Oil & Gas Operations and Exploration companies have many different interpretations of when a well becomes an asset of the company. While this question seems simplistic, it is an essential component of a Well Life Cycle Framework to establish clarity on the answer.
The answer to this question is really based on how a company views land positions, PUDs, Probable, and Possible locations and also yet to be determined opportunities within the budget process and the reserve process.
The biggest key to identifying a well asset is to do it at the earliest point that a well or potential well enters an annual budget cycle By identifying early, the entire process of tracking concept to reality becomes possible. As an idea matures to the point of requiring AFE approval and accounting function, the information surrounding the well concept can evolve and serve a cumulative requirement to all functions, as well as give retrospective insight to the accuracy of planning forecasts to actual performance.
This identification process combined with a data warehouse able to absorb key information elements from each functional application in the well life cycle framework will position a company to much greater insights as to the actual functional and physical performance of the company.
The following diagram aids in understanding this dynamic.
Wednesday, August 24, 2011
Fundamentals of a Well Life Cycle Framework
A sea of paper work was stacked on my desk as a managing petroleum engineer in the mid 1990's. Everything from hand written notes on well activity to stacks of material transfers on paper forms came streaming through every day. In order to best produce the 400 wells I was responsible for within the course of the week, there was constant re-assembling of data every day to stay on top of both the activity, planning, and paper work the business required. To further the challenge, banker and investor reporting required frequent faxes of information specific to the assets they were tied to in order to be satisfied as to the viability of the company.
Upon reviewing the multiple uses and requirements of daily production reports, information from the wells was humanly handled twenty- three times before it was finally completed updating all required useful places.
In today's world (15 years later) that challenge has been reduced, but is still less than optimal in most oil & gas companies because of the lack of clarity in process, deficiencies and gaps in "field to office" data capture methods or the lack of a strategic plan for tying "asset" and "well" information together between departments and functions.
Whether those gaps are realized at the Executive Level, Management Level, or the disciplined function level, they create both human resource loss and asset value loss.
The key elements of a Well Life Cycle Framework are clearly identified in the following bullet points.
1. Entering valuable data once and use it every where it is needed for business impact.
2. Having a Well Master Strategy that ties all company asset entities in all applications information together for extraction to the right department at the right time.
3. Having clearly identified processes to sustain the data flow with properly trained resources to keep up with both the technology and process.
4. Identifying all aspects of detailed information that is useful for engineering, geological, geophysical, land, business, and executive functions with corresponding data flow technologies with the architecture to deliver to everyone in the mode needed to analyze.
5. Keeping in mind that the greatest ROI comes from a well / field / reservoir producing at it's optimum rate against both science factors, and business and market factors, a Well Life Cycle Framework should be designed to achieve this in all aspects of the operational team.
The following list of functions / departments should be included for information requirements.
1. Land
2. Accounting
3. Capital Planning
4. Geologic and Geophysical
5. Partners
6. Reservoir
7. Purchasing
8. Pre-Drill Planning
9. Contract Management
10. Drilling
11. Completion
12. Facilities Management
13. Land
14. Production Engineering
15. Field Operations
16. Regulatory
17. Health , Safety and Environment (EPA, OSHA)
18. Acquisitions
The framework of technology and process should be clearly defined at all levels and expectations. It should be kept in mind that capturing information in a shared environment serves the creative, business, and technical aspects of the company. The process itself should be stable, strategic, integrated and serve all needed components. This is contrary often to internal spreadsheet silos that often get lost in the sea of informational documents.
So where can a company begin to put together it's best strategy ? The first step is to create a realistic picture of where you are at at this point.
1. Is there a clear method for creating a new well in each application.
2. Is there a clear method for getting all the key data to a centrally located data warehouse for all recipients to see and utilize for business optimization ?
3. Are there adequate applications and good processes to support all information requirements to optimize the asset through all phases of the Well Life Cycle ?
4. Does the right information get to the right person in real time or near real time?
5. Is the information displayed in an actionable fashion ?
Identifying these matters for each WLF section and each function will give a company a sense of what needs to be done and in what fashion to optimize assets
Upon reviewing the multiple uses and requirements of daily production reports, information from the wells was humanly handled twenty- three times before it was finally completed updating all required useful places.
In today's world (15 years later) that challenge has been reduced, but is still less than optimal in most oil & gas companies because of the lack of clarity in process, deficiencies and gaps in "field to office" data capture methods or the lack of a strategic plan for tying "asset" and "well" information together between departments and functions.
Whether those gaps are realized at the Executive Level, Management Level, or the disciplined function level, they create both human resource loss and asset value loss.
The key elements of a Well Life Cycle Framework are clearly identified in the following bullet points.
1. Entering valuable data once and use it every where it is needed for business impact.
2. Having a Well Master Strategy that ties all company asset entities in all applications information together for extraction to the right department at the right time.
3. Having clearly identified processes to sustain the data flow with properly trained resources to keep up with both the technology and process.
4. Identifying all aspects of detailed information that is useful for engineering, geological, geophysical, land, business, and executive functions with corresponding data flow technologies with the architecture to deliver to everyone in the mode needed to analyze.
5. Keeping in mind that the greatest ROI comes from a well / field / reservoir producing at it's optimum rate against both science factors, and business and market factors, a Well Life Cycle Framework should be designed to achieve this in all aspects of the operational team.
The following list of functions / departments should be included for information requirements.
1. Land
2. Accounting
3. Capital Planning
4. Geologic and Geophysical
5. Partners
6. Reservoir
7. Purchasing
8. Pre-Drill Planning
9. Contract Management
10. Drilling
11. Completion
12. Facilities Management
13. Land
14. Production Engineering
15. Field Operations
16. Regulatory
17. Health , Safety and Environment (EPA, OSHA)
18. Acquisitions
The framework of technology and process should be clearly defined at all levels and expectations. It should be kept in mind that capturing information in a shared environment serves the creative, business, and technical aspects of the company. The process itself should be stable, strategic, integrated and serve all needed components. This is contrary often to internal spreadsheet silos that often get lost in the sea of informational documents.
So where can a company begin to put together it's best strategy ? The first step is to create a realistic picture of where you are at at this point.
1. Is there a clear method for creating a new well in each application.
2. Is there a clear method for getting all the key data to a centrally located data warehouse for all recipients to see and utilize for business optimization ?
3. Are there adequate applications and good processes to support all information requirements to optimize the asset through all phases of the Well Life Cycle ?
4. Does the right information get to the right person in real time or near real time?
5. Is the information displayed in an actionable fashion ?
Identifying these matters for each WLF section and each function will give a company a sense of what needs to be done and in what fashion to optimize assets
The Case For a Well Life Cycle Framework
The Case for a Well Life Cycle Framework
Oil and Gas Companies spend billions of dollars each year to find / develop / and produce oil and gas. Investments are made along the way throughout both the life of the company and producing asset that are dependent on and improved by reliable information placed into the hands of competent decision makers in timely fashion.
In many companies, there is a constant struggle to implement and maximize the use of the appropriate software that (correctly used) would enable the business to move forward more efficiently, while improving the confidence of analysts and decision makers to know they have the right information at the right time.
Additional layers of struggle occur in both time and dollars to integrate the business information needed to serve the requirements of disciplines and functions from multiple data sources needed to serve the business.
A Well- Life Cycle Framework for an Oil & Gas operations is fundamentally a combination of people / Skills / resources with applied technology engaging the activities needed to maximize the return on time and money with the correct information in the right context at the right time.
A framework is defined within this publication as the appropriate combination of source data applications working to conduct necessary function, with the most streamlined data path to translate that source data into meaningful reports and information to the right recipient at the right time. (Across departments and function)
Every oil company, has a framework in place, whether formally documented or not. And at it's very core of existence it either enhances efficiency or reduces effectiveness by the ease or difficulty it is to obtain the right information at the right time.
The core of the problem is then defined by whether that framework is intentionally designed to be efficient and serve the greater good of the company, or only partly in place with inherent bottlenecks that increase costliness of time and resources constantly patching information together to achieve business and functional success.
A first step in the right direction toward developing an efficient Well - Life Cycle Framework is to look at the major departmental, functional, and discipline information requirements and define the gaps and consider the solutions that fundamentally fill those gaps while keeping information easily integrated with an Well / Asset Master Strategy.
As the chapters unfold, or additions are made, this book will examine the detailed multiple- departmental needs with a detailed review of engineering and operations to establish what should be included in a Well Life Cycle Framework.
Working through this book methodically and establishing components to fill the missing pieces of software / process / training paths / and resource requirements will allow the organization to improve the ability to manage operations at a much higher level of efficiency.
A simple litmus test of a well-lifecycle framework is to ask if information is entered or captured once and easily translated and positioned to serve all departments and functions with that information with the least amount of human intervention.
Oil and Gas Companies spend billions of dollars each year to find / develop / and produce oil and gas. Investments are made along the way throughout both the life of the company and producing asset that are dependent on and improved by reliable information placed into the hands of competent decision makers in timely fashion.
In many companies, there is a constant struggle to implement and maximize the use of the appropriate software that (correctly used) would enable the business to move forward more efficiently, while improving the confidence of analysts and decision makers to know they have the right information at the right time.
Additional layers of struggle occur in both time and dollars to integrate the business information needed to serve the requirements of disciplines and functions from multiple data sources needed to serve the business.
A Well- Life Cycle Framework for an Oil & Gas operations is fundamentally a combination of people / Skills / resources with applied technology engaging the activities needed to maximize the return on time and money with the correct information in the right context at the right time.
A framework is defined within this publication as the appropriate combination of source data applications working to conduct necessary function, with the most streamlined data path to translate that source data into meaningful reports and information to the right recipient at the right time. (Across departments and function)
Every oil company, has a framework in place, whether formally documented or not. And at it's very core of existence it either enhances efficiency or reduces effectiveness by the ease or difficulty it is to obtain the right information at the right time.
The core of the problem is then defined by whether that framework is intentionally designed to be efficient and serve the greater good of the company, or only partly in place with inherent bottlenecks that increase costliness of time and resources constantly patching information together to achieve business and functional success.
A first step in the right direction toward developing an efficient Well - Life Cycle Framework is to look at the major departmental, functional, and discipline information requirements and define the gaps and consider the solutions that fundamentally fill those gaps while keeping information easily integrated with an Well / Asset Master Strategy.
As the chapters unfold, or additions are made, this book will examine the detailed multiple- departmental needs with a detailed review of engineering and operations to establish what should be included in a Well Life Cycle Framework.
Working through this book methodically and establishing components to fill the missing pieces of software / process / training paths / and resource requirements will allow the organization to improve the ability to manage operations at a much higher level of efficiency.
A simple litmus test of a well-lifecycle framework is to ask if information is entered or captured once and easily translated and positioned to serve all departments and functions with that information with the least amount of human intervention.
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