The Role of a Worldwide Drilling Organization and the Road to the Future
- G.F. Boykin (Amoco)
- Document ID
- Society of Petroleum Engineers
- SPE Drilling & Completion
- Publication Date
- June 1999
- Document Type
- Journal Paper
- 144 - 152
- 1999. Society of Petroleum Engineers
- 1.6 Drilling Operations, 4.1.2 Separation and Treating, 1.6.1 Drilling Operation Management, 2 Well Completion, 1.6.9 Coring, Fishing, 1.10.1 Drill string components and drilling tools (tubulars, jars, subs, stabilisers, reamers, etc), 1.15 Fundamental Research in Drilling, 4.1.5 Processing Equipment, 6.1.5 Human Resources, Competence and Training, 4.2.3 Materials and Corrosion, 4.3.4 Scale, 7.3.3 Project Management
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After struggling for the past few years with the question "How can we get the highest return for our drilling expenditures?," major operators have arrived at very different answers. Some have responded by moving the drilling function to business units, some by retaining a mixture of centralized and decentralized drilling staffs, and some by outsourcing the function almost entirely.
The purpose of this paper is to describe why one major operator has chosen to keep drilling management as one of its core competencies, and how it continues to use a centralized drilling group to meet its exploration and production customers' needs. Also discussed is the deliberate strategy employed by this operator to meet the challenges posed by the changing exploration and development environment. This strategy included elements to manage people, business and technical processes, and to ensure that the drilling organization captured and shared its experience. This paper describes this strategy, the organization's successes and remaining challenges, and how this organization plans to address these challenges.
In this paper, the term "drilling" encompasses the functions that have traditionally been fulfilled by the drilling organizations in major operators. In this definition, "drilling" is not the ownership and operation of the tools, but is instead the management of the well drilling and completion activities. Under this definition, drilling includes the following elements: development of the well's technical requirements (based on exploration, production, health, safety, and environmental goals) development of the design and operational plans to most effectively meet these goals, oversight and management of wellsite operations, and improvement of all drilling associated activities. In short, drilling is not limited to wellsite operations but includes the entire process required to plan, implement, and analyze a drilling and completion program. Because this is nothing new, I hesitate to coin a new phrase (such as well construction) for this total system approach because "drilling" for major operators has always meant drilling management as defined here.
Is Drilling a Core Competence?
I have heard it said, more than once, in various industry forums that "drilling is not a core competence." I always find this statement amusing because, until we can find a way to extract petroleum from the earth without a wellbore, drilling must be someone's core competence. It is possible that drilling should not be an operator's core competence, but it certainly must be the core competence of someone in this industry. The key question is not "Is drilling a core competence?," but rather "Should drilling be one of our organization's core competencies?"
To answer this key question we should examine the requirements of a core competence, and then determine if drilling meets these requirements. According to Prahalad and Hamel,1 the originators of the core competence concept, a core competence is a set of skills that:
- provides potential access to a wide variety of markets,
- makes a significant contribution to the perceived customer benefit of the product, and
- is difficult for a competitor to imitate.
Does drilling, as defined above, fit the description of a major operator's core competence? What follows is an examination of drilling as it relates to these three criteria.
Core Competence Requirement 1: Does Drilling Management Provide Access to a Wide Variety of Markets?
Drilling provides access to a "wide variety of markets" if, by possessing drilling competence, the organization is able to operate profitably in many more situations than it would otherwise be able. The capacity to manage drilling projects worldwide fulfills this requirement for the following two reasons: (1) it provides access to resources in "exotic" operating environments; and (2) it is a major factor affecting the economic viability of mature operating environments.
How Does Drilling Competence Improve Access in Difficult Operating Environments?
Some of the obvious examples of where drilling competence improves access to resources in difficult operating environments include deep water, remote, and very long, extended-reach prospects. Operators may possess the financial resources, exploration, production, financial management, and facilities competencies to economically exploit these resources. However, if they lack the drilling competence, then they will not be contenders in the competition to acquire and develop these areas. In these unusual operating environments, drilling competence can be one key to accessing the market.
How Does Drilling Competence Improve Access to Economically Marginal Markets?
Drilling competence not only provides access to resources in "exotic" operating environments, but it can also improve access to resources in what some people would consider "mundane" drilling environments. Without advances in drilling technology and practice, development of some mature plays is simply not economic. Amoco has many examples where proper drilling project management enabled profitable extraction of resources that would otherwise have remained uneconomic.
One example of such a situation is the ongoing drilling operations in the Greater Green River Basin. Marshall Gile, the primary customer in the area, said that "If not for the improvements made by our drilling department we would be out of business in the Green River Basin." Fig. 1 illustrates the situation behind Gile's statement. Fig. 1 shows every comparable well drilled from 1990 through 1995 by every operator in one particular Green River Basin play. The figure shows a "step change" in drilling efficiency reflecting dramatic improvement for one of the operators, in this case—Amoco.
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