Driving operational performance in oil and gas

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7 T ab le of contents E x e cu t i v e s u m m ary T he p ri z e o f o p e rat i o n al e x ce l l e n ce I n d u s t ry o b j e ct i v e s T o p b u s i n e s s i s s u e s Low oil prices are highlighting the effects of operational inefficiencies W hy n o w ? T he an at o m y o f o p e rat i o n al e x ce l l e n ce K e y o p e rat i o n al e x ce l l e n ce co m p o n e n t s Causes of inefficient operating performance O p e rat i o n al e x ce l l e n ce re s u l t s i n b e t t e r o u t co m e s Current state in industry: usage and benefits I s i t t i m e f o r a s hi f t i n f o cu s ? H o w E Y can he l p — achi e v i n g o p e rat i o n al e x ce l l e n ce 1 2 3 4 5 6 8 10 11 12 14 16
1 E x e cu t i v e s u m m ary T he o i l an d g as i n d u s t ry i s cu rre n t l y f aci n g a cri s i s t hat t hre at e n s e v e n t he m o s t s t ab l e o f o rg an i z at i o n s . I n cre as e d s u p p l y an d d e cre as i n g d e m an d g ro w t h d e rai l e d an e x t e n d e d p e ri o d o f hi g h p ri ce s an d t he i n d u s t ry i s n o w f aci n g w hat ap p e ars t o b e an e x t e n d e d p e ri o d o f l o w o i l p ri ce . T o f u rt he r co m p l i cat e m at t e rs , t he n e w price reality comes on the heels of diminished returns despite high prices. Over the past five years, upstream operators have seen a steady decline in efficiency (the barrel of oil equivalent per day, per capital dollar) and asset reliability while experiencing increases in finding and lifting costs. A s t he e ra o f “ e as y o i l ” p as s e s , o p e rat o rs are f ace d w i t h i n cre as i n g l y e x p e n s i v e g l o b al e x p l o rat i o n an d development in harsher, remote and complex basins. These factors have been eroding profits, though price stability (of more than US$100 per barrel) prior to December 2014 masked the full effect of these increases. T he o i l an d g as i n d u s t ry has e x p e ri e n ce d n u m e ro u s b o o m an d b u s t cy cl e s , rare l y re act i n g i n a s t e ad f as t w ay t o e i t he r hi g hs o r l o w s . I n p e ri o d s o f p ro s p e ri t y , o rg an i z at i o n s s p e n d b i g m o n e y f o r n e w as s e t s , hi re m an y employees (often at an inflated rate) and push for growth, often at the expense of current asset performance. During downturns, organizations make drastic cuts to survive, eradicating projects, slashing headcount and d e f e rri n g i m p o rt an t i n v e s t m e n t s i n o rd e r t o m i n i m i z e co s t s , ag ai n o f t e n at t he l o n g - t e rm e x p e n s e o f as s e t p e rf o rm an ce . T hi s e x p an d - an d - co n t ract m o d e l cre at e s g re at i n s t ab i l i t y i n t he i n d u s t ry , w i t hi n i n d i v i d u al o rg an i z at i o n s an d at o n - s i t e o p e rat i o n s . O n l y w he n o p e rat o rs d e ci d e t o b u i l d l o n g - t e rm s t ab i l i t y an d s u s t ai n ab i l i t y i n t o their operational strategies will they be equipped to weather the downturns and capitalize on upswings in a measured and profitable way. This stability is best achieved through operational excellence programs focused o n co n t i n u e d , m e as u re d i m p ro v e m e n t t hat s y s t e m at i cal l y ad d re s s e s re cu rre n t b u s i n e s s i s s u e s . Operational excellence is not a new concept, but current conditions create a unique opportunity for the i n d u s t ry t o re al i z e i t s f u l l p ro m i s e . E x t e rn al e co n o m i c f act o rs are p u t t i n g p re s s u re o n t he i n d u s t ry t o b e m o re efficient and cost effective without giving any ground on HSEQ. And, advances in digital technologies offer new tools and techniques to capture and leverage information to streamline operations while increasing p ro d u ct i o n . F i n al l y , an d w hat m ay b e t he m o s t i m p o rt an t f act o r i n cre at i n g s u s t ai n e d chan g e , i s t he ri s e o f younger workers committed to serving a broader purpose through work beyond simple economics and their i m p act o n o rg an i z at i o n al cu l t u re . I t i s t hat p u rp o s e t hat w i l l d ri v e t ru e t ran s f o rm at i o n an d b ri n g s t ab i l i t y an d carry sustained benefits of operational excellence through both boom and bust. O p e r a t i o n a l e x c i s e lan l e e nl e cm ee n t o f o rg an i z at i o n al l e ad e rs hi p t hat s t re s s e s ho w a v ari e t y o f p ri n ci p l e s , s y s t e m s an d t o o l s can b e ap p l i e d t o w ard t he sustainable improvement of key performance metrics. Driving operational performance in oil and gas |
Page 1: Driving operational performance in
Page 5 and 6: I n d u s t ry o b j e ct i v e s O
Page 7 and 8: Low oil prices highlight the effect
Page 9 and 10: T he an at o m y o f o p e rat i o
Page 11 and 12: W K e y o p e rat i o n al e x ce l
Page 13 and 14: m m m O p e rat i o n al e x ce l l
Page 15 and 16: 1 2 3 We identified three main reas
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Page 19 and 20: m 3. Supplier and contractor manage

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