Management by Exception

When oil prices are low, operators naturally turn their focus to reducing lease operating expenses (LOE). However, during the recent uptick in prices, conversations in production operations are focused on not forgetting lessons learned and continuing that focus on managing LOE.

An immediate contributor to increased LOE is unplanned downtime – the effort it takes to address and reduce deferred production. Gain the efficiencies you need in the field by taking small steps towards improving the way you operate. For instance, start by moving away from routine and repetitive tasks and, instead, operate by exception by providing immediate attention to the assets that require it now.

When operating by exception, operators move away from reactive measures and downtime interruption and, instead, become more proactive and focus on value-added activities – such as preventative maintenance, optimizing well production, and reducing time spent on manual, time-intensive processes like manual dispatch.

These exception-based operations have many terms in the oil and gas industry today, including:

• Exception-based surveillance
• Surveillance-based exception
• Exception-based pumping
• Management by exception

In this article, we’ll use the term “management by exception” as we discuss simple steps your operations team can take today to lower your organization’s LOE – with applications you may already have in place. Management by exception is not just a buzz term – it’s a proven way to drive efficiencies. Start managing your production operations by exception today to improve the way you communicate, organize your work, and control your LOE.

Pumping by Exception

In its simplest form, pumping by exception means your lease operators don’t necessarily take a set route every day. Instead, stops on a route are re-ordered based on exceptions identified through historical analysis, SCADA monitoring, or scheduled maintenance activities. Relying on a strict, pre-defined route/stop order with no regard to skillsets, live operating conditions, or proximity of available resources means you’ll miss opportunities for efficiency.

On the other hand, a proactive approach using a combination of best available data, 24-hour or real-time, along with smart, configurable monitoring systems to proactively assign maintenance and priority issues ensures you get the right people to the right wells and equipment at the right time to drive the following benefits:

• Labor efficiency with increased well coverage per lease operator
• Minimized production deferments through faster issue identification and remediation
• Reduced drive time and associated wear and tear on vehicles and equipment
• Improved overall operational safety

Cross-Discipline Collaboration

A key component to implementing a successful management-by-exception program is effective collaboration. In most companies, collaboration is handled through disparate channels, such as phone calls, emails, and texts. While these communication tools can be effective, they are often lacking or missing altogether important context or historical information and data that can help address a given problem more effectively.

Incorporating two-way commentary tools and capabilities, similar to those available in common social websites or help portals, that are shared across the organization with embedded replies and targeted recipients, creates collaboration and enables better, traceable communication among everyone who relies on detailed information history regarding a specific asset. The ability to add and associate commentary to wells and equipment makes it easy for everyone to understand the current and historical status because the communication has been captured and preserved in one centralized location.

Operations Centers

Production operations data comes from multiple sources, including manually entered data, SCADA, and data from 3rd party vendors, such as run tickets, chemical usage, and maintenance schedules. Bringing together information from these systems, whether through one reporting tool or enabling access to all the systems’ data across multiple disciplines in a single setting, organizations can create a virtual operations center of sorts. A centralized view of operations down to the asset level enables greater visibility and context for supervisors, engineers, and lease operators to work collaboratively to address issues with under-performing assets. Attain tremendous operating efficiency by leveraging alerts and notifications raised automatically through condition-based monitoring or defined maintenance schedules in addition to the ability to manually raise a case or service ticket that can be tracked to completion from a central place.

In today’s environment, leading operators increasingly turn to technology solutions that enable them to do more with less. High well counts and geographically dispersed and remote operations common in shale operations, magnify the challenges. Managing by exception allows operators to combine technology and process changes to drive efficiencies in operations, resulting in optimized production and lower operating expenses.

About The Author
Clara Fuge is vice president of product management at P2. With more than 20 years of experience providing software solutions to the energy industry, her expertise lies in upstream hydrocarbon accounting and production operations. Clara graduated with a degree in Economics from the University of Texas at Austin and is a member of several industry groups, including the American Petroleum Institute’s Committee on Production Measurement & Allocation. A self-proclaimed “allocations geek,” she is passionate about giving oil and gas companies the tools needed to report accurate well production. When she’s not working, Clara enjoys spending time with her husband and their three dogs.