Optimizing the Organizational Design of a Typical Upstream Exploration and Production Company

Abstract

Abstract Most upstream exploration and production (E&P) companies or departments in the petroleum industry are facing significant compression in resources – both staffing and funding. These organizations are being challenged to produce more oil and gas, under more difficult conditions, at lower costs, and with smaller and less well trained staffs. This paper presents a process for analyzing the business strategy of a typical E&P organization. It is a comprehensive process that includes all the relevant strategic elements in a rigorously testable, integrative framework that is simple to understand and focuses the strategy on the business's key purpose. This process is known as GRASP. It highlights the Goals, Resources, Actions, Structures, and People that such an organization must have (or acquire) and effectively deploy to successfully compete in the modern E&P environment. This analysis addresses such difficult questions as: What are the optimal: Organizational structures for surviving and thriving in the modern E&P business Tradeoffs in satisfying financial shareholders, employees, suppliers, and external stakeholders Interfaces and interactions between the separate groups in the organization Allocations of people and financial resources to achieve optimum productivity Degrees of staff development and training for optimum performance Balances between primary and secondary recovery to optimize economic operation Approaches between manual and automated operations Planning and funding for new equipment vs. repair and maintenance of existing equipment Investing resources for safety and environmental protection. This analysis is based on a sophisticated causal (cause and effect) evaluation of the organization, with several technological enhancements that clarify areas where leverage is needed and can be applied to make significant improvements. We present one case study where this analysis has been applied and several insights that have been gained from applications of this technology.