November 2015

Drilling advances

The new cutting—coping paradigm
Jim Redden / Contributing Editor

With the typical corporate pep rally, otherwise known as the quarterly conference call, taking on a decidedly somber tone this year, the July 30 comments of Oxy Oil & Gas President Vicki Hollub were at once refreshing, and a bit radical, when put in context of the current climate.

“In previous industry down cycles,” she told investors, “we’ve seen the industry overreact through widespread layoffs. We’re taking a different approach with our response to low oil prices and have deployed many of our engineers in the early stages of their careers, out into the field, where they have replaced contractors. They are successfully helping to optimize our base production, improve drilling times and gain on-the-ground experience.”

Pointing to the Midland, Texas, training center, which Occidental Petroleum unveiled in September, in the heart of the Permian basin, Hollub went on to say, “Despite the low-price environment, we’re continuing to commit to developing our technical talent.”

With the big crew change having morphed into an ever-bigger crew drain, Hollub now appears to be the lone voice in an expanding wilderness of downsizing, rightsizing, furloughing or whatever is the tasteful euphemism of the day. And, as those folks leave, they take with them a wealth of institutional knowledge and experience that may be forever lost, warned Tamir Aggour, Southwest regional director of business strategy and development for IHRDC, a global petroleum training and development company. His Sept. 29 comments were made at the SPE Annual Technical Conference and Exhibition (ATCE) in Houston.

“Oil companies have been known to say our number-one asset is our people, and that’s very true at $100/bbl. But, when it drops to $60/bbl, maybe the balance sheet becomes our biggest asset and at $40/bbl, the shareholders become our most important asset. I get it. I understand we have to cut costs, but it’s frustrating that the first thing to go is the people,” Aggour said, as part of the ATCE’s appropriately timed panel, “Managing the Future Impact of Current Cost Cutting.” 

His vested interest notwithstanding, the former professional development advisor for Saudi Aramco pulled no punches, saying today’s wholesale slashing of training and development activities—save for those dedicated to regulatory-required compliance and safety—coupled with widely publicized job losses could pose dire consequences when the industry recovers. “I don’t know if we could sustain another big crew change,” he said. “All this could have a long, negative effect on recruitment. But, if we plan right, and with a little investment, we can be more effective (in training).”

The most cost-effective way to maximize training and development and, in turn, improve employee engagement, is re-structuring the elemental approach to training, he said, beginning with a shift from a subject matter-based strategy to an outcome-based version. “There’s a whole field out there called HPI, or a human performance improvement approach, that will guarantee all your training produces outcomes that add value,” he said. “Also, establishing a good competency management system is not expensive, and, if customized to job roles and tied to performance, you can really identify who knows how to do what and who doesn’t. By identifying the gaps, you can be a lot more precise and efficient in your training.”

Aggour cited increasing reliance on E-Learning as another economical and timely option for the more basic and fundamental training requirements. In addition, owing to the experience that is leaving the workforce, he said it becomes imperative that a process be in place to ensure that knowledge does not go into the dust bin. “There needs to be a formal process of knowledge capturing that goes beyond knowledge sharing, and actually records best practices and makes it accessible to everyone on the job,” he said. “Knowledge management should be integrated into the workforce, and the knowledge that is leaving should not be lost forever. Put these subject matter experts on retainer, and don’t lose them. It will cost less and be more effective.”

“We can cut costs and still deliver better training results,” he said.

Enough is enough. Meanwhile, as for constructing wells in a low-cost environment, panelist Jeff Moss, an Exxon Mobil drilling advisor, said today’s mantra should be “quality comes first, but quantity matters.” In other words, some wells can be drilled safely and efficiently without over-engineering.

“With all these discussions on cost management and how we lost our way in the last boom, the biggest problem I see, and I’m heavily biased on the drilling side, is knowing when good enough is good enough.”

To illustrate, he said that some 15 to 25 of the rigs that Exxon Mobil runs worldwide may have up to 15 engineers stationed per rig. “These are not cookie cutter, plug-and-play wells. These are the ultra-deepwater, extended-reach and other types of wells that some of my co-workers call CNN wells, because they will get you on the front page of CNN if you have a failure. These wells have to be (heavily) engineered, as we all have a responsibility toward our shareholders and the general public.”

“There are other wells, however, that maybe don’t require quite that level of engineering. For these, we need to make it (engineering) fit the purpose, so knowing when good enough is good enough is critical.”

Moss said the safe delivery of quality wells at the lowest possible cost is especially imperative in the unconventional sector. “When I started my career in the early eighties, we called them crappy rocks; now they’re called unconventionals. For the past three years, within Exxon Mobil, I’ve been working extensively on unconventionals, where cost absolutely matters. You have to understand why you’re doing what you’re doing, and what you hope to get for the money you’re investing.” wo-box_blue.gif 

About the Authors
Jim Redden
Contributing Editor
Jim Redden is a Houston-based consultant and a journalism graduate of Marshall University, has more than 40 years of experience as a writer, editor and corporate communicator, primarily on the upstream oil and gas industry.
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