John F. Greene, Garfield D. Rees
Louisiana Land & Exploration Co.
New Orleans
Application of new technology in multidisciplinary team environments can help independent producers prosper in the world's evolving oil and gas industry.
Independents face changes on both a macro and micro level involving resource access, capital pricing, tools, systems, and processes which are progressing at a disconcerting pace.
Many opportunities, challenges, successes, and failures will transpire in this environment. Organizations and individuals will succeed or fail based on the ability to adapt, create, capitalize, and excel in a business world that fails to offer a clear vision of the future.
Many strategies for operating oil and gas enterprises are in use today. The company that succeeds in establishing a competitive advantage and consistently produces long-term, superior results must develop and apply a strategy based on technology and multidisciplinary team dynamics.
During the last 5 years, dramatic consolidation has occurred in the energy industry of the U.S. Documentation of this consolidation may be found in counts of active geophysical crews, drilling rigs, industry staffing levels, and the shortfall in replacement of produced reserves.
A John S. Herold study of attrition in large independent oil companies revealed a reduction from 45 companies in 1980 to less than 15 by 1990.1 A review of the 50 largest oil companies in the world shows that over 50% are state-owned. Of the largest 20, only 6 are publicly owned, and Exxon, the largest U.S. company, ranks only 14th. These 20 companies control 85% of the world's proved oil reserves.
A nonsubsidized U.S. company operating in a global marketplace, while burdened with relatively high tax rates, environmental and regulatory costs, limited land access policies, and an indifference to rising imports, is forced to make significant improvements to earn competitive returns for its shareholders. To produce the needed results, many paradigms of the industry must be changed.
CRITICAL ISSUES
A study by Gemini Consulting identified the most critical issues facing exploration and production organizations. The results of 923 interviews with managers and technical and support professionals strongly focused on five key issues critical to improvement of operating performance and enhanced business results (Fig. 1).2
Strengthening of internal communication up, down, and across departments is needed to permit fuller participation. Cross-discipline work teams help remove barriers and broaden skills and perspectives. Information systems providing data from a shared, common database greatly improve the processes of doing work and business.
Simplification and improvement of processes in budgeting, planning, reserve determination, production accounting, contract management, scientific data access, and lease management command high priority on most companies' work plans. Finally, programs for recognizing and rewarding individuals, teams, and corporate performance must be modified in concert with the organization and process changes that are occurring.
Streamlining the entire corporate organization must be accomplished along with these process changes. Elimination of management levels, decentralizing authority for business management, and developing an increased business awareness at the operating level are all valuable goals.
The traditional E&P organization was discipline-aligned (Fig. 2). This multilayered, control-oriented organization allowed the routing of written information in a rigid, slow decision-making system.
Discipline-aligned systems offered strong control of staff and information within a specific discipline. Quality control, mentoring of new professionals, and specialized collaboration were strong.
This organization did not foster communication or cooperation between disciplines; often, unhealthy competition between geologist, geophysicist, and engineer resulted. Separate office locations, restricted access to data, and a separatist attitude provided professionals a very limited view of the project or task being worked.
Individual contribution was seldom identified with the business outcome of the work. Cosmetic variations of this traditional discipline organization have been tried by many companies without meaningful synergy being achieved.
WORK TEAMS
Recently, multidisciplinary work teams have proven to be powerful and superior replacements for discipline-aligned bureaucracies. These organizational dynamics incorporate computer utilization and respond to many of the issues identified by the Gemini study.
The integrated team organization combines multifunctional professionals into teams focused on specific assets, plays, programs, or geography (Fig. 3). There is routine integration of technical skills, and communication is greatly enhanced.
In many cases, teamwork can be enhanced simply by working in a common area or in close proximity to other team members. Clear, shared goals are mutually established. The work plan is fast, flexible, and focused on technical and business results.
Emphasis on doing it correctly the first time makes the team an instrument for process improvement and reduces the need for quality control. In today's business environment, the consolidation, streamlining, and integration greatly reduce hierarchical promotion opportunities.
A new definition of "success" must be established. Multidisciplinary skill growth, greater authority for business success, a multifunctional esprit-decorps, combined with progressive recognition and reward schemes become positive substitutes for the traditional managerial and career ladder.
In pursuit of exploration and production success, company leaders must acquire and retain a motivated, talented technical staff. A vision of the company's future must be compellingly articulated, and the strategies and processes needed to achieve the vision must be implemented. Integrated teams of skilled geoscientists and engineers using state of the art tools and supported by complete information systems are playing a decisive role in providing the efficiencies, risk reduction, and results required for success in today's business environment.
A critical element on the path to success is improving the tools or technologies that we use to perform our business. A commonly stated belief is that technology is changing the way we perform our business; in fact, the inverse of this is a closer approximation of the truth.
Our business needs of improving exploration success and increasing recoveries have elicited many new technological responses. The development and operation of new technology is specifically addressed in many industry technical publications.
Horizontal drilling, measurement while drilling, 3D geophysics, cross well tomography, prestack seismic depth migration, sequence stratigraphy, and numerous other new and emerging technologies have reduced risk, enhanced recoveries, and improved project economics.
INFORMATION SYSTEMS
Successful implementation of these techniques depends heavily on improving information systems and computer resources.
Computer technology is the key to determining the availability and economic viability of many of the new tools and capabilities with which we desire to leverage our business.
For instance, significant improvements in the cost of and time required to acquire, process, and interpret 3D seismic data have resulted from the availability of larger, more efficient, digital recording systems, far more powerful data processing computers, and the implementation of high performance interpretation workstations.
The independent operator that designs a strategy to fully utilize the improved processes and knowledge created by this environment will enhance operating results.
The company must first develop a foundation by designing and implementing an integrated information system. When designing an information system to support the activities of the multidisciplinary team, it is important that the architect create a system that complements the working dynamics of the team.
The system should be equipped with excellent interuser communication capabilities and provide each team member with full access to all data and information. The desire to create an environment of shared understanding dictates that selections of components of the system are made as part of an overall network plan.
In the geoscience information network, many computing components are linked through a network to create a distributed yet fully integrated total environment (Fig. 4).
Powerful Unix-based workstations that provide high resolution graphics capabilities and are configured for a variety of geoscience applications are combined with personal computers (PCs) and supported by a common file server to provide the geoscientists and engineers with a desktop computing environment.
The network also provides access to peripheral sharing components such as print/plot servers and data loading systems. It also provides access into the company's other information systems, such as a gateway to the corporate mainframe and a wide area network connection to remote locations.
Endowed with a common database and communications tools, this system provides the foundation for installation of sophisticated, high technology applications tools with which the geoscientist and engineer can increase their understanding of the subsurface. At the same time, the system provides shared information and communication capabilities that enable team dynamics to operate.
EXPANDING DISCRETION
When workers add value through judgment and knowledge, computers become tools that expand their discretion. The challenge is not only to increase efficiency or productivity but to deepen creativity and understanding.
Computer systems used in this manner become data and information-driven and support a work flow in which an information base is created by geoscientists and engineers using application software to interpret and analyze the database.
In the integrated information system model in Fig. 5, a central geoscience database is interfaced to applications software and users through a data interchange system consisting of a standard database management system (DBMS) and other data exchange software.
The geoscientists and engineers interact with the applications and database using a standard graphics user interface such as X-Windows/Motif to create an information base of interpreted, analytical, and computed information.
When this information base is made available to all members of the multidisciplinary team through the network by way of communication tools such as 3D visualization, Hyperlinked documents, text, and image retrieval systems, the information is further synthesized into understanding and knowledge that can be used to drive business decisions.
To fully realize the potential of the system, an integrated digital database must be systematically gathered from many areas, and its accuracy must be verified. The many elements of data that need to be available in digital form include land, subsurface, seismic, well logs, and production and reserve information. The information system architect needs to ensure that this database can be accessed by all applications.
A complete system plan and strategy must guide decisions on and selection of component parts to ensure they are consistent with overall objectives. Each organization needs to develop a system architecture that complements and enhances its organization, processes, and decision making culture.
The independent E&P company is unlikely to have the resources to develop the geoscience applications software. The company more likely will acquire the necessary components from one or more vendors.
The role the E&P company must play is that of architect and general contractor in integrating the many hardware and software components into the total information network. The proactive company with a well defined strategy and plan will become an informed buyer and will be able to select the most appropriate components offered by multiple vendors.
The company becomes most involved in overall system creation at the point of integration of the shared database to multidisciplinary applications. Development of a standard data model and knowledge of the many initiatives from the industry software vendors, professional organizations, and open software organizations such as Petrotechnical Open Software Corp. for data interfacing and exchange will be required to create desired functionality.
The flatter task-team integrates different technical skills. The computer-networked environment provides fast access to a common database for analysis and interpretation. Creativity, participation, and communication within the team foster a sense of excitement, and the esprit-de-corps is high. Team participation and problem solving invariably produce better idea development and interpretation than an individual can provide alone.
As John Masters, cofounder of Canadian Hunter, has so ably put it, "A successful team is like a 'composite brain' built of experts in various fields."' Masters effectively states the power of team thinking in a computer-enhanced environment.
DOCUMENTED RESULTS
The impact and results of new technology and methodology are being documented in many industry technical journals and papers. Presentation of detailed operational projects is not in the scope of this article; however, several examples show the results of computer-enhanced team technology.
At Chevron-operated Bay Marchand field in the Gulf of Mexico, an integrated team effort using 3D seismic data has produced a dramatic turnaround to declining oil production. Cumulative production of 500 million bbl was attained in 1986, but the production rate had declined from a peak of 75,000 b/d of oil in 1970 to 18,000 b/d in 1986 .4
An integrated methodology then was focused on delineating new stratigraphic and structural reservoirs, locating additional infill development wells, and optimizing waterflooding. Production for 1991 averaged over 36,000 b/d.4
Recently, Shell Offshore gave credit for the redevelopment of Cognac field to the detailed integration of geoscience, petrophysical, and production data. This 20 well program increased production from 12,000 b/d of oil and 45 MMcfd of gas in mid-1989 to 27,000 b/d of oil and 53 MMcfd of gas by yearend 1991.5
In the Brae field complex of the North Sea, the Brae Group has used an integrated methodology to successfully develop North Brae and East Brae fields. Complex stratigraphic systems in this submarine fan have been difficult to predict.
The group produced dramatic improvements in understanding reservoir sand distribution by integrating geoscience, reservoir engineering, and 3D geophysics. Several 30,000 b/d wells have been drilled to "sweet spots" in the reservoir system. At North Brae, actual production has exceeded plan since start-up. Production in 1990 averaged over 80,000 b/d.6
Currently, development drilling at East Brae is consistently resulting in well location selection better than that of the exploratory phase which used 2D seismic and a conventional, discipline-specific approach.
Operations such as these demonstrate several of the strengths of teamwork-such as creativity, technical synergy, coordination, and asset exploitation. This work is accomplished with small, highly motivated teams of skilled professionals. These teams constantly upgrade the integrated interpretation and assure high quality, timely decision making.
CAREER RAMIFICATIONS
The personal career ramifications of the team methodology are yet to be resolved.
There remains little doubt that a professional's creativity and contribution can be enhanced by the multidisciplinary dynamics of a team environment, but career success must be redefined.
No longer are parameters such as the number of staff supervised or where a person is slotted in an organization hierarchy seen as a critical measurement of performance and contribution. Instead, a high value is placed on communication, coordination, and contributions to bottom line business results.
Job satisfaction, training, career path, and compensation take on new and different character for individuals in the team concept.
Motivation from a sense of contributing to a job well done and being part of a successful team plays an important role in the dynamics of teams and the job satisfaction of team members.
Compensation systems must focus on results, rewarding impact contributors, team success, and ultimately bottom-line corporate performance. Increasingly, the emphasis on results-based bonus stock options, participation, and professional growth perks (job rotation, schools, sabbaticals) will recognize individual and team contributions.
Hierarchical control is tough to relinquish and is seen as a loss of power as the distinction and status between manager and team member blur. The organizational evolution is producing frustration and concern at senior professional and middle management levels. This must be addressed in a proactive, problem-solving manner.
Career path expectations of vertical succession are modified due to consolidation of "layers and levels." A redefinition of "success" that is significantly different from traditional expectations, that stresses team participation and achievements, is required.
The use of multidisciplinary teams in a computer-enhanced environment using a common information base provides a competitive advantage and superior results. In a rapidly changing technological world, the independent operator can be at an advantage in more quickly implementing new techniques due to its smaller installed base of existing technology, faster selection processes, and reduced user training burden.
Operating staffs must learn when and how to task teams to their advantage. Managers need to be confident and comfortable in the utilization of the team concept.
REFERENCES
- John S. Herold Inc., "Oil & Gas Capital Markets-A Fierce Battle for the Reinvestment Dollar," 12th Annual Oil & Money Conference, Nov. 12, 1991, London.
- Payne, Katherine, Shermer, Dick, and Pereth, Hank, Gemini Consulting, "In Search of Dynamic Equilibrium," Petroleum Economist, February 1992, pp. 22-28.
- Masters, John A., "Exploration De-Organization," Houston Geological Society Bulletin, May 1990, pp. 24-32.
- Abriel, W.L., Neale, P.S., Tissue, J.S., Wright, R.M., Chevron USA Inc., "Seismic Interpretation 27," "Modern technology in an old area: Bay Marchand revisited," Geophysics: The Leasing Edge of Exploration, June 1991, pp. 21-35.
- "Cognac redevelopment pays off," OGJ, Jan. 27, 1992, P. 104.
- Alqassar, T.M., Gallacher, W., LL&E London, DeMoss, S., LL&E New Orleans, "Interdisciplinary Effort Optimises Field Development in the U.K. North Sea Brae Area," prepared for the Archie Research Conference, Houston, Oct. 22-25, 1990.
Copyright 1992 Oil & Gas Journal. All Rights Reserved.
