Over the past twenty-plus years of consulting with Oil & Gas companies operating mature onshore assets, there has been one constant that we have encountered time and again: there is always additional value delivered through incremental changes to operating philosophies, standards, processes, and practices. Once Organizations embarked on “Operations Excellence” or “Continuous Improvement” initiatives, it did not take long for the bones of the low hanging fruit to be picked clean. Unfortunately, 30 years of such effort has made it more challenging to continue to deliver similar results with the same, or similar approaches. A recent HBR article cited research that showed that up to 75% of change management initiatives fail to deliver the intended results and outcomes. So how do organizations react? More of the same! It was Henry Ford who stated that “if you do what you have always done, you will get what you always got.” Unfortunately, not only are organizations not getting what they always got, they are potentially destroying value, or getting less, by doing “what they always have done.”
It must never be about burdening the organization with more initiatives, most of which will never deliver actual meaningful value, but small changes that immediately and positively impact people, processes, or management systems that ultimately provide the desired throughput and OPEX improvements. These improvements are achievable irrespective of the basin in which the company operates, although we nearly always hear “yes, we are different.” Our experience shows there are indeed variables that potentially impact overall results from basin to basin, but not substantially. Our experience also indicates that most variables that we encounter are impactable when addressed in bite-size chunks. These variables range from the age of assets, equipment, technical capabilities, competency & capability of the workforce, availability of labor, to name just a few. Organizations that we have worked with over the years have learned to address similar challenges successfully, delivering significant and sustainable results in the process. These are organizations that took a very measured and practical approach, rather than trying to drive wholesale changes, they identified and defined the potential and opportunities in each part of the end-to-end value stream. Then prioritized highest-value opportunities and took rapid action to implement the opportunities and demonstrate that the changes were driving the desired outcomes.
Looking at operations through an end-to-end value-stream lens, while engaging a large part of the organization in the process, creates a very different dynamic. The level of engagement, the ownership of the outputs, and the desire to take accountability for executing the actions demonstrate the real power of this process. This approach has shown time and again that there is still significant value to be had, more so today, through a combination of engagement, empowerment, incremental changes in operating philosophies, technology, and human interface to optimize that technology.
Opportunities identified in such programs are too numerous to list, we see improvement opportunities across the entire value stream, not just confined to any parts. These opportunities include:
The above list is by no means exhaustive but is indicative of where onshore producers are potentially losing value, whether it is operating costs, well and equipment downtime, throughput, or operator productivity. The lost amount can range anywhere from 5%-25%, and sometimes even higher. Given the significance of the value at stake, organizations are slow to act, especially today given the uncertainties around current commodity prices. However, it is in times of uncertainty, that organizations must act with most haste. Moreover, when we do see organizations act with haste, the results can be quite astounding.