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Production Management: Back to basics in energy

Driving base production management in a high well-count onshore environment.

Overview

Oil exploration and production activities promise growth and success; yet underlying operational inefficiencies threaten performance. Onshore operators are coming under increasing market scrutiny and pressure to deliver profitable production. Their traditional responses have been to drill more wells faster and cheaper. However, a growing trend toward a fundamentally different way of operating is emerging—high well-count onshore operations—especially in the unconventional arena. This is a more integrated approach in the management of both capital campaigns and production operations. However, it has not been a priority, which has resulted in significant untapped value being left behind.

DOWNLOAD BACK TO BASICS: DRIVING BASE PRODUCTION MANAGEMENT IN A HIGH WELL-COUNT ONSHORE ENVIRONMENT [PDF]

Key Findings

To succeed in the high well-count onshore market, operators need to overcome several key challenges.

  1. The absence of data-driven decisions can lead to an ineffective prioritization of activities, increased response time to well failures and production downtime.

  2. Cultural inertia. This unconventional business has upended the predictable rhythm of low-count, slowly declining wells. The inability to adapt has led to inefficient resource utilization.

  3. Narrow focus on overall cost versus unit cost. The traditional “explore-by-the-bit” approach to resource development is no longer viable. A broader view of uncertainties is required to understand the true life cycle economics of the play.

  4. Organizational silos. Unconventional resource development requires a more iterative approach to accelerate commerciality of resource plays in the early pilot phases and to drive execution efficiency in the development phase. Unit costs cannot be improved unless execution teams consistently loop in other functions across the entire value chain.

Recommendations

Operators need a new toolkit for these unique, high well-count onshore operations based on four principles.

  1. Integrated and agile operations. Quickly responding and adapting to internal and external triggers, and dismantling the silos that exist between different parts of the organization.

  2. Specialization. Continuously evaluating the core activities that drive results and costs.

  3. Lean ecosystems and a continuous improvement culture. Driving process efficiencies and improving waste elimination, supported by a mechanism to continuously assess, identify, operationalize, and sustain new opportunities.

  4. Collaborative data-driven decision making. Having access to an information-rich environment that enables effective decision-making and resources selection.


Authors

Thomas Bonny
Managing Director – Accenture Strategy, Energy

Tom specializes in helping Oil and Gas operators drive production and cost efficiency across operations through strategy, organization, and process and technology enhancements. He has a significant focus on production optimization, digital analytics, and capital efficiency. Tom collaborates with Independents in the oil and gas industry to identify, design, and implement programs to optimize cost management, maintenance, and production. Tom is based in Houston, Texas.

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Mohammed Saadat
Managing Director – Accenture Strategy, Energy

Mohammed focuses on helping unconventional Oil and Gas operators enhance their operations performance through operating model transformation and capability development to respond to an increasingly competitive and compressed commodity environment. He specializes in production operations management, capital efficiency and technology innovation management and leads the Unconventional Operations practice for Accenture Strategy Energy in North America. Mohammed is based in Houston, Texas.

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