Benchmarking drilling and completions operations has benefits and limitations
Extrapolating the North Sea experience
A group of other North Sea oil and gas operators and BP established a coop-erative study to share information about their comparative drilling performance in 1988. They called the study the "Drilling Performance Review." From that beginning a drilling and completions performance bench-marking process covering thousands of wells a year from Alaska to New Zealand was developed.
Today, many oil and gas operators are benchmarking their well construction performance globally with competitors. They are integrating benchmark data into their corporate performance scorecards and adapting internal measurement systems to fit with external benchmark definitions and measures. This is helping to bring about a standardization of well construction performance measures and terminology throughout the industry.
Some operators are even linking staff bonus rewards to benchmark performance, others are using external benchmarks to compare the performance of internal group companies, asset groups or business units. With this expansion in the use of well construction benchmarking, it is important to understand its uses and limitations.
Need reliable data
It is nice to know that you are doing "x%" better than last year, but the bottom line is really how you are doing compared to the competition. Information about the performance of competitors can be a very strong driver for improvement. Every operator wants to be the best, but in order to know who is best, it is necessary to be able to obtain reliable competitor performance information.
As a runner at the Olympic Games, you can see where you are in the race; at the end, the scoreboard will give the results. In the petroleum business, it has not been easy to obtain similar authoritative data about comparative performance. "Accessing this type of external data helps Marathon's drilling organization to ensure that we are performing as well or better than our competitors, and to identify opportunities for improvements" states Bryan Roy, Advanced Senior Drilling Engineer for Marathon.
Popularized by Xerox in the 1980s, the benchmarking process involves identifying "best in class" performing companies and learning from them in order to systematically improve, with the aim of eventually becoming one of the "best in class." There are also other specific benefits from benchmarking. Operators planning to go into new areas can use data on other operators' well and completions designs, problems experienced, time and cost data, and other factors to help with budgeting and planning. "Our ability to learn from external benchmarking is a cornerstone of our performance culture," explains Tony Brock, Drilling Performance Consultant with BP.
Multiple data uses
The degree to which operators follow the entire Xerox process varies a great deal. For some operators, it is enough simply to be able to confirm that their performance falls within an acceptable position in the industry. Other operators use benchmarking data for performance target setting. Identifying "best in class" performance and setting out to equal or better it normally means having to learn new and better ways to design and construct wells. Indicators of what the "best in class" companies do differently are available within benchmarking data. Benchmarking information is being used by Amerada Hess to plan wells in areas where the company has not previously operated, according to Andy Child, Well Engineering Manager with Amerada Hess.
Benchmarking data provides specific support to "technical limit drilling" ot TLD implementations, which some operators are using to achieve spectacular performance improvements. While the theoretical target for TLD is perfection, being provably among the "best in class" is an important step along the way.
A number of operators implement the full benchmarking methodology. They examine performance differences in terms of well and completions design and construction data provided with the study, and then selectively approach other operators who are achieving superior performance with an offer to share information and learn from each other. According to John Stobart, Worldwide Drilling Manager for BHP Petroleum, the reviews are used to identify real competitors and determine what the company has to do "to make sure that we out-perform them."
Do operators respond to requests to share information on performance? Most are happy to discuss their performance and how they achieve it, however a few are reluctant to do this. Participation in benchmarking studies does generally imply a willingness to share and this is reinforced by the identification of an individual in each operator as the first point of contact for inquiries about data and performance.
The drilling and completion performance reviews are fully transparent (operators, well names, and locations are provided), and there are no problems with anti-trust or anti-competition law. This is because only a limited number of "rolled up" drilling and completions costs are included. Studies which include detailed cost data require the operator and well identity to be anonymous, which does limit their use for learning purposes.
The initial 1988 study included little more than well cost, timing, and depth data. In 1993, surveying was outsourced to a joint venture of Rushmore Associates and the Sigma Consultancy, both based in Aberdeen. Since then, the surveys have been developed to include the completions phase and has geographically expanded from just the North Sea into a global study.
Each year, participating operators are consulted on potential changes and improvements and a meeting is held to agree on study content, scope, and format. From this a set of instructions and a data input spreadsheet is developed and circulated. Operators complete and submit this, along with time-depth charts or completion schematic diagrams.
The data for each well is subject to 100 automated checks on internal consistency. Wells which exhibit results outside the standard performance boundaries are highlighted for further verification. Well trajectory diagrams are included for particularly complex wells.
Once the operator data has been verified, it is made available to all other participating operators, who have also provided data. Sets of comparative performance charts which show the results by geographical area, rig type, well type, and other factors are also provided.
To be able to bring real value a global drilling and completions benchmarking study needs a critical mass of participating operators and a standard set of data definitions. Many operators use benchmarking data to derive quartile positioning for reporting purposes, which means that a reasonable proportion of other relevant operators need to participate in order to provide meaning to this measure.
The study requires that operators submit all their wells drilled in each country of participation. A problem encountered by studies, which have not required full submissions is the inevitable skewing of results through the withholding of data on poor wells. Compliance with the full submission requirement is verified using publicly available information.
The technical data provided for wells, such as casing sizes, mud type and weight, coring and logging measures, age of lowest reservoir accessed, and other factors, is highly reliable. The data relating to operational times is also reliable and verifiable through examination of time-depth charts, and dates provided by independent industry data providers. The data related to "interrupt" or "non-productive" times is more indicative due to the different ways in which operators define and calculate these values.
Cost data is subject to a margin of error due to varying accounting practices. However, examination of well time/well cost ratios for operators provide an indicator of the reliability of cost data with most operators in any area falling within defined bands.
Is it valid to compare the performance of operators who will be designing and drilling different wells, and to compare, for instance, land wells in Algeria with those in Bolivia? The answer is yes and no. The results need to be intelligently interpreted, with an understanding of the reality behind the numbers.
Clearly, it is not valid to simply look at a chart of comparative drilling speed and cost performances, for example of deepwater Gulf of Mexico operators, and conclude that operator A is a better performer than operator B. Comparative performance charts are just starting points to selecting valid comparator operators and wells, and then using informed judgment to discern the meaning behind the numbers.
With many of the major and mid-sized multi-nationals now participating in drilling and completions performance benchmarking on a corporate, rather than local, basis the trend towards full industry participation seems inevitable. The form that studies will increasingly take is a real-time, internet-based data store containing key performance data and time-depth charts on the great majority of the worlds wells, instantly accessible to every engineer and manager in every participating company throughout the world.
This will accelerate the movement to the establishment of a "de facto" standard for sharing of well construction data - one that operators will increasingly use for internal as well as for external benchmarking.
Current trends in knowledge management and toward the integration of information would also suggest that drilling and completions performance information will become linked with information on equipment performance and reliability, success of operational tools and techniques, and when the industry want to make that step, to links with well and completion productivity performance.
One of the drivers towards the globalization of drilling and completions benchmarking has been the increase in deepwater drilling. The relatively small number of deepwater wells in any one region, coupled with the commonality of issues raised by deepwater well construction, makes it vital for deepwater groups to examine well and completion designs, operational methods, and the performances achieved by others, not just locally, but throughout the world.
It would be naïve to imagine that there are not potential lessons, for instance, for deepwater drilling in the US Gulf of Mexico derived from successes in the Mediterranean, Atlantic Margins, West Africa, Australia, and the South China Sea. And, vice versa.
Author's Note: Peter Rushmore may be contacted at firstname.lastname@example.org.