Improving Asset Performance Through Application of a Structured Decision Process

Abstract

This paper (SPE 60852) was revised for publication from paper 56579, originally presented at the 1999 SPE Annual Technical Conference and Exhibition held in Houston, 3–6 October. Original manuscript received 17 June 1999. This paper has not been peer reviewed. Summary Company experience, external benchmarking, and application of best practices all contribute to improved capital efficiency and reduced cycle time. Combining these practices with a value-driven decision structure yields a powerful method to advance a business opportunity from inception through completion. Many upstream petroleum companies are using, or developing, this type of method to improve reservoir characterization and development practices. Through direct experience in a variety of operational situations in the Gulf of Mexico, a five-step generic decision model evolved that is straightforward, intuitive, and scalable. The initial definitions of the opportunity, assessment of value, decision-makers, deliverables, and assignment of accountability to advance the opportunity to the next decision point are core to the project. The result is a customized road map from opportunity identification to post-implementation evaluation of results. Any business-process change within an active production operation is likely to meet organizational resistance. Unlike previous initiatives, however, this process has been well-received, primarily because it establishes a usable plan developed by the individuals directly responsible for advancing the business opportunity. We have been directly involved in a variety of applications, including complicated infrastructure retrofit projects, pipeline riser repairs, owner- and non owner-operated development projects, well planning, and operation-support activities. The majority of applications are tangible, real-world situations that all operators routinely face. Each application contributed to the evolution of the model. Lessons learned are presented, including cases that illustrate and reinforce essential principles of the process. Conclusions, in the form of quantified financial and technical results, are also presented. Background During the 1990's, a number of processes and practices to improve asset-management and decision-making performance were developed or applied in the petroleum industry (e.g., decision and risk analysis, value engineering).Within Conoco Inc., initial efforts to improve asset-management performance generated detailed process maps for E&P assets. To improve performance in reservoir characterization, a full-asset life-cycle map was developed that covers the geoscience, reservoir engineering, and management-approval steps from acquisition through production and disposal. A companywide education program was used to familiarize personnel on best practices and the reservoir characterization process. Subsequently, this map was expanded to include additional steps covering project-development and operations functions. Additional practices, processes, and principles derived from participation in external-benchmarking, industry, and internal experiences were combined with the more-inclusive process map under and effort named for one of the principles, front-end loading (FEL). Numerous attempts to apply the complex process to improve asset performance were met with limited success and revealed flaws in a complex, fixed process. First, each application had unique attributes and constraints that required departure from or modification to the standard work process. Additionally, workshops and techniques to apply the process were time-consuming and often did not produce near-term improvements that demonstrated the benefit of following a process. Resistance to applying the process was encountered for numerous reasons, including limited time to learn, adapt, and apply a new process; lack of confidence in a process that could not accommodate the unique aspects confronting the asset team; and concerns about stifling creativity. The move toward a simplified process began in late 1997 and early 1998. The process now being used evolved largely through a focused effort to apply a simplified process with two asset teams in Conoco's Gulf Region business unit(GRBU). Focusing the effort on application in one location accelerated the rate at which the simplified process evolved and allowed tailoring of the process and methods to ones that would be accepted and used. The GRBU application pilot could then be taken and used elsewhere in the organization through the central process group (FEL organization). Process Description The basic tenet for the generic process is that all projects follow a distinct sequence (Fig. 1). The initial phase is identification of a business opportunity. The boundaries of the opportunity, high-level assessment of how value could be realized, and assessment of whether the opportunity merits resources to pursue are the main elements of this initial phase.Table 1 gives the phases that follow this initial phase in generic and asset-management terms. Between each phase is a key decision or decision gate. At each decision, the opportunity can be approved to proceed to the next phase, shelved, postponed, or recycled for additional work. Several important principles apply at the decision gates.