Balancing people and physical assets

Today’s upstream oil and gas industry faces widespread changes and challenges that are central to its survival and success.

Firstly, our physical assets are becoming ever more mature, and harder to find and produce. It serves as a salutary warning that more than 70% of the world’s oil and gas production comes from fields that are over 30 years old, according to the World Energy Organization.

Secondly, availability of qualified people assets is becoming an ever more serious operational constraint. A recent study by Booz Allen Hamilton found that around 50% of professional staff in the industry is between 40 and 50 years old, while barely 15% are junior recruits. This is compounded by the fact that up to half of the current workforce is likely to retire within the next 10 years.

At a time when high-level technical expertise is required to meet the twin needs of maximizing returns from existing fields and finding hydrocarbons in new ones, many skilled, experienced but aging technical personnel are at the point of leaving the industry and there are no immediate replacements. Today, graduate recruitment into the oil and gas industry is at all-time low.

So what are the immediate repercussions of declining physical and people assets?

For some, the lack of a critical mass of people is resulting in a prioritizing of short-term focused activities – often at the expense of long-term reservoir management issues. There is a real danger that reactive, short-term management will replace the longer-term business reservoir recovery goals that drive productivity.

For many, the panacea to the challenges of physical and people assets is the adoption and use of advanced technology spurred by the dramatic rise in computing power. A recent survey by Microsoft found that 89% of respondees believe the diminishing work force and the necessity to increase production makes the need for high-performance computing capabilities more critical today than ever.

It is my belief that the most successful oil and gas companies of the future will be those that maintain a balance over the development of both their physical and people assets facilitated through the adoption of advanced technology solutions. I believe operators will have no option but to change their ways of doing business and the relationship between people and technology.

How exploration and production operators use knowledge to extract value from the technology and how they make these technology solutions work for the people who operate them will be crucial. This is what will drive true productivity.

Let me give you some examples in the reservoir characterization workflow where, through the use of new technologies, this balance between physical and people assets already is being fostered.

Take the evolution of structural modeling. Previously seen as a long, cumbersome, and labor intensive process, today’s structural modeling tools provide new fault and horizon modelings, an intuitive graphical user interface, and a streamlined workflow. The result is that cycle times are reduced from months to weeks.

The fact that the entire asset team now can access the same structural representation provides consistency across the disciplines and increased productivity. And the increased productivity also results in higher-value physical assets; with an accurate model of the subsurface showing both rock layers and faults.

Fracture modeling and reservoir simulation are two other examples.

Despite its importance and influence, for many years fracture modeling was considered an esoteric and highly specialist part of reservoir management. This has changed, however, with the rise in integrated, easy to use fracture modeling packages.

By arming asset teams with more effective tools to incorporate fractures into their models in readiness for simulation, operators can look forward to more geologically robust reservoir modeling, improved decision-making, and more productive people.

The same goes for reservoir simulation. Reservoir simulation today on the desktop, with its increased emphasis on cost, ease of use, and an accessible, streamlined workflow, is starting to involve the entire subsurface community rather than a few, highly specialist reservoir engineers.

Finally, there is the move in the oil and gas industry toward an integration of modeling, real-time instrumentation, and a merging of geoscience and production data to create real-time models.

At a time when the industry is looking for fast, easy-to-use, powerful reservoir management solutions to optimize production from increasingly marginal assets, and to make better decisions over the allocation of capital and resources, the timing of this move towards integration could not be better.

A people-oriented approach to new technologies is central to the effective balancing of physical and people assets. And in addition to the technology, the training, coaching, and mentoring of existing and new recruits also will be vital to the effective execution of technologies, workflows, and work processes.

There is, and will always remain, an interdependent relationship between people, technology, and physical assets. At a time when one of the biggest challenges operators face is skills-shortages, however, it is encouraging to see the signs of an increased maturity from operators – not just in their older reservoirs, but also in their alignment of technology and people.

Blair Shimmield
Solutions Strategy Manager
Roxar AS

Blair Shimmield is author of the Roxar white paper titled “Where Should the Balance Be Between Developing People Assets and Physical Assets in Today’s Upstream Oil & Gas Business?”

This page reflects viewpoints on the political, economic, cultural, technological, and environmental issues that shape the future of the petroleum industry. Offshore Magazine invites you to share your thoughts. Email your Beyond the Horizon manuscript to Eldon Ball at[email protected].