Geo-Teams Prove Their E&P Value

Challenging to Build, Easy to Use
Next month: The economic results of a competition between two groups -- one a large traditional organization and the other a small company of MDTs. Also, a failed team effort is analyzed.

Teams and teamwork are not new in the oil and gas business.

In the period 1950s through 1970s teams were used in both large and medium-size companies for some large projects such as lease sales, appraisal of large discoveries and initiation of secondary recovery ventures.

The proliferation of teams in the mid-1980s was in response to both financial and technological reasons. The low oil and gas prices in the mid-1980s through most of the 1990s dictated that companies lower costs and do more work with fewer people.

At the same time, the explosion of new technology such as 3-D and 4-D seismic, reservoir simulation and a host of drilling innovations created the need for technical staff from several geoscience and engineering disciplines to work together.

This article is based on more than 25 years of experience building, guiding and working in multidisciplinary teams in exploration and production. This experience has been gained working with more than 75 teams in major oil companies, large and medium-size independent oil companies and national oil companies in North America, South America, Europe, Southeast Asia and Australia.

The teams have included geophysicists, geologists, petrophysicists, and engineers working in drilling, completions, reservoir engineering and facilities.

Definitions

A typical Traditional Organization of an E&P operating division usually has strong discipline (i.e. geophysics) control and development, good discipline mentoring and strong quality control -- but individuals commonly have a limited view of overall project objectives and goals, and communications among disciplines is generally only fair.

In contrast, Multidisciplinary Team (MDT) Organizations (Figure 1) usually have shared objectives and goals, better communication amongst disciplines and good integration of technical skills and knowledge.

For MDTs, quality control and mentoring have to be added. A concern is that individual "success" may be less visible. MDTs are also called "interdisciplinary" or "cross-disciplinary" teams.

Synergy is a concept that usually results from multidisciplinary teamwork. Synergy is defined in Webster's Dictionary as "The cooperative actions of discrete agencies so that the total effect is greater than the sum of the effects taken independently."

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Next month: The economic results of a competition between two groups -- one a large traditional organization and the other a small company of MDTs. Also, a failed team effort is analyzed.

Teams and teamwork are not new in the oil and gas business.

In the period 1950s through 1970s teams were used in both large and medium-size companies for some large projects such as lease sales, appraisal of large discoveries and initiation of secondary recovery ventures.

The proliferation of teams in the mid-1980s was in response to both financial and technological reasons. The low oil and gas prices in the mid-1980s through most of the 1990s dictated that companies lower costs and do more work with fewer people.

At the same time, the explosion of new technology such as 3-D and 4-D seismic, reservoir simulation and a host of drilling innovations created the need for technical staff from several geoscience and engineering disciplines to work together.

This article is based on more than 25 years of experience building, guiding and working in multidisciplinary teams in exploration and production. This experience has been gained working with more than 75 teams in major oil companies, large and medium-size independent oil companies and national oil companies in North America, South America, Europe, Southeast Asia and Australia.

The teams have included geophysicists, geologists, petrophysicists, and engineers working in drilling, completions, reservoir engineering and facilities.

Definitions

A typical Traditional Organization of an E&P operating division usually has strong discipline (i.e. geophysics) control and development, good discipline mentoring and strong quality control -- but individuals commonly have a limited view of overall project objectives and goals, and communications among disciplines is generally only fair.

In contrast, Multidisciplinary Team (MDT) Organizations (Figure 1) usually have shared objectives and goals, better communication amongst disciplines and good integration of technical skills and knowledge.

For MDTs, quality control and mentoring have to be added. A concern is that individual "success" may be less visible. MDTs are also called "interdisciplinary" or "cross-disciplinary" teams.

Synergy is a concept that usually results from multidisciplinary teamwork. Synergy is defined in Webster's Dictionary as "The cooperative actions of discrete agencies so that the total effect is greater than the sum of the effects taken independently."

Within the context of the petroleum E&P business, synergy means that geoscientists, petroleum engineers and others work together on a project more effectively and efficiently as a team than working as a group of individuals. In other words, the total contribution of the team in terms of quality and quantity of work, ideas and results, is much greater than that of the individuals working separately.

Figure 2 portrays the results of synergistic teamwork versus results generated by the efforts of individual workers. A synergistic team is a committed group of individuals that produces results superior in quality and quantity to that produced by the same group working as individuals.

Most teams we work with produce positive results, but some produce negative results. These "negative synergistic teams" commonly are a group of individuals who may actually produce fewer ideas, output and results than the same group working as individuals.

These "teams" may appear as teams on an organization chart, but do not actively function as teams.

In the early 1990s, Assist Management Teams were created with appropriate required disciplines to handle large fields and development projects. These teams would bring together the requisite technology to make all the decisions needed to minimize cost and maximize profits from project inception to the economic end.

Team Concepts

Several published studies and unpublished results of teams I have worked with show the great economic value of integrated multidisciplinary teamwork.

MDTs can decrease costs and increase profitability -- but more importantly, these teams are the most effective way to incorporate new technology and ideas generated by geophysicists, geologists, petroleum and operation engineers and computer systems analysts. The synergy generated by MDTs increases the quantity and quality of valuable ideas and innovations.

In some teams, the time spent analyzing data and arriving at decisions has been reduced by an order of magnitude. Also MDTs generally make better decisions and recommendations.

Well-informed people working in a team environment can obtain a level of professional and personal satisfaction not possible in a traditional, discipline-oriented organization.

It should be emphasized that not all exploration and development projects lend themselves to or need to be done by MDTs. Plenty of work still is best done by individuals.

Putting people in teams and having them work effectively and efficiently is not easy and can pose a major challenge to even the best managers.

The many advantages of MDTs are worth the effort to build these teams. MDTs are an important addition to E&P organizational structure.

Economically Successful Teams

The published results of integrated MDTs in E&P projects are impressive. Consider these two examples that demonstrate financial success.

 YPF Maxus Southeast Sumatra, Indonesia Team.

Since 1986 multidisciplinary teams have been utilized in development and exploitation of Maxus's older fields. Geophysicists, geologists and petrophysicists were integrated with a variety of petroleum engineering specialists.

The teams worked together in large team rooms that contained all the data and displays. The environment was ideal for synergy to occur -- and the results reflected this.

The efforts of the teams over 10 years resulted in a dramatic increase in production and reserves in older fields, and very attractive economic return on investments.

Figure 2 shows the economic results for six years in terms of rate of return, ultimate recovery and dollar cost per new barrel added. The development drilling projects added over 70 million barrels of new reserves that would not have been added from existing wells.

Finding and development costs average less than US $3 per barrel.

Figure 3 shows the 12 percent per year production decline in the Sunda Basin. The MDTs virtually flattened the decline (Figure 3).

The MDTs were composed of both expats and Indonesians. Good people in efficient MDTs.

 Shell's McAllen Ranch, Texas Team.

Production from the 36-year-old giant gas field had declined to about 50 mmcf/d. An MDT was established to evaluate additional opportunities to increase production from the noncontributing reserves behind pipe. The team looked at all aspects of the field's production and developed a consensus plan that included:

  • Acquisition, processing and interpretation of a 3-D seismic survey.
  • Development drilling in the northern portion of the field.
  • Procedures to obtain regulatory approval from the state of Texas to commingle noncontributing reserves in existing well bores.
  • Enhanced drilling and completion techniques.

The staff assigned to a specific field team would be from all functions involved in operations of the field (i.e., all appropriate specialties of engineering, exploration, operations, business and regulatory affairs, land, permitting, tax and legal). The team would have compatible and consistent targets.

The team members would work together, but also remain in their own functional group and thus would have technical backup and review available from peers and supervisors.

With the challenge of a declining production rate -- and the fact that 40 percent of the developed reserves were behind pipe -- four team goals were identified:

  • Develop a technique to allow accelerated production of existing reserves.
  • Add reserves profitability.
  • Incorporate 3-D seismic into the planned drilling program.
  • Identify potential for commingling pay sands and obtain regulatory approval to commingle.

Team members were encouraged to concentrate on these overall goals rather than on those segments specifically applicable to their specialties.

The McAllen Ranch team members came up with five specific targets to be accomplished within two years:

  1. Increase total field gas production rate to >100 mmcf/d.
  2. Reduce noncontributing behind-pipe reserves by 50 percent.
  3. Complete 3-D seismic interpretation and mapping, and identify at least 10 new drilling locations.
  4. Reduce drilling costs by al least 10 percent.
  5. Commingle production from all the major reservoir sands in the northern field area.

The results of the MDTs' work are impressive:

  • Field gas production rate was increased more than 250 percent, from 50 to >130 mmcf/d, in less than two years.
  • Application of fine-grid 3-D seismic and synergistic subsurface engineering resulted in a success rate exceeding 93 percent for drilling of 15 new wells, adding >100 bcf of new gas reserves.
  • The time needed to drill the new wells was cut in half, and overall drilling costs were reduced by 25 percent (over $7 million).
  • Average new well initial production rates are 7 mmcf.d compared with previous rates of 1 to 3 mmcf/d.
  • The previously untested concept of commingling several massive hydraulically-fractured intervals in the same wellbore, separated by hundreds of feet, was successfully applied after obtaining approval from the regulatory authorities.
  • Through commingling, behind-pipe noncontributing reserves were reduced to less than 20 percent of the proved developed reserves. This compares to more than 40 percent of developed reserves behind pipe previously.

The McAllen Ranch team met or beat all of its targets. The results published by Shell encouraged other companies to initiate MDTs.

When the goals of the McAllen Ranch team were completed, the team was disbanded and individual members returned to their respective functions after a very successful team effort. About 30 professionals made up the team.

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