Improving Drilling Scheduling with Owen Plowman of Actenum

EKT Interactive

Improving Drilling Scheduling with Owen Plowman of Actenum

In this episode our topic is “How improving drilling scheduling can benefit operational performance – more importantly, how not to miss your targets.”

We’re really happy to learn more about improving operational performance at this time of unprecedented challenges in our industry – answering questions like:

• What are the challenges as operators manage their drilling program schedules?
• Operationally, this must be particularly applicable to shale plays – steep decline curves, multi-pad drilling, huge volumes of water and sand, and the frack crews. True?
• Can you share case studies where operators have seen payoffs by improving schedules?
• Who needs to be involved with this process to achieve some of these efficiencies?
• What are some unique capabilities of the Actenum scheduling software application?

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Relevant Links:

Drill Down Oil and Gas Podcast

EKTi Oil-101 Introduction to Upstream

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About the Experts

Owen Plowman

Owen Plowman – Vice President of Business Development at Actenum Corporation. His role is to merge his software technical skills and knowledge of the oil and gas industry to advance Actenum’s product capabilities and address customer challenges.

Prior to joining Actenum in 2006, he spent 14 years at Oracle Corporation Canada, Inc., managing sales consulting, technical support, marketing, and professional services.

Owen has worked in the IT industry for almost 41 years: he began his career writing commercial software in 1979. After completing degrees in molecular biology and computer science, he joined Meta Systems Canada (a software start-up), where he led development efforts and consulted on projects for Canadian and US government agencies and defense contractors.

Mr. Plowman holds a BS in Biology and an MSc in Computation from McMaster University.

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Marty Stetzer

In parallel with his 25-year energy career, Marty has over 15 years experience in providing custom digital training programs to a variety of oil and gas technical audiences – like EKT Interactive Oil 101.

Marty has been a consultant to U.S. and international oil and gas
companies since 1986, including 13 years with PriceWaterhouseCoopers.

He has 18 years management experience with Schlumberger, Superior Oil-Mobil, Wilson Industries and Exxon.

Marty has worked with numerous national and international oil and gas company managements to help improve business performance across upstream, midstream and downstream operations.

Like many of the team, Marty is active in the Society of Petroleum Engineers and often presents at industry forums.

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Transcript:

Marty:

Hi, everyone and welcome to Drill Down, our podcast channel that routinely brings you new insights on oil and gas operations. I’m Marty Stetzer, President of EKT Interactive in Houston, and I will be your host today.

Our topic is “How improving drilling scheduling can benefit operational performance, and, more importantly, how not to miss your targets.” And I’ll be speaking with Mr. Owen , VP Business Development at Actenum Corporation in Vancouver. Owen has over 40 years of developing software applications for the oil and gas industry.

We’re really happy to have his input on this topic at this time of unprecedented developments in our industry. Owen thanks so much for taking the time today.

Owen:

Hi, Marty. It’s great to be here.

Marty:

Owen, as an industry and IT veteran, can you give our listeners your background as it relates to today’s topic?

Owen:

Sure. As you mentioned, I’ve been in the industry for 40 years, a little over 40 years now actually, and I come from a computer science background – that’s what I studied in university. My perspective has been shaped by my experiences. I came out of my master’s degree, and I spent eight years working mostly in the defense sector with a small software company.

And then I went to work for Oracle and I was there for 14 years. And of course, Oracle is a gigantic software corporation and it was a really interesting ride. I spent most of my time working in the finance sector and federal and local government.

And then I went to Actenum, where I’ve been for about 16 years, and I’ve worked with oil and gas customers of all different sizes – global customers, national oil companies, super majors, and all the way down to small US independents.

My perspective has been shaped by that experience and, of course, by what my company does, which is scheduling in the upstream world. The thing that I’m always interested in, my major interests, besides my job objectives are, and I’ve done this right from the get-go, why initiatives are successful and why initiatives fail and what lessons may be learned from that.

That’s really what shaped my perspective and led to me getting where I am today.

Marty:

So let’s get started, Owen. What are the challenges as operators manage their drilling program schedules these days?

Owen:

Well, I think that the major challenge is the understanding of what a schedule actually provides to an organization. When you’re an operator, you can think of the schedule as a way of figuring out when a particular rig is going to be spudding a well, or when is a well going to be tied in.

What you’re thinking about there is really just resources, activities, and dates. And what you should be thinking about and what is starting to happen in the industry is that you think about the schedule as an operational model of your organization.

When you start looking at the schedule that way… as a model of your operations and the effectiveness of your operations, then you start asking a lot of interesting questions which are material to your performance.

How efficiently are we using our rigs and frack crews? What’s the average cycle time and is there anything we can do to reduce it? That is the time between spudding a well and tying it into production. What is the production that we’re expecting to achieve over a particular period of time, like the next two quarters or the next year? How much is all that going to cost?

And more importantly, questions about how you might change your operations to be more efficient and more effective. What if we added a rig in the fourth quarter? What if we added a frack crew in the second quarter? What if we changed the way that we were drilling and we tried to use more efficient rigs, what would that cost and what would the payoffs be? Those are all really important questions and good questions.

And the challenges that I see right now are that some organizations are not positioned for success in that kind of thinking, because they’re using what I call traditional tools or 1990s technology. They’re working with manual spreadsheets. Microsoft Excel is the one that comes to mind. It’s probably the biggest… When people say, who is your competitor? I always say it’s usually Microsoft Excel. They use project management tools from the 1990s, like Project and Primavera, and those are not really oriented to really exemplify the model of upstream operations.

It’s very difficult for people to get the answers to questions that they ask, when they’re using those kinds of tools. You need to think about integrating your operations and bringing all of your upstream disciplines together in one schedule application. So that you’re not only thinking about what’s happening in drilling… you’re looking at the whole range of operations from pre-spot drilling, completions tie in, or through workovers, even sometimes down to plugging and abandonment. Those kinds of things are quite difficult using traditional tools, but it’s what people are focusing on even more and more as we speak.

It’s been, probably a change has been going on since about 2012, and now we hear about it all the time from companies that contact us. It’s something that they’re really starting to think about, because obviously the industry has gone through some horrific downturns and everybody’s trying to figure out how to be more efficient and do more with less.

Marty:

And again Owen, from an operational standpoint, this must be particularly applicable to the shale plays – steep decline curves, multi pad drilling, huge volumes of water and sand, and in the frack crews. I guess that’s another perspective that the operators have.

Owen:

This is exactly what led to the change that I mentioned just now that’s been going on since 2012. I would visit Houston a lot in the late first decade, so 2008-2009, and I would show our software to people. And they would go, “Oh, that’s quite interesting,” but nothing would ever come out of it. They wouldn’t adopt it, because they figured, we’re getting stuff out of the ground. Price is good. Who cares about a little bit of efficiency gain here and there? They weren’t drilling that many wells.

I started visiting Houston again in 2012, basically once a month, and it was crazy… because it’s all many more wells, lots of resources, all these moving parts, much higher level of coordination among operations, things to worry about like frack materials, drilling materials, and so on. Everything has to be coordinated. Some things have long lead times, so you really have to have a handle on when you need certain kinds of bits, for example. All that stuff that’s coming out of the unconventional, I think, has been leading to the push for higher efficiency and better scheduling.

Marty:

What have you seen are some of the payoffs for improving schedules? Can you share some case studies with our group?

Owen:

Sure. Without revealing any names, I can tell you about some interesting ones. We had one recently in the last couple of months where I heard that one of our customers was receiving a CIO award. I was kind of intrigued. So I phoned him up and said, “Well, what’s happening? How come you’re getting this award?” The two reasons are that using our software, they were able to save a thousand person hours of scheduler’s time over the course of the year. And that’s because our software automates much of the functions that they would do on a day-to-day basis.

Changing the durations of activities and moving activities around in time that saw routine with our software and it takes minutes. We heard that using alternative tools, it might take up to a week to get the schedule in sync because of the changes that occur in the operational world.

These guys saved a thousand person hours of schedulers’ time. And because they could use the software to look at the schedule from different perspectives, they weren’t stuck just looking at what the resources were doing. They were able to look at what was actually happening with individual wells and multi-well pads.

They could actually look at the cycle time, and they were able to shave some of the cycle time off and remove the white space from the Gantt chart, so activities move closer in time, and that saved them $30 million.

That’s why they are getting that award.

Other things that we’ve seen, we were working with a US company about four years ago, and they needed a better way to create what if scenarios. They were trying to maximize the drilling budget, and they were running all these scenarios with monthly production forecast to figure out what mix of rigs and frack crews should we really have as we go forward.

That process used to take them five engineers, and two weeks of time, because they were working with manual process, manual tools. And using our software, they were able to get the forecast that they wanted with two engineers in one day. So that was a very significant change for them.

Going back about 15 years, one of the first things that we saw with our software was the problem of optimizing rig scheduling to minimize unnecessary travel. We worked with a very large national oil company. They had a lot of situations in their schedule like this.

You’d have a couple of rigs. They would be about a hundred kilometers apart, and then they would both move and each one would go within about 10 kilometers of the other one’s starting point, right? They would actually pass each other on the road. What they really needed to do was to move one rig 5 or 10 kilometers to the next well site. And instead, they were bringing in this other rig and making it move a hundred kilometers.

The problem there is you’ve got a lot of unnecessary move time that you’re paying for, and you’ve got a lot of time wasted trying to get to first oil, because obviously drilling is delayed because of this gigantic move. So within three months of using our software – because we geo-and tag everything, all our locations and all our resources – they were able to get $5 million in savings and reduce the average time from spud to first oil.

Those kinds of things are what we’ve seen. Another big area is in what we call schedule conflicts.

We were working with an operator and they had the drilling people use one scheduling tool and the completions people use a completely different tool, have a completely different schedule, and then they tried to keep them in sync.

And they kept running into these what we call schedule conflicts where, for example, the completions team would show up to complete a well and they would discover that it was still being drilled and that the rig was not going to be freed until about four or five days later. So then what do they do? Sit around and do nothing, and that’s costing the company money.

They would also have a situation sometimes where a completion crew would show up and the pad would be totally empty. The pad had been built, but there was nothing actually on it. There wasn’t even any drilling scheduled, and it wasn’t scheduled to occur for some months.

What we were able to do… They were running into this five or six times a year, I think. We were able to get them down to about one time per year. And each occurrence that we were able to eliminate, they estimated it would cost about $1.4 million in people’s time.

That doesn’t count the time for the completion crews or whoever to sit around and do nothing or be redeployed, but just to resolve that kind of conflict was taking $1.4 million in people’s time. So that savings went right to their bottom line. Those are some of the benefits that people have seen.

Marty:

Owen, that is really impressive. But how do you pull this off? I’m hearing drilling. I’m hearing completions. I’m hearing stimulation. Of course, the associated service companies. I’m hearing production… Who’s involved with this process to try to achieve some of these efficiencies?

Owen:

We could do a whole other talk about that, about what I’ve seen in terms of performance improvement initiatives… but I think that the process of gaining these efficiencies requires what I would call an integrated well delivery framework, which is structured to provide the entire organization and all of the disciplines involved with data that they need and with measures that they need to understand so that they can determine whether they’re being really effective.

You bring together all the disciplines from G&G, reservoir planning, drilling, completions, workovers, and so on. All the execution, and you can actually use the scheduling platform as a mechanism to have everybody collaborate and gain feedback and pass that feedback between all disciplines. And that leads to enhanced performance.

What you need there is access to the data on demand that is required by each individual across the whole set of disciplines, elimination of the territorial behavior that sometimes we see between the disciplines where people won’t share their data, and sustained involvement of management and a commitment to change things. Now, that can be a lot for an operator to chew on all at once, but you can gain significant value from executing any one of those things.

Of course, I come from a company that sells scheduling software, so my initial reaction would always be, well, buy our software and it’ll make everything better for you. But you don’t have to do that. You really have to think about change management, because the people will make or break the performance improvement initiative, and what you need to do in your organization just to make sure that you’re positioned for success and improvement over the long haul.

Marty:

Speaking of performance improvement, I’ve spent time at Schlumberger and what you’re describing sounds to me like some of the more successful field development planning projects that we executed with the cross-functional, cross-discipline folks finally getting in the same room and working together. Is that another good analogy?

Owen:

Marty, it’s a very, very good analogy. We’ve actually had projects fail, particularly in some national oil companies where disciplines won’t share their data. We were trying to help an organization once improve its whole drilling program and bring better scheduling into place. They were very keen on optimizing their schedule and aligning it with targets, right? One of the targets that they wanted to work on was production. How do we assemble our rig resources and what wells do we drill to achieve a certain production level over a year or over half a year?

Well, they couldn’t get the production data because that was handled by a totally different discipline, and the VP would not allow that data to go outside the discipline. I heard this and I shook my head, and I called my contact up and said, “Well, what do you mean? Why doesn’t your drilling VP talk to that production VP and just say… outline the reasons why we need that data?” “Tried it. Doesn’t work.”

You simply can’t have that behavior in an organization that’s trying to improve performance.

There needs to be some kind of management intervention at a higher level there which says, “This is what we’re doing. Get on the train and let’s all move forward together.” That’s the kind of thing that needs to be in place.

Marty:

Owen, in addition to being a cross-functional application, is there any other special items about your scheduling application that you’d like to talk over with us?

Owen:

I think the traditional tools that I’ve mentioned earlier, like Excel, Project, and Primavera, those are not specific to oil and gas, obviously. I mean, Excel is a general purpose spreadsheet and Project and Primavera are project management tools, but they don’t care whether you’re managing development of a nuclear power plant or building a bridge. There’s no well-based model in those applications. They don’t understand anything about production.

They don’t understand anything about well locations – surface hole, bottom hole, geographic orientation, whether the well is vertical, multi-lateral, horizontal.

They don’t know anything about interference that may occur between wells. You’re deciding on fracking a particular well or drilling a particular well and what you find is that you’re in the zone of interference for a producing well. And if you carry on, you’re going to have an impact on the production and what may be even worse is that it’s somebody else’s well and not yours, and then you’re going to have to pay them some kind of penalty.

What our software incorporates is a very comprehensive well model that has been developed over the 16 years that we’ve been doing this, developed in conjunction with customers. It captures all of the relevant data that a customer would want… not all of which has to be used. Some small operators won’t care about some of the data items that they could populate, but it’s specifically designed for well delivery operations, so taking a well from concept all the way through to actually putting it online and getting production out of it.

Marty:

With your application and the drive for efficiency, are there some other industry trends that you’re seeing in managing upstream operations?

Owen:

I think besides the increased thinking about efficiency and what can be done operationally to achieve that efficiency, we’re seeing more integration of operations.

We used to show up and customers would say, “Here’s my schedule, and it’s just rigs and completion crews and dates for doing activities, and these are the well names.” What we’re seeing now is increased sophistication on the part of the operators. Even if they’re using traditional tools, they’re trying to align multiple spreadsheets, so they’re tracking production in one spreadsheet and they’ve got the schedule in the other.

We’re seeing much more sophistication and increased appreciation of why that’s important. That’s one thing that we’re seeing.

More integration of different functions, people are bringing together the pre-spud activities, the drilling completions, facilities pipeline, and so on, and workovers.

We’re seeing increased interest in deployment in the cloud. Six or so years ago, I went to all of our customers in the US and I started asking about cloud deployments, and every single organization said, “Not on our radar. We have no use for cloud. Not something we’re interested in.”

Two years ago, I went back and revisited that question and every single customer said, “Cloud is definitely part of our strategy moving forward with our IT applications.” We have the ability to deploy locally or in a cloud. That’s been available for a couple of years now.

I think there is an increased interest in bringing some of the field development planning capabilities into the same tool as the execution scheduling function.

Development planning is looking at aspects of the operations saying, “I’ve got a billion dollars to spend in a year. Where am I going to drill my wells? What do I need to do about my gathering network? What do I need in terms of resources, and so on, and how am I going to spend that billion dollars wisely?”

And what comes out of that plan, it’s the step before you get into the execution scheduling usually. And then the question is, so what resources do I need to mobilize to make that plan a reality and execute it over the next 18 months or whatever?

And currently, the situation is that those functions are generally done by different tools. Sometimes spreadsheets are used for both, but there has to be some sort of linkage between them. One of the things that we’re working on – and we’re doing that as a result of some questions being asked by our customers – is how can you bring those two functions together in one application so I have seamless integration between my plan and my schedule? Because, of course, the plan may change.

If you go out and start drilling some wells and you discover certain things that lead to the G&G people thinking about the reservoir and that translating across all the disciplines and changing the plan, you need to be able to put a sort of feedback loop in process between those disciplines that goes very rapidly. Seamless integration across planning and execution scheduling is really important. That’s something we’re working on and we’ve had some initial successes with that. We’ve been working on that for about four or five month.

Marty:

Owen, that was terrific. Thanks so much for your insights. This will surely be valuable to your audience and our own community of 10,000 thousand EKT Interactive followers.

Thanks to everyone for listening. Our company name, EKT Interactive, stands for Energy Knowledge Transfer. We digitally capture the extensive knowledge of industry experts like Owen.

If you are an analytics expert or an IT professional that is new to oil and gas and want to quickly learn how this industry works, check out our digital on-demand oil and gas training series at www.ektinteractive.com.

Thanks again.

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