November 6, 2020
Are you still using simple tools for rig scheduling?
Over the last few months, we have spent much time visiting with people in oil and gas companies. Many of our discussions have focused on how they manage the leases in their assets, together with the many lease obligations, and how they schedule all of the activities along the well delivery process (pad construction, drilling, completions, fracturing, and so on). What is remarkable, besides the complexity of the operational situation (particularly in unconventional environments), is the software tool that’s commonly used to manage it: MS-Excel.
The complexity of lease management overwhelms the capabilities of a spreadsheet
We know that, when faced with the need to capture a lot of data and present it in some intelligible manner, any engineer worth his or her salt is going to fire up MS-Excel and bash away with it. But the problem with this approach is that the real-world operational complexity of lease management and scheduling overwhelms the capabilities of a spreadsheet and can make people’s jobs very difficult. It’s challenging to model a lease effectively, for example, where there are various time-based obligations that must be met, resulting in the need to schedule equipment, facilities, and people against those obligations. The reason it’s so challenging is that the operational environment isn’t static: there are a large number of factors (such as lease changes, equipment readiness problems or downtime, and weather) that bring about schedule changes, sometimes several times a day.
Simple tools like Excel can’t keep up with the need to rapidly make informed decisions that cumulatively have a huge financial impact
All these changes require a lot of decisions to be made about what to do. Not necessarily single decisions that have a huge financial impact, but multiple decisions that cumulatively affect the bottom line. There may be multiple people involved in each decision or multiple teams that must collectively decide what to do to achieve the best outcome. So, the opportunity to be right or wrong—to make a good or bad decision—is always around. And MS-Excel (along with other tools such as MS-Project) simply isn’t up to the job. A single example: management decides to reduce the drilling budget for one asset by 2% over a year, and to send three rigs from that asset to a different one. How easy is it, using MS-Excel, to ensure that no lease obligations are missed, and to determine the change in forecast production in the next six months? It’s not: it’s laborious and there is little opportunity to evaluate multiple scenarios and select the most appropriate one to put into practice.
What is the result? Imperfect decisions, based on partial (or missing, or erroneous) information. The kind of imperfect decisions that, when taken cumulatively, result in significant losses over time.
Selecting the right scheduling tool makes all the difference
So, what’s the answer? From Actenum’s perspective, organizations simply need an appropriate tool that enables people to make the right decisions and to make those decisions in a timely way. Such a tool must have the following characteristics:
- All lease and well delivery data is maintained in a single environment, providing a consistent view of the business. This allows you to make decisions based on all available data.
- Feedback on the impact of decisions on key operating metrics is available immediately, not in minutes or hours. You should be able to decide on a change and understand the implications of that change on your bottom line immediately.
- The tool should support “what-if” analysis, quickly and easily. It is rare that there is only one “correct” decision, or response, to a given situation. Being able to try different approaches allows you to explore different aspects of complex solutions.
- The tool makes it easy to understand what the data means and to collaborate with others. This requires a powerful interface that allows you to view summarized information and also to drill down to the details to understand what is behind the numbers you are seeing.
By properly equipping people who make critical decisions every day, we can ensure that those decisions are made quickly and with confidence. This means more of these decisions will be the right ones, and cumulatively they will result in higher profits.