Lean by Design for Upstream Oil & Gas, Scene Setting
The Lean methodology can be traced back to 1986 and is commonplace in manufacturing companies. There are pockets of success within the Upstream Oil & Gas industry, but many businesses fail to realise the value it can fully deliver. Lean by Design for Upstream Oil & Gas is our proven approach to leverage Lean for this industry.
The principles of Lean are easy to grasp, the reality though is that the Upstream Oil & Gas industry does not view itself as having a manufacturing type concept of operations. The industry view did change slightly when the challenges of drilling Shale assets led to the development of a factory drilling concept, even though the method is still under-utilised across the industry.
Adopting a Lean Approach
Lean Six Sigma is a methodology that relies on a collaborative team effort to improve performance by systematically removing waste and reducing variation. It combines lean manufacturing/lean enterprise and Six Sigma to eliminate the eight kinds of waste.
The Six Sigma leverages statistical principles to enhance the efficiency of a set of activities, which are becoming more widely accepted in the Upstream given the acceptance of Machine Learning and the growing demand for Data Scientist roles in their operating model.
The method is DMAIC (define, measure, analyse, improve and control). With the ongoing acceptance of Machine Learning, users are now more exposed to the type of statistics that lie at the core of Lean Six Sigma. Statistical proof underpins the Lean Six Sigma model of performance improvement, and Minitab is a vital tool of the Lean Six Sigma practitioner.
The goal is to improve Process Capability; this translates to the need to move the process Mean and reduce the Standard Deviation. Using these methods, we make decisions based on sample data which has inherent uncertainty aspects.
Hypothesis Testing is one of the many tools, this helps us make fact-based decisions about different population parameters, enabling us to choose the optimum data population. Hypothesis Testing can help reduce the high cost of prototyping as it uses experimental efforts with existing data, which can also reduce the cost of capturing and modelling data for the final solution.
Hypothesis Testing supports decisions based on;
- Beliefs (experience)
- Preferences (current needs)
- Evidence (statistical data)
- Risk (acceptable level of failure)
Using these methods, we can prove the benefits of a process improvement and determine the minimum data and quality to ensure sustainability of the final solution. More importantly for Upstream Oil & Gas, we can prove the process savings vs expenditure, and the available benefits at each stage of the solution lifecycle.
Upstream Oil & Gas Operator Examples: Lean is used to trim approx. $400,000 off the cost of each well. Lean is used to generate an extra 5% production. Lean is used to reduce forecasting errors by 75%, and a gradual increase in production revenue.
Given the vast majority of challenges in the Upstream Oil & Gas Industry, then the collaborative approach to 'Lean Design' encourages users to think past traditional barriers. By leveraging Value Stream mapping principles broader transformational benefits providing a significant cost advantage over polarised solution approaches.
'Lean by Design' has been a pillar of all our engagements, including many in Upstream Oil & Gas. Easymatics believe that 'Lean by Design' is a crucial tool to transform ways of working, of which doing more with less is the core requirement of Upstream Oil & Gas clients. We have developed many accelerators, and have certified Black Belts who can support clients unlock their potential.
The team at Easymatics are in a unique position to support clients in their Transformation for Upstream Oil & Gas journey. We have developed a proven framework of methods and accelerators based on six pillars culled from multiple global assignments. Lean by Design for Upstream Oil & Gas is one of those six pillars.