Modern Drilling Organization

Budgeting with precision

Being able to match budget and result is more important than you think

Value of planning

The early decisions have the highest impact; the architect controls the budget and the hammer follows the budget. Let's look at how decisions in well planning impacts the oil company finances.

For simplicity, we can split well planning in two, early and late decisions. In the industry, we typically define everything from detailed operations planning through operations as late decisions, and everything before the detailed operations planning as early decisions.

Value of planning

The decisions made in early phase are used to choose rigs for drilling, decide on well schedule, schedule targets to be drilled, and choose upgrade strategies for platforms or rigs.

The budget is the quality of your organization

You can easily link the quality of your organization with the quality of the budgets. If your budgets match the results, you communicate experience and trustworthiness

Value of planning 3

You want the budgets to match results, to show that you manage the uncertainties of well operations through advanced planning.

The alternative does not put you in a good light, and you will probably not be invited to strategy meetings.

In addition to trust, if your budgets are off, you can cause grave harm to the company and to the following operations.

Value of planning 1

The impact of early decisions range is enormous. If you underestimate the complexity of a well, you can end up with extra costs in operations in the 50-100 MNOK (5-10MUSD) range for stuck and sidetrack incidents, or you can end up with a limited reservoir section, killing the NPV of the project.

In any case where your budget is off, you end up with placing the operational teams under extra pressure, as you hand over unrealistic plans. The operational teams are already under heavy pressure with handling logistics and inefficient decision processes, you don't want them to make design decisions on top.

As you can see, all the decisions in the early phase of a project has significant impact on cost, risk and quality.

Which leads us to the questions: how good are the early decisions today, and how can these decisions be improved?

How good are the early decisions today?

Available resources

The people of the industry are good at planning, but they are a scarce resource in the current business atmosphere. All budgets are slayed, and lay-offs are again happening. The operations, with their high risk and manual decision structure is given priority, as operational managers can scream loud when the rig is waiting for decisions. Combine this with the potential negative outcome of a well schedule decision, the incentive prioritizing early planning is low in the manual organization.

Work process

Adopting workflows from the operations, early planning is sporadic and risk-based. Without proper planning tools, engineers and managers start from scratch every time, spending most their time trying to gather information and reporting. Well planning is primarily copy-pasting of previous wells, as the decision quality often is questioned in later stages such as detailed planning. The multitude of stakeholders in early decisions makes the reporting time dominant over engineering time.

So in summary, the early decision making suffers from few resources available and a poorly defined work process. The result is that decisions made in early planning phases are of low quality and carry the risk of derailing your oil company's investments.

How can the early decisions be improved?

The Pro Well Plan platform let you start from where you left off your previous well. You can do benchmarking and cost estimation in a couple of days without increasing the staff.

New workflows enable automated reporting and technical engineering, as well as digital input to the well planning. When you make decisions and changes, the stakeholders are immediately updated. And when the input data is changed, your model updates or ask for your input.

Improve your trustworthiness

Create budgets which match the results and show that you plan at the same detail as the operations. Pro Well Plan allows for reuse of plans, so you are no longer wasting the time you spend on details.

When you improve your plans, you will also take more responsibility and be accountable for operational outcomes. Take pride in making well designs and operational decisions that last all the way to TD.

Add more details to the planning to get valuable KPI's. The operational teams are overloaded with micro KPI's for performance, but only the well planner can coin the value of drilling a deep or slim section, avoiding known problems, or enabling well features which impact the well targets.

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