Skip to main content Skip to Footer

LATEST THINKING


Improving the uncoventional oil and gas exploration process

Read the Accenture study: Achieving high performance in unconventional operations, based on interviews with operators in the Eagle Ford Shale, US.

Overview

The importance of adopting a manufacturing approach to oil and gas exploration – which includes standardization, factory lines and strategic use of inventory – is well known across unconventional operators. But what are the next areas of improvement?

This paper, Achieving high performance in unconventional operations: Integrated planning, services, logistics and materials management, examines the leading operators across multiple segments to understand what has been implemented and, more importantly, what the remaining areas of differentiation are. The findings are based on a survey of leading operators across multiple basins and in-depth interviews with operators in the Eagle Ford Shale in southern Texas, one of the largest-producing oil and gas fields in North America.

DOWNLOAD PDF

Key Findings

Oil and gas operators can reduce the costs of constructing, drilling and completing unconventional wells, as well as the overall time it takes to complete them, by up to 40 percent through better planning and management of logistics, contractors and materials, according to the report.

For the higher performers, this could mean a reduction in costs of $1.3 million to $2.6 million, on a $6.5 million well, and much more for the low performers. Operators can achieve these savings by adopting a more integrated planning process, better management of service contractors, and improved logistics and materials management for fresh and reused water, proppant and installed equipment.

This approach can also reduce the time to deliver an average unconventional well by up to 40 percent. In one example that Accenture analyzed, this meant an estimated reduction of up to 170 days, taking the overall cycle-time down from 464 days to 254 days.

Analysis

The report covers several planning and management issues and ways operators can improve performance, including:

  • Integrated Planning – With hundreds or thousands of wells in a single field and production forecasts largely driven by drilling new wells, the lack of an integrated planning approach in unconventional operations can lead to missed production targets and capital overruns. To avoid this, operators will need to apply planning tools, simplify planning schedules, break down organizational silos and integrate service providers into the planning process.

  • Logistics Management – At 5 million gallons and 1,000 truck movements per well, efficient water use and movements continue to provide a competitive advantage in unconventional operations. But there’s also an opportunity to improve non-water movements, such as proppant and aggregates. It’s critical to make the best use of rail, road and pipeline transport and select the most optimal locations for permanent and temporary storage.

  • Management of Drilling and Other Service Contractors – Unconventional development is characterized by a large number of service providers and a large number of handovers on the site. Operators need to ensure better collaboration between these contractors and apply strict financial controls and management to meet risk, commercial and operational requirements.

  • Materials Management – Given the number of wells on a multi-well pad and 24-hour crews, an unconventional operation requires a much higher volume of materials than a conventional one. The management of these materials needs to be efficient and agile to ensure timely delivery, in order to minimize downtime and avoid tying up working capital and racking up needless storage expenses.

Recommendations

Different operators have different operating models when it comes to using technology, focusing on continuous improvement, and investing in people. While all areas are important, one will take precedence, depending on an operator’s situation. Leading operators are constantly making trade-offs and the ability to cost effectively balance investment in these areas has a clear impact on success.