Making the Invisible Visible

Delivering Clarity (Cost Saving through Operational Optimisation)

Without exception every Operator has the potential to significantly reduce their operational costs. I don’t think anyone would argue with this. But where do we start and how far should we go?

Most will pay invoices, incurring unnecessary expense without realising. Introducing optimisation methods will put potential savings into practice. A company’s campaigns will become more streamlined, putting performance and cost efficiency firmly in the top quartile.

Invisible losses will become visible, creating the ability to significantly reduce unnecessary expenditure. Clarity is provided, making cost saving more achievable.

Streamlining processes, saving money on materials here, or a few hours of rig time there can lead to significant reduction in expenditure.

The following article will describe methods which have been used with great success, delivering savings of tens of millions of dollars.

The learnings below come from subsurface operations related to drilling wells, but these practices can be applied to just about every business.

Operational Optimisation

Team Architecture

Identifying which services are required in order to ensure an operation runs smoothly is a talent. However, it is not enough to simply tick a box by employing an individual with the right job title. It is essential to identify those capable of providing the required results. When expert opinion has been given it must be communicated to the wider team and – after discussion and agreement - implemented. Embracing new ideas is not something most personnel do easily. The benefits and rewards of the new input need to be made clear.

Managing Service Company Inventory

Ensuring the system has no waste is an essential part of the optimisation process. Carefully examine the equipment and consumables required and create a dynamic inventory which caters for those needs.

Utilising Company Scale

Benefiting from the stature of the demand you are creating is an often-overlooked bonus related to the size of your operation. Capitalise on this by looking for potential value associated with scale.

Planning Advancements

A Fresh Set Of Eyes

Most Operators have planning systems which are tried and tested. There is however always a way in which these procedures can be adjusted to improve their effectiveness or to make them more streamlined. This can be as simple as removing unnecessary content or duplication, or completely restructuring planning documents.

Knowledge Capture & Dissemination

By taking an overview of projects and examining the whole picture it is possible to create efficiencies simply by being informed. In the drilling business this information can be captured and spread to the wider team through: Drilling Well On Paper (DWOP) and other ‘WOP’ exercises, Knowledge Capture / Lessons Learned sessions and workshops for individual disciplines. The value these exercises create should not be underestimated.

Day to Day Operational Adjustments

The Right Person In The Right Place, Again

No matter how efficiently projects are planned, there are inevitably areas where the unforeseen or unpredictable happens. When these outliers show themselves, it is essential that there is an individual supervising the operation who has the experience, knowledge and gravitas to deal with the situation swiftly and without fuss.

Data Acquisition Rationalisation

I Want vs. I Need

Each Operator has a different approach to Data Acquisition. It is essential to engage the team and in particular the higher level Managers in order to ascertain the goals. Only when the company’s philosophy is understood can the processes of capturing this data be optimised. Often this is through rationalisation of the programmes.

Process Improvement

We’ve Always Done It This Way

Often companies have guidelines and processes which are outdated or without reasonable justification. By looking at the required deliverables or end use of the data it is often possible to create efficiencies in the process without affecting the end result. Operator processes can be very emotive. There are often personnel still in place who were instrumental in the creation or moulding of a design process or documentation structure. To convince these individuals their pride and joy is inefficient or outdated is a very difficult, sometimes impossible task.

Contract Optimisation

Contract Design

Contract design is an essential cost saving tool. Service companies tend to make significant profit by invoicing for non-contract items or non-standard contract items. By ensuring Invitations To Tender (ITT) are constructed in such a way that the Operator has as few unplanned items billed, is a simple yet frequently unobserved efficiency. It is not enough to ask the contracts team to create a streamlined contract. There must be input from a technical specialist who thoroughly understands the service.

Thorough Tender Evaluation

Contract bids from service companies can often be vague, or even leave out important responses which could have financial or operational consequences. Ensuring a thorough evaluation is undertaken will create financial and operational efficiency (which reduces expenditure further).

Contract Monitoring

Very close monitoring of services and invoices associated with contracts is a quintessential feature of contract management. This scrutiny helps to ensure there is no ‘creep’ in contract spending. The task requires time and an in-depth knowledge of the contracts. It’s possible to save hundreds of thousands of dollars through simple contract monitoring.

Finally, check invoices carefully. Mistakes are made. It is therefore essential to ensure you are paying for what you request and no more. Remove all charges from invoices which are not as per contract or which have been included in error. This is an important final step of contract management.

This article has been reduced in size to accommodate LinkedIn formatting. A full version with industry examples is available on request.