Cost efficiency through sharing

"How much more efficiently could you conduct your offshore oil and gas exploration and production operations if you and your service providers worked cooperatively to coordinate the use of certain resources?"

Recently, the 14 founding members of an initiative known as Operating System 99 (OS99) posed the following question to oil and gas companies that operate in the Gulf of Mexico (GOM): "How much more efficiently could you conduct your offshore oil and gas exploration and production operations if you and your service providers worked cooperatively to coordinate the use of certain resources?"

The OS99 initiative provides a vehicle for exploring this question. The focus of the initiative - improving efficiency without compromising effectiveness - seeks to eliminate waste and make oil and gas-related investments in the GOM more attractive.

To date, OS99 appears to have made a good start, has generated tremendous interest, and promises to significantly improve offshore operating efficiency.

Resource sharing

Operating System 99 is like a cooperative of oil and gas exploration and production and service companies who coordinate specific resource sharing to improve their operating efficiency in the GOM. The initiative is establishing processes for sharing nearly any resource needed by offshore oil and gas companies, such as boats, helicopters, shore bases, warehouses and inventories, drilling rigs, wireline operators, welders, mechanics, electricians, painting crews, and other specialty services.

The initiative is available to service providers and users on a voluntary, non-exclusive basis. The participants run the cooperative organizations democratically.

The program fosters the identification, development, and execution of resource/region-specific sharing arrangements through the use of an Internet web page and an ongoing series of forums on resource sharing.

Scheduled services

For participants, OS99 enables a cost-effective shift from a costly service-on-demand method of operating to a more efficient scheduled service method by providing pools of shared resources for contingencies. Sharing contingency resources enables participants to move from reactive service-on-demand to a proactive mode of scheduled service.

This is accomplished without suffering the costs of downtime that might otherwise result from the loss of flexibility that could occur if a single company acted alone to increase the utilization of its resources.

Operating System 99 delivers these benefits with minimum overhead, and costs are shared in proportion to the benefits a participant receives. The initiative can perpetuate the life of marginal fields and create opportunities not otherwise achievable in today's operating environment in the GOM.

On March 10, 1999 OS99 members held the first Forum on Resource Sharing Opportunities. Over 100 key people from 55 companies attended. Roughly half those attending were from oil and gas companies, with representatives from service companies making up the other half. Twenty-nine companies proposed one or more resource sharing opportunities during the Forum.

Web site

The Forum produced a summary listing of the opportunities presented and a contact list of the participants. Additionally, participants voiced overwhelming support for establishing a cooperative initiative Internet web site to serve as a bulletin board for resource sharing opportunities. This has led to the creation of an OS99 Internet web site.

Several of the 14 founding members of OS99 have named representatives to serve on the cooperative organization's Steering Committee. The founding member companies include:

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The current governance of OS99 is based on an informal process. It's eventual governance structure will be determined by its participants as the need for a more formal arrangement may develop.

While resource sharing has often occurred in the GOM, especially among independent operators, OS99 will make the resource sharing process easier, more effective, and more common.

Since the first forum on March 10, several participating companies have entered into boat and/or helicopter sharing arrangements. These arrangements are meeting operational needs at considerably less cost.

Success stories of resource sharing arrangements around the world suggest that the improved efficiencies from such arrangements can produce savings of 20% and more.

(For more information about OS99, see the organization's web site at OS99.com. If you would like to participate in OS99, call Bob Sheffield at (504) 728-4849).

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