Oil and gas producers appear to be less than infatuated with the success of integrated asset teams - that assemblage of 5-8 disciplines, including a financial expert - to successfully drill and develop individual onshore and offshore properties. In short, the results do not exceed the sum of the individual contributions - often enough. The failure appears to rest less on the team's technical expertise than on team dynamics.
Producers expect the technical disciplines to optimize decision-making internally. More often, however, team management or leadership comes from a dominant discipline. This arrangement does not optimize the process, and it is not a fault of the participants.
Managing an asset team is no different than what takes place on corporate or division levels. Executive committees pick management team leaders based upon dynamics management skills - for the good of the company. Somehow, this process is subdued on the project team level, with the assumption that a competent technical team can always resolve dynamics issues.
Are integrated asset teams going away? Probably not, but oil and gas producers need to take a closer look at team dynamics at the outset. Some talented individuals don't operate very well in a team environment; others are uneasy with peers in a team leadership role. Sometimes, sending in a leader to fix a problem subordinates technical input to relationship building.
Sooner or later, everyone wants to be a part of a winner, and good team dynamics - organized at the outset - can produce consistent winners.
Two missing generations
Two energy price recessions have taken a serious toll on industry engineers and geoscientists at both ends of the working age spectrum. During the entire 14-year period, industry recruitment and training of technicians took place in only two of those years. At the other end of the age spectrum, many professionals in the 50 plus age range took options for early retirement during both downturns.
Shortages in both age groups create transition challenges for oil and gas producers. Vendors must be relied upon to fill the experience gaps, even though they have similar, but often unacknowledged, shortages. Another is that the industry becomes more vulnerable to environmental accidents, partner lawsuits, and risk-reward calculation mistakes.
How can we remedy this experience shortfall? To begin with, we need to look at what cannot be done. To remedy the situation producers will not be able to expand drilling or development portfolios with any rapidity, regardless of demand and high oil prices. During the coming activity expansion, producers will have to be cautious about their own capabilities and that of vendors. One impact producers had hoped to avoid - a bidding war for talent - appears to be on the way.
Producers re-assert control
Oil and gas producers, mostly majors at the present, appear to be re-aligning management control of projects. Improving cash positions and share values are allowing producers to pull back on personnel reductions, and fewer projects on the table mean internal teams can better manage portfolios. If the trend is significant, what does this mean for the industry?
- Rather than partner management teams, large producers likely will insist on operating management, even if they hold minority stakes.
- With less need to lay off risk, producer partnerships probably will diminish in number or devolve into senior-junior partner arrangements.
- Vendors may not see as many opportunities to lock in project participation. Larger producers want to widen bidding to head off expected rate and product pricing increases.
- Bundled and turnkey services could lose some of their attraction, if producers expand detailed project bidding by function and specialty. The quality of individual products and services could become as important as vendor depth and breadth.
Even though producers are luxuriating in high oil and gas prices, they remain vigilant on cost control. To the extend that project managers can demonstrate cost benefit on tighter internal controls and unbundled bidding, the trend could prove long-lasting.
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