There are stories of successful implementation of oilfield operations management software and the primary reason is the people involved. They should have a positive mindset with fierce courage to get the work done. With the procedure of implementing software, it is evident that conflicts will creep, but the team jointly can pass through tough times. The entire project management team needs to act as a catalyst so that they can drive the project towards success.