Optimization and Business Improvement Studies in Upstream Oil and Gas Industry

Delves into the core and functional areas in the upstream oil and gas industry covering a wide range of operations and processes

Oil and gas exploration and production (E&P) activities are costly, risky and technology-intensive. With the rise in global demand for oil and fast depletion of easy reserves, the search for oil is directed to more difficult areas – deepwater, arctic region, hostile terrains; and future production is expected to come from increasingly difficult reserves – deeper horizon, low quality crude. All these are making E&P activities even more challenging in terms of operations, technology, cost and risk. Therefore, it is necessary to use scarce resources judiciously and optimize strategies, cost and capital, and improve business performance in all spheres of E&P business.

Optimization and Business Improvement Studies in Upstream Oil and Gas Industry contains eleven real-life optimization and business improvement studies that delve into the core E&P activities and functional areas covering a wide range of operations and processes. It uses various quantitative and qualitative techniques, such as Linear Programing, Queuing theory, Critical Path Analysis,  Economic analysis, Best Practices Benchmark, Business Process Simplification etc. to optimize

• Productivity of drilling operations
• Controllable rig time loss
• Deepwater exploration strategy
• Rig move time and activity schedule
• Offshore supply vessel fleet size
• Supply chain management system
• Strategic workforce and human resource productivity
• Base oil price for a country
• Standardize consumption of materials
• Develop uniform safety standards for offshore installations
• Improve organizational efficiency through business process simplification

The book will be of immense interest to practicing managers, professionals and employees at all levels/ disciplines in oil and gas industry. It will also be useful to academicians, scholars, educational institutes, energy research institutes, and consultants dealing with oil and gas. The work can be used as a practical guide to upstream professionals and students in petroleum engineering programs.

Sanjib Chowdhury is working in a major oil company and has over thirty years of experience in cross-functional areas of Strategic and Corporate Planning, Optimization and Business Improvement, HR and General Management in Upstream sector. He has held responsible positions and carried out many impressive work and studies in these areas – this book is a testimony of that. He holds B.Tech, M.Tech., and Ph.D. degrees in Industrial Engineering & Management all from  Indian Institute of Technology, Kharagpur and published several technical papers in journals of repute.

Preface xv

About the Author xvii

Acknowledgments xviii

1 Optimization and Business Improvement Studies in Upstream Oil and Gas Industry: An Overview 1

1.1 Introduction, 1

1.2 E&P Activities and Processes, 2

1.3 Need for Optimization in Upstream Industry, 3

1.4 Importance of Creativity and Data Usability for Business Performance Improvement, 4

1.5 Overview of the Book, 5

Review Exercises, 8

References, 8

Further Reading, 9

2 Optimizing Productivity of Drilling Operations 11

2.1 Introduction, 11

2.2 A Brief Note on Drilling Operation and Cost, 12

2.3 Objectives, 15

2.4 Key Observations and Findings, 16

2.5 Human Factors, 21

2.6 Organizational Factors, 25

2.7 Technical Factors, 28

2.8 Benefits and Savings Potential, 32

2.9 Limitations of the Study and Scope for Further Work, 33

2.10 Conclusion, 33

Review Exercises, 35

References and Useful Links, 35

Further Reading, 36

3 A Diagnostic Approach to Optimize Controllable Rig Time Loss 37

3.1 Introduction, 37

3.2 Rig Time Loss and Nonproductive Drilling Time, 38

3.3 Objectives, 39

3.4 Observations, 39

3.5 Waiting on Materials, 42

3.6 Waiting on Decisions, 45

3.7 Waiting on Logging, 46

3.8 Equipment Repair Downtime, 49

3.9 Other Shutdown, 53

3.10 Waiting on Weather, 55

3.11 Conclusion and Scope for Improvement, 57

Review Exercises, 59

References, 59

Further Reading, 59

4 Optimizing G&G Strategies for Deepwater Oil and Gas Exploration 61

4.1 Introduction, 61

4.2 Objectives, 62

4.3 Methodology, 63

4.4 Optimization of G&G Evaluation Time in Deepwater Wells, 65

4.5 Economics of Acquiring LWD for Own Deepwater Rig, 70

4.6 Improve Accuracy of Geological Predictions, 73

4.7 Effect on Downhole Complications due to Variation in formation Pressure, 75

4.8 Slippage in Well Completion Time of Deepwater Wells, 78

4.9 Influence of People’s Factors on the Success of Deepwater Exploration, 80

4.10 Benefits, 81

4.11 Limitations of the Study and Scope for Improvement, 81

4.12 Conclusion, 82

Review Exercises, 83

Further Reading, 84

5 Optimization of Offshore Supply Vessel Fleet Size Using Queuing Theory 85

5.1 Introduction and Background of the Problem, 85

5.2 Objectives, 86

5.3 Waiting Line Model: A Brief Note, 87

5.4 Formulation of the Model, 91

5.5 Results, 93

5.6 Limitations of the Model and Scope for Further Work, 96

5.7 Conclusion, 98

Review Exercises, 99

Appendices, 100

References, 101

Further Reading, 101

6 Standardizing Consumption of HSD, Cement, and Chemicals in Oil/Gas Wells and Rigs 103

6.1 Introduction, 103

6.2 Objectives, 104

6.3 Methodology, 104

6.4 Standardization of HSD Consumption, 105

6.5 Standardization of Oil Well Cement Consumption, 117

6.6 Standardization of Chemical Consumption, 124

6.7 Benefits and Scope for Improvement, 131

6.8 Conclusions, 132

Review Exercises, 134

Appendix, 135

Reference, 135

Further Reading, 135

7 Optimizing Rig Move Time and Activity Schedule Using Critical Path Analysis 137

7.2 Objectives, 139

7.3 A Brief Note on Network Analysis Using PERT/CPM, 139

7.4 Development of Network Analysis Model, 141

7.5 Results and Discussions, 145

7.6 Probability of Completion of Project on Time, 146

7.7 Crashing of Activity and Project Completion Time, 148

7.8 Suggestions, 150

7.9 Limitations of the Study and Scope for Further Work, 151

7.10 Conclusions, 153

Review Exercises, 154

Appendices, 155

References and Useful Links, 165

Further Reading, 165

8 Developing Uniform Standards for Emergency Alarm System and Indicators for Offshore Oil and Gas Installations 167

8.1 Introduction, 167

8.2 Objectives, 168

8.3 Methodology, 169

8.4 Observations, 169

8.5 Deep Dive and Findings, 170

8.6 Recommendations, 173

8.7 Conclusions, 174

Review Exercises, 175

Appendices, 176

References and Useful Links, 180

9 Optimizing Supply Chain Management System of an E&P Company 181

9.1 Introduction, 181

9.2 The Evolution of SCM, 182

9.3 Objectives, 185

9.4 SCM System, 186

9.5 Procurement Group, 188

9.6 Materials Management Group, 200

9.7 SCM Support Group, 206

9.8 Benefits, 209

9.9 The Scope for Further Work, 210

9.10 Conclusions, 211

Review Exercises, 213

References and Useful Links, 213

Further Reading, 214

10 Manpower Optimization and Strategic Workforce Planning 215

10.1 Introduction, 215

10.2 Objectives, 216

10.3 Manpower Planning and Optimization Process, 217

10.4 Methods of Manpower Demand Forecasting, 218

10.5 Other Key Issues in Manpower Planning, 221

10.6 Introduction of Multiskilling and Multidisciplinary Approach, 222

10.7 Rationalization of Disciplines, Trades, and Categories, 225

10.8 A Case Study on Manpower Optimization, 229

10.9 Conclusion, 244

Review Exercises, 246

Appendices, 247

Further Reading, 262

11 Improving Organizational Efficiency through Business Process Simplification 263

11.1 Introduction, 263

11.2 Objectives, 264

11.3 Differences between Business Process Simplification and Business Process Redesign/Reengineering, 265

11.4 Identify Opportunities for Business Process Simplification, 267

11.5 Business Process Simplification: Some Real�]Life Examples, 267

11.6 Suggestions for Improvement, 281

11.7 Scope for Further Work, 282

11.8 Conclusion, 283

Review Exercises, 283

References, 284

Further Reading, 284

12 Optimization of Base Oil Price Using Linear Programming 287

12.1 Introduction, 287

12.2 Objectives, 291

12.3 A Brief Note on LP, 292

12.4 Formulation of the Model, 294

12.5 Model Calibration and Execution, 301

12.6 Results, 302

12.7 Limitations of the Model and Scope for Further Work, 308

12.8 Conclusions, 308

Review Exercises, 309

Appendices, 310

References and Useful Links, 313

Index 315

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