Production Capability Maturity Model: How to Advance From Proactive to Managed Upstream Oil and Gas Operations

Correct production problems quickly, or prevent them altogether, and identify key opportunities via operational transparency and insights – that’s the operational intelligence way

This is the third in a five-part series about the Production Capability Maturity Model for upstream oil and gas companies. This blog covers the evolution from Proactive to Managed operations.

Our incremental journey toward Optimized upstream oil and gas operations is well underway.

You’re capturing and validating all of your field data, whether it’s being measured electronically through SCADA or manually entered and validated by your production operators.

You also have a production data management system in place to store, allocate, and validate all of your production volumes, which provide a foundation for your overall operations; if the data isn’t accurate from the get-go, an ugly domino effect of inaccuracies and corrective work will be triggered.

Then, the epiphany: “We have all this great data at our disposal: data about our meters, tanks, wells, allocations, downtime events, downtime causes, downtime durations, etc. What if we can start to use all this data in a proactive way? What if we can start to resolve production issues much more quickly by getting the right information in front of the right people at the right time? What if we can even start to predict when production issues may be forthcoming and prevent them from occurring altogether?”

Now you’re starting to embrace the concept of operational intelligence and Proactive operations, which is the next step – and it’s a critical one – in the Production Capability Maturity Model.

The Path From Proactive To Managed Operations

Let’s get this out of the way first: Data is great, but having more of it doesn’t automatically make exploration and production companies and their teams more productive. Case in point: According to management consulting firm McKinsey & Company, less than 1% of the SCADA data collected from sensors on rigs is actually made available to company decision-makers. That’s a lot of rich information going unseen and unused.

And then there’s this, taken from a collection of industry studies: Oil and gas production engineers, on average, spend just 39% of their time on “value-added” activities, such as resolving a production-slowing issue of some kind. The other 61% is spent on hunting for the information needed to make decisions. That’s a lot of valuable time going unmaximized.

The key for E&P companies, then, is to connect all of their disparate data sources and the information from these sources, extract the right data for any given decision-making scenario, then direct this information to the right people in a timely manner.

This is where exception-based-surveillance (EBS) processes and alerts and notifications really come into play. EBS processes monitor a company’s assets and trigger alerts and tasks when predefined events occur, empowering engineers to manage more wells and minimize the duration of deferments.

Let me say that again – Manage more wells. Minimize the duration of deferments. These two points are absolutely critical. The most recent market downturn has claimed hundreds of thousands of jobs, so organizations are looking high and low for strategic ways to do more with fewer resources available. Not only that, but when engineers have real-time data at their fingertips, they can spend more time on correcting problems and less time on looking for problems.

And I think we’re all well aware of the importance of cutting down on deferments. According to a recently published IDC white paper, aside from worker safety, reducing deferments is the top priority at both the corporate and business-unit levels of E&P companies. Here are a few numbers that illustrate why: Most oil and gas wells, on average, lose 12-13% of their potential production; 8-9% of that 12-13% is due to unplanned downtime; if unplanned downtime can be reduced by just 20-25%, significant production gains and better cash flows can be had.

So, identify issues, resolve them quickly – now we’re getting proactive about being reactive, if you will.

Taking things a step further, leading indicators and predictive analytics can be used to identify potential problems on the horizon and intervene before they occur. That’s the crème de la crème, the proactive of the Proactive.

Our picture of Optimized upstream oil and gas operations is starting to take shape. The next piece of the Production Capability Maturity Model puzzle: Managed.

Stay Tuned
I’ll be covering the Managed-to-Optimized transition in my next blog. Until then, be sure to check out these webinars. These were our most-viewed production webinars in 2015.

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About The Author
Alex Schultz works on P2’s corporate marketing and communications team. Prior to coming on board at P2, Alex worked as a news and sports reporter in California’s San Joaquin Valley, where he covered everything from local politics and citrus farming to college baseball and senior slowpitch softball leagues. When he’s not writing about the innovative and resilient upstream oil and gas community for P2, you’ll likely find Alex in one of two places: at Folsom Field in Boulder, CO, watching (and usually regretting his decision immediately) a University of Colorado football game, or trying (and usually failing) to hook a rainbow trout from one of Colorado’s mountain streams. Alex holds a bachelor’s degree in journalism from CU-Boulder.