Five key points to making more money upstream by getting knowledge management into play
By Brian Toelle, Schlumberger
& Dutch Holland, PhD, Founder & CEO, Holland & Davis
Contents
Using it every day without knowing its name
5 easy steps to making millions more annually
Case study: Large multi-national E&P company
Conclusion
Within the last century, the world experienced Spindletop, the huge growth of major oil companies and the industry's infrastructure as we now know it, along with more changes in exploration, production, refining, and marketing than anyone could have imagined.
In many ways, this global drama is taken for granted. Oil was beneath the earth and, turning profits in the process, the industry figured out how to get it to consumers. Actually, it's 100 years of knowledge management (KM) still proving that much more money can be made upstream with KM than without it.
Using it every day without knowing its name(Return to Contents)
The bottom line on KM is that this professorial-sounding term itself is less important than executives and managers recognizing how easily it can work for their people and the substantial value it can deliver globally. While KM has various arms and legs, one of its biggest strengths has historically centered on workflow, a real-world concept that's been around awhile. Today there are a number of pieces to KM systems and workflow is still one of the critical components.
Therefore, since KM is actually just as common as rotary bits, subsea platforms, and horizontal drilling, it must be easy to grasp, put into action, and increase profitability by using, right? Yes, to make more money upstream, only five easy steps must be absorbed and practiced:
5 easy steps to making millions more annually(Return to Contents)
If that sounds like too easy a road to increased E&P profitability, think again. KM simply takes the building block approach to ongoing E&P operations and says, "Use what you're doing right on every project to successively improve your processes and, in turn, your success rate." KM helps deliver a greater number of high-quality prospects quicker and increased revenue from existing fields. Let's look at these five easy steps one-by-one:
- Understand what's important about your upstream operations
Companies within the same industry, such as oil and gas, approach their business differently. Typically, companies concentrate their efforts in areas of perceived strengths, which may vary but are usually within common industry functionalities.Within the overall oil and gas industry, concentrations (or focuses) may include marketing, refining, and transportation or transmission. Within E&P, a concentration might involve choosing a strong emphasis of geophysics over geology. Likewise, many companies are more partial to certain geographical locations than to others such as deepwater plays, for example.
What's most important in terms of functionality, specialization or geographical location for your company? Nail these down first.
- Target work processes with the most potential
Having pinpointed a discipline or geographic preference as key to overall
business strategy, examine work processes within these areas. Why – isn't the company running at maximum efficiency every day? Actually, nearly every process may potentially be improved, especially when it's been in place awhile. So, study and note both tools and methods to see which bring more value to the table.Then make choices. While one company may decide to focus on rank exploration areas, another may opt to re-examine the methods it uses to evaluate farm-in deals. Still others may identify field development processes as critical, and select reservoir modeling or reservoir stimulation as key. Choices may even be juxtaposed, with all from column A merging with one from column B, i.e., the company identifies all these processes as critical but wants to focus only on deepwater plays.
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- Map and analyze targeted processes
Steps 1 and 2 should not be underestimated or quickly jotted down on a legal pad. These steps, identifying key work processes within the company's major business domain, are mortar that builds the workflow analysis. This analysis should include documenting and verifying tools and methods currently used, identifying major results such as knowledge products and value-added data, and assembling the company's "superior processes."Then, analyze the final process map, or "as is" workflow, to recognize any KM-related issues. Meanwhile, remember that many of the processes involve sophisticated geoscience methods and tools. Therefore, when developing "as is" workflows and analysis, it's vital to understand geological, geophysical reservoir engineering methods and the latest capabilities of the tools/software in use.
Additionally, validate data with asset teams to confirm accuracy of documented workflows once completed. Ultimately, the best work methodologies should be recognized and collected.
- Improve processes by using the company's knowledge assets
Now the new work environment can be designed, spotlighting the recently identified "superior workflows and the best corporate know-how." It's important to recognize that this new environment should include new methods using state-of-the-art, easy-to-use KM utilities, not just better versions of current workflow methods.And what's the final result at the Step 4 juncture? The company will have built a "knowledge powered" environment that's faster and more accurate. The best knowledge of the company's people is now captured in processes, safeguarded and shared more efficiently than ever.Beware of a potential glitch. Because E&P's fast pace is combined with a software tools revolution, keeping pace on both ends of the spectrum may be difficult for geoscience and engineering staffs. Specifically, asset teams may develop their own specialized processes that excel on their projects, but do not have the time or even the realization these should be shared.
Go the extra mile anyway. Gathering "superior processes" and combining them with the latest IT capabilities is more than an exercise; it may greatly increase the entire staff's productivity.
- Deploy improved processes widely
In the home stretch, these improved processes must come alive in the
workplace to increase productivity and profitability. Fortunately, IT advances such as Web-enabled knowledge sharing systems are rapidly becoming the preferred knowledge distribution method.On a virtually instantaneous basis, companies can use the workstation, desktop, and laptop to enhance how people collaborate, find needed information, and exchange knowledge—all on the backbone of documented best practice workflows. With asset team members scattered around the globe, or even down the hall, ideas may be quickly exchanged at various times during basin evaluation or field development projects.
The bottom line is dramatic. With instantaneous intranet access to superior practices of all the company's teams--and collaborative tools within a knowledge sharing system to communicate with other specialists--asset teams have a sizeable advantage in both planning and performance.
Case study: Large multi-national E&P company(Return to Contents)
This five-step process has already been successfully used by oil companies, including the domestic division of a large multinational E&P company that strongly believes sharing "best practices" is valuable.
This particular company wanted to improve its work processes for three key geographic areas: Gulf of Mexico deepwater and shelf, as well as a Rockies onshore area. These were the focus of a pilot workflow/KM project. So, they began by understanding that high potential areas were central to business objectives.
From that starting point, they assembled a team of employees, who knew the normal operating methods, and outside workflow/KM consultants who knew KM and the latest geoscience and software tool features. Initially this team interviewed asset team members working the three geographic areas to identify the company's best "how to" knowledge.
Next order of business: making sure that "as is" workflows accurately depicted the process performed by team members. They developed a series of "as is" process maps to show the teams' workflows, focusing on tasks, dependencies, who performed them and the tools used. Each workflow version was reviewed during validation meetings and adjustments made until the process as performed was correctly shown.
Then, certain work procedures were identified as superior ones to be shared companywide. At the same time, the workflow team noted that some tasks were performed correctly for the immediate objectives but not meeting management's preferred future status. In turn, the team constructed a recommended workflow that achieved desired results and used every captured superior process.
To distribute these new processes, KM consultants constructed a prototype Web site deployed on an extranet shared by the company and its consultants. The site also included various KM utilities for collaboration and posting of company and site-specific news/events. When the new recommended work processes were delivered through this early version of a KM system, the project was completed. But, the company cleverly took the project a step further by using the developed ideas as a base for their own strictly in-house system on their intranet – and began blending in other work processes. Success breeds success.
Conclusion(Return to Contents)
Fundamentally, KM is about enabling organizations to effectively capture, share, and apply the collaborative experience and know-how of their people. With new technology and a fancy new name, knowledge management is taking oil and gas companies to new levels in productivity and profitability.
About the authors: Brian Toelle is a Senior Geoscientist with Schlumberger GeoQuest's Technology Solutions Department (www.geoquest.com) and has nearly 20 years experience as a geologist/geophysicist. He performed exploration and development projects for Texaco and Saudi Aramco for fourteen of those years and is currently developing E&P Workflow and Knowledge Management solutions for oil industry companies.
Winford (Dutch) Holland, PhD, is Founder and CEO of Houston-based Holland & Davis, LLC (www.hdinc.com), a nationally recognized management consulting firm serving the energy industry. A widely published author and speaker, Dr. Holland's newest book is "Change is the Rule: Practical Actions for On Target, On Time, On Budget Change."