Standardizing Work Processes Drives Production Optimization and OPEX Efficiency
MTG partnered with a 10-year young, independent Canadian company with exploration and production operations in Alberta and British Columbia. The company rapidly grew from an entrepreneurial startup, acquiring companies and competitors' producing fields, and in the last two years moved from a three-field to an 18-field operation. The business consisted of two business units, each led by a superintendent who managed three to four foremen who covered the 18 fields. Total staffing for the field operation was comprised of 74 contract operators and employees, supported by four production engineers, and two engineering managers and service departments. The company's strategy is to optimize current and new production as it operates both light and heavy oil (as well as gas fields), while keeping costs in control during an industrywide growth period.
Key Issues
The client's organizational structure was still in flux post-acquisition. The challenge was to optimize current and new production in the face of setting and communicating aggressive production targets to the market. Our client looked to us to help improve, integrate and standardize work processes across the business units and fields, driving production optimization and OPEX efficiency.
Assessment
Our assessment revealed a lack of operational metrics, with no visibility of production goals and a strictly top-line results view. All reports showed net production numbers, aggregated by field, with no linkage to gross volumes as reported by the field. Furthermore, downtime and lost production reporting was a puzzle of multiple reporting practices tied to the legacy codes as each field was added to our client's operations.
There was no reporting on operating expenses, even when driven by field operators and field supervision. Foremen saw a dollar-per-BOE metric once a year as a summary presentation, and they were not involved in budget planning.
Finally, production engineers and field operations were disconnected at the point of execution – the field team felt "dictated to" with ever-changing priorities, while engineers believed field response to direction was lackluster. Well reviews were driven by weak and untrusted data, as well as by a "project" rather than a continuous approach. This led to three key objectives for moving forward:
- Reinforce the behavior change required to enable action-oriented planning processes
- Leverage the existing infrastructure to create a single, sustainable operating model
- Create visibility of progress toward achieving goals, using targets and setting expectations for reviews
Implementation
Partnering with our client, MTG developed and implemented a staggered implementation of improvements aimed at driving action-oriented behaviors. The implementation focused on improvements aimed at optimizing well production and reducing controllable operating expenses. The staggered model enabled MTG resources to be leveraged early on, with a transition to client resources to take the lead as the implementation progressed. This approach drove ownership and future sustainability. Each of the following improvements was designed, developed and implemented with workforce participation:
Execution Control SystemSM (ECSSM)
- Implemented action logs for tracking assignments and opportunities with greater accountability assigned
- Instituted daily, weekly and monthly production reporting by well/run/field against daily production targets – pushed automatically to the specific operators, leads, foremen and the complete management chain via e-mail, which could be viewed on hand-held devices
- Instituted weekly review meetings between foremen, production engineers and operators
- Installed work authorization and reporting for service providers in order to schedule field work and control costs
- Enhanced the monthly production meetings to review operating expenses to drive production at the right cost
- Instituted cascading performance KPIs with leading indicators for production and operating costs
- Involved service providers in the process of collecting operating cost data and supporting cost reductions by instituting weekly activity summaries
- Established internal review processes to ensure sustainability of key ECSSM elements across the business unit
- Created standardized terms of reference for each ECSSM element to ensure ownership of the process and assist in training on Standardized Work Practices
- Developed weekly meeting formats to link production engineers and operators through available technology in the specific field
- Developed standardized downtime codes with definitions for consistent code usage
- Developed a well performance look-back process to capture and assign optimization opportunities
- Integrated the field operations to the capital program in order to schedule field activities required for equipment installation, tie-ins and turnover to operations.
Well Reviews
- Instituted a comprehensive well performance look-back process across all business units to involve lease operators in regular reviews of individual well performance and identify actions to optimize wells, including an action log to assign accountability and follow-up for results reporting
Communication and Coordination
- Instituted standup daily review meetings at each field office, chaired by the lead operator, to review production, address downtime and collect optimization opportunities with assignment of actions on an action log
- Instituted Scheduling Boards in each office to improve communication with lease operators regarding daily production tracking and contractor service requests to highlight operating costs
- Implemented monthly "Foremen's Roundtable" meetings between operations management and foremen to share new processes and tools, as well as address common barriers
- Clarified and documented roles and responsibilities for lease operators, production engineers, superintendents and well service personnel
Sustainability and Continuous Improvement
- Instituted a sustainability audit process and scorecards for periodic comprehensive review by corporate staff of the state of implementation for each field office, with participation by the local management team
- Trained foremen and superintendents to create focused or situation-specific reports (well profitability, costs by wells, production overtime, etc.)
- Formalized the budgeting process for operating expenses, creating a formal methodology using existing tools, but most importantly, joining production engineers and foremen to plan ahead and prioritize key projects and improvement activities
The Results
Implementation of the ECSSM management system has led to an operating shift across the business units, where the accountability from the budget to the field is clear, roles and responsibilities are known and embraced (whether contract operators or employees), and better communications exist regarding visible goals and objectives. This has helped to transform the business unit into a more productive workforce, leading to cost savings, reduced downtime and improved optimization activities:
- Production has been optimized by 4.3 percent above the base forecast in the major operating field
- A 23.6 percent reduction in controllable well and surface equipment downtime hours has been achieved against the base line across all fields
